Protected: A program that can put your first home within reach
Protected: A program that can put your first home within reach
The First-Time Home Buyer Incentive, combined with one of the lowest mortgage rates in Canada, can take the sting out of monthly mortgage payments
![](http://www.facebook.com/sharer.php?u=https://torontolife.com/real-estate/put-your-first-home-within-reach/&title=Protected: A program that can put your first home within reach&picture=https://torontolife.com/wp-content/uploads/2020/02/316321928.png&description=As real estate prices continue to climb, many of us feel priced out of the housing market or at least unable to mortgage a home without mortgaging our lives in the process. But there are several things that can help put buying home within reach. One is the First-Time Home Buyer Incentive.
The First-Time Home Buyer Incentive is a federal program that helps make purchasing your first home more affordable. Through this program, the government will loan you up to 10% of the price of a home. This incentive lets homebuyers borrow less money from the bank, which, in turn, leads to lower monthly payments. You still have to pay the government back, but not for a period of 25 years, or until you sell your home.
The First-Time Home Buyer Incentive, essentially, is a shared equity mortgage with the federal government. You can receive a loan of 5% of the sale price if you’re buying a re-sale home or 10% of the costs of a newly built home.
So how does the First-Time Home Buyer Incentive work in practice? We asked Barry Gollom, HSBC’s Senior Vice-President of Products and Customer Experience, to walk us through an example.
“Let’s say you’ve decided to purchase a new $400,000 condominium,” says Barry Gollom. “You have to pay the minimum 5% down payment, which is $20,000. Then the government kicks in with the incentive—a $40,000 shared equity mortgage, which is 10% of $400,000. So instead of having to get a mortgage for $380,000, it's reduced to a more manageable $340,000."
As mentioned above, you do need to pay back the incentive loan to the government. How much you pay back will depend on what your home is worth at end of 25 years or when the home is sold, whichever comes first. “So if your home goes up in value,” says Barry Gollom, “let’s say from $400,000 to $450,000, you would owe the government $45,000. The more your home goes up in price, the more you have to pay back to the government.”
It’s also important to note, Barry Gollom says, that the government will only provide loans to those buying a primary residence—if you’re looking to purchase an investment property you don’t intend to live in, you won’t qualify for the program.
Those interested in the First-Time Home Buyer Incentive need to be sure they meet the program’s qualifications: You’ll need to be able to make the minimum 5% down payment, you can’t earn more than $120,000, and if you have a spouse or are purchasing a home with a friend, your combined income can’t exceed $120,000. Also, the total amount you borrow can’t be more than four times the qualifying income.
Those who do qualify for the First-Time Home Buyer Incentive could end up seeing a savings of a few hundred dollars on what they might otherwise have paid toward their mortgage each month, depending on the mortgage rate they lock into.
“Couple that with a mortgage from HSBC—such as our very competitive high-ratio mortgage—and you’ll have just that much more money in your pocket,” says Barry Gollom. “It’s a natural fit with our belief in helping someone mortgage their home, not their life.”
Find out more about how HSBC helps first time home buyers.){kind=link}