What is the First Time Home Buyer Incentive (FTHBI) Program?
The FTHBI is a shared-equity mortgage with the government of Canada, initiated by CMHC in June 2018. CMHC has recently expanded the qualifications for this program to help lower the mortgage carrying costs for First Time Home Buyers, in hopes of making home ownership more affordable. This program is intended to help lower the mortgage insurance premium that borrowers’ have to pay (not increase purchasing power).
What does the program offer?
5% or 10% for a first-time buyer’s purchase of a newly constructed home
5% for a first-time buyer’s purchase of a resale (existing) home
5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home
Qualifications
Purchasing a home in the Toronto, Vancouver, or Victoria Census Metropolitan Areas
Household annual income must be under $150,000
Mortgage to Income (MTI) ratio is equal to or lower than 4.5
Total down payment from buyer + Incentive must be less than 20%
As this is a share equity program with the government, whether the value of the property goes up or down, the government will share 5% or 10% of that market value. The incentive must be repaid after 25 years, in a lump sum (in full), or when the property is sold, whichever comes first.
Example
You will see that in the example above, by taking advantage of the Government’s FTHBI Program, you will reduce the mortgage insurance you have to pay, and reduce your monthly payments, as long as you can qualify and meet their mortgage to income ratio. Although there is no interest on the loan, you are still required to pay the Government back based on the value of your home at the time of repayment.
To learn more about this program, click here:
To view the eligibility calculator, click here:
Please contact us if you have any questions!
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