What is the first-time home buyer incentive?

BC first-time home buyer guide

The First-Time Home Buyer Incentive (FTHBI) is a program designed to empower first-time homebuyers across Canada. Led by the Canadian government, this initiative aims to minimize the challenges often associated with purchasing a first home, making the dream of homeownership more attainable for aspiring buyers. Through shared equity mortgages, the program provides eligible individuals with a financial boost. Check out below for more detailed information on this incentive and how it can make homeownership a reality for you.
first-time home buyer incentive

What is the incentive?

The First-Time Home Buyer Incentive is a program designed to simplify the homebuying process in Canada. It operates as a shared equity instrument, offering eligible buyers an additional 5% or 10% of the down payment towards their home purchase. In return, the government shares in the property’s appreciation or depreciation upon repayment.

As its name suggests, this incentive is exclusively for first-time homebuyers, providing support to those navigating the complexities of homeownership for the first time. Besides providing support on paying the down payment, it also aims to alleviate property transfer taxes for qualified individuals, granting either full or partial exemptions based on eligibility criteria.

Do I qualify for the first-time home buyer program?

To be eligible for a full exemption, you must:

Citizenship/Residency: Be a Canadian citizen or permanent resident.

Residency Requirement: Have lived in B.C. for at least one year immediately preceding the property registration date OR filed at least two income tax returns as a B.C. resident in the last six taxation years before the registration date.

Property Ownership: Have never owned a registered interest in a property that was your principal residence anywhere in the world, and have never received a first-time home buyer’s exemption or refund.

The Property Must:
– Only be used as your principal residence.
– Have a fair market value of $500,000 or less.
– Be 0.5 hectares (1.24 acres) or smaller.

You may qualify for a partial exemption if the property:

– Has a fair market value less than $525,000.
– Is larger than 0.5 hectares.
– Has another building on the property other than the principal residence.
– Your total annual qualifying income doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria). You or your partner are a first-time homebuyer.

How to apply?

Download and fill out the following Forms:

FTHBI – SEM Information Package (PDF)
SEM Attestation and Consent Form (PDF)

Provