First Time Home Buyer Incentives

buying your first home

There are many firsts in life that you will never forget, and buying a home is one of them. While you know the result will be rewarding, getting there can be scary. With the right plan, it doesn’t have to be. Whether you’re newly married or recently graduated, know what is available in terms of first time home buyer incentive programs. 

 

Those looking to make the leap from renting to buying should also pay attention to these incentives and take advantage of them. As a first-time home buyer in Alberta, many incentive programs are available. Knowing what is out there will help take off some financial stress and help you purchase your first home.

Creating A Plan

Saving for your future mortgage is one of the first steps in purchasing a home. But how much is enough? This is where a mortgage specialist comes in. They can make sure you are saving enough without throwing out your current lifestyle. Creating a savings plan is one of the first things you’ll want to do. For example, paying off credit card debt and changing bad spending habits are good places to start.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) is a program made by the Canada Revenue Agency for first time home buyers. It allows you to withdraw funds from your Registered Retirement Savings Plans (RRSP). In addition, you are given 15 years to pay back the funds.

 

Funds can come from over one RRSP as long as it does not exceed $35,000 in a calendar year. This means you and your partner could both contribute from your respective RRSPs. To be eligible for the HBP you must be a first-time homebuyer who is a resident of Canada. You must also have a written agreement to buy or build a qualifying home for either you or a related person with a disability.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a Government of Canada program. It aims to help qualified first-time homebuyers purchase their first home. The program offers five or ten percent of the home’s purchase price to put towards a down payment. Therefore, reducing monthly mortgage payments to help more Canadians become a homeowner.

 

Eligibility requirements for the incentive include:

• Having Less Than $120,000 Total Annual Qualifying Income 

• Your Total Borrowing Does Not Exceed Over Four Times Your Qualifying Income 

• Being A Canadian Citizen

• Alternatively, Being A Permanent Resident Or Non-Permanent Resident Allowed To Work In Canada 

• Meeting The Minimum Down Payment Requirements From Savings, RRSP, Or A Non-Repayable Financial Gift From A Relative/Immediate Family Member

first time home buyer

Alberta Resident First Time Home Buyer Programs

There are several Alberta specific programs also worth looking in to.

Attainable Homes Calgary Program

The Attainable Homes Calgary Program is specific to Calgarians who seek affordable homeownership options. The program works by providing down payment help. Individuals, couples, and families can be eligible. Since 2009, the program has helped 1000 Calgarians meet their homeownership dreams.

RAMP

The second program is the Residential Access Modification Program (RAMP). RAMP helps low-income Albertans with mobility challenges. You can apply for this grant if you need to make renovations. However, renovations must include ways to make the home safer or more accessible. The program offers a grant of up to $7,500 per person each benefit year. Eligibility includes those living with progressive neurodegenerative disease or uses a wheelchair. Income thresholds are also considered.

PEAK

Public Essential And Key Workforce (PEAK) helps middle-income people buy a home. PEAK is divided into two categories, those with dependent children and those without. For those with no dependent children, you must have a household income of up to $80,000. However, for singles or couples with dependent children, the income threshold is $90,000. Moreover, PEAK is a down payment help program for those who don’t have resources for a 5% down payment.

Mortgage Specialists Are Here For You

Above all, the biggest thing to remember is to take your time. Don’t rush into decisions either. If you are purchasing a home with a partner, clear communication is important. Make sure both people agree on the house being purchased, the plan to save and purchase, and have realistic wants and needs. Be patient with yourself and your partner. Rushing the process could lead to regret later on.

 

Know that being a first-time homebuyer doesn’t have to be done alone. Federal, provincial, and municipal incentive programs are available and worth looking into. While there are many incentive programs out there, they can be hard to understand. Working with an experienced mortgage broker will save a lot of time and confusion.

first time home buyer

In conclusion, write all your questions before meeting with a mortgage specialist. Ask how incentive programs could benefit you. They will be with you every step of the way. Being a first-time homebuyer should be an exciting and rewarding process.

