By The A-Team | Jul 04, 2019 | Buyers Advice
The First-Time Home Buyer Incentive (the Incentive) helps qualified first-time homebuyers reduce their monthly mortgage carrying costs without adding to their financial burdens.
You need to have the minimum down payment to be eligible. You can then apply for a 5% or 10% shared equity mortgage with the Government of Canada. Your maximum qualifying income is no more than $120,000, and your total borrowing is limited to 4 times the qualifying income.
A shared equity mortgage is where the government shares in the upside and downside of the property value.
A main criticism for the FTHBI is its purchase price cap of $505,000 for resale homes purchased with a minimum down payment, which won’t go far in Canada’s biggest urban housing markets where buyers would arguably need the most help. For this reason, analysts believe the FTHBI will be useful only in markets with overall lower prices, such as in the Prairie or eastern Canadian markets. via zoocasa.comFor example, buyers are hard pressed to find a resale home within the eligible price range in the City of Toronto, where the average home price came to a whopping $937,804 in May.
Livabl.com highlights the hiccups surrounding the program with this assertion:
As others have noted, part of that has to do with the income and mortgage caps built into the scheme. To qualify, households can’t earn more than $120,000 annually, and the maximum mortgage they can take on is limited to four times that. via livabl.comApparently, this program is not applicable to buyers in every city. Data from Zoocasa.com captures the distinct locations where the program could be effective:
There are only 13 out of the city’s 35 MLS district neighborhoods where such homes are available – and options are limited to condos located away from the city core, including North York condos and Etobicoke condos.This is coming as the Canadian real estate prices appreciated after months of being in the red. According to betterdwelling.com, this is a little drop of positive in a sea of negative:
Those on the hunt for average priced houses for sale in Toronto (including both detached and semi-detached options) have zero ability to utilize the program, as the average property comes with a price tag of $1,299,061. via zoocasa.com
The C11, a weighted price index of Canada’s 11 largest cities, advanced on both a monthly and annual basis. The index increased by 0.47% in May, compared to one month before. This works out to a 0.69% increase compared to the same month last year. Prices are now down 1.31% from the peak reached on September 2018. On the upside, prices increased breaking a seven-month streak of declines. via betterdwelling.com