Has anyone you know used the government’s First-Time Home Buyer Incentive? If the answer is no, you are not alone. As a busy Niagara-based realtor I have heard of a few failed attempts in applying so I decided to go to the source. When asking some of my most trusted local mortgage brokers I was told that the program is hardly ever talked about or considered within their day-to-day solutions for clients. I will aim to shed some light on why this program has been flawed from day one and has been modified just once since inception to accommodate a small crowd of exclusively GTA first time home buyers.
The goal of the FTHBI is to make it easier to buy your first home by bringing down your monthly mortgage payments. It is a shared equity mortgage, which means the government shares in the upside and downside of your property value if it applies to you. It allows you to borrow 5 to 10% of the purchase price of a home (10% only applies to new construction) to be paid back within a 25-year window.
https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive
If you like follow along with one of the government website’s examples:
· You receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000.
This might sound like something that can work for you or your friends and family who are struggling to purchase their first home in this turbulent market. The catch? Keep reading through the government site to get into the details of who is applicable and consider how few people this actually helps. Here is a summary of eligibility criteria:
- Total household income doesn’t exceed $120,000 (not an issue in Niagara with massive unemployment rates)
- Total amount borrowing is no more than 4 times your qualifying income (HPI composite benchmark price for Niagara region was $620,700 in March 2021) source: https://creastats.crea.ca/board/stca
- You also must meet challenging down payment requirements and you are not allowed to avoid mortgage insurance premiums as this program only applies to those with a first mortgage greater than 80% of property’s value.
Many people are concerned with sharing equity. In my opinion that is not the concern here. The issues lie with the government bringing in incentives that apply to small parts of the country and leave others in the dark. Ontario, on the whole, has had only 743 approved applications since it was approved in 2019(canadianmortgagetrends.com) as the eligibility criteria slides further out of reach and the market continues to climb. If there are solutions out there, this is not the one and it doesn’t appear that it is capable of catching up to the times. Unfortunately, this seems to be the trend, when it comes to help, concern and adjustments to the real estate market enforced by the government to help Canadians stay in their favourite communities.
Thanks for reading and leave a comment below if there is something you see or read that you would like to see me chop up next.
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