 

At the Mortgage Group Calgary, we have a team of some of the best mortgage brokers in Calgary. We provide mortgage solutions based on expertise and experience to best fit your financial situation. Contact us today for a consultation on how you can get on track to becoming a homeowner. 

Taking Part In The First Time Home Buyer Incentive

Buying a home

What is the First Time Home Buyer Incentive?

For homebuyers looking to break into the Calgary housing market, the stress test and other changes have made it a challenge. That is in part why the federal government put the First Time Home Buyers Incentive in place. Participants of the program, which kicked off on September 2, will see the funds released as early as November to get them into a home.
The government has invested $1.2 billion into the Incentive, which they hope will run for three years. However, it will close once all of the funds have been allocated.

How Does The Incentive Work?

The loan sharing program contributes 5 to 10% of the home purchase price to qualified applicants. The contribution will lower the overall net price of the mortgage, resulting in lower monthly payments for the buyer. The plan administrators think this will lower payments by $100-$300 a month. The savings makes owning a home much more affordable and means that buyers can qualify for a higher amount.
The Incentive covers three property types: new construction, existing homes, and new or resale mobile homes. With new construction, the government will contribute 5 to 10%. For existing homes and mobile/manufactured homes, the government will contribute 5%. Buyers are not allowed to purchase the house to rent it out. It must be their primary residence.

First Time Home Buyer Incentive qualifications include:

  • You have not purchased a house previously
  • You must have the minimum down payment
  • The purchase must be in Canada
  • It must be your primary residence and not a vacation home
  • In the last four year’s you did not reside in a house owned by you, your spouse or common-law partner
  • You are a Canadian citizen, a legal permanent or non-permanent resident authorized to work in Canada
  • Your household income cannot be over $120,000

Additionally, people who are separating from their spouse or common-law partner would also qualify, even if they do not meet the other incentive requirements.

First Time Home Buyer Incentive
Starting on Sept. 2, 2019 Canadians can now buy a home with government help under the First Time Home Buyer Incentive

How Can I Apply?

Applying is relatively easy. There is an online application that can be filled out. However, the first practical step is to assemble a real estate team. You’ll need to apply for a mortgage pre-approval to see what you qualify for. Then, with the help of a real estate agent, it’s time to shop for a home. Once you find a home you’re ready to make an offer on, then it is recommended you fill in the application forms. As mentioned above, you will still need to come up with a minimum of 5% for the down payment.

At The Mortgage Group, we can assist you with the pre-approval process and filling out the paperwork. Our mortgage brokers in Calgary will help you submit the firms to the government administrator. They will then contact us – or whomever you have help submit the forms – when you are accepted. From here, your real estate lawyer will likely become involved as everything is arranged to close the agreement with the government. They will submit all of the documents, and ensure that the government’s contributions are paid to the mortgage upon confirmation of title transfer and possession date.

Is The First Time Home Buyer Incentive Right For Me?

The money the government is giving is not a grant or free; it is a home equity loan. It is a second mortgage on your property, though it has no regular principal payments, nor is it interest bearing.

The loan over a 25-year duration and you can repay it at any time. If homeowners don’t pay it off before 25 years, or they sell the home, the government takes a cut of 5 to 10% of the fair market value price of the home. The percentage is based on how much they put in initially. If it was 5%, then they will only expect 5% in return. The Incentive cannot be ported onto a new property. If you decide to port the mortgage and move into a new home, you will have to pay off the Incentive.

Any increases to the value of your home are shared with the government at final payout or sale. If housing values go down, the government also takes a loss in the final sale. There can be joint mortgagees, but all parties are then responsible for the loan. There are also ways to refinance the loan without triggering a need to repay the government’s money early.

While the cap may not be enough to put you in your forever home, this can be a great way to get into a starter family home. The Incentive is not ideal for everyone. If you have any questions and want to learn more, give us a call. We would be happy to look through the options with you and help you find the perfect mortgage product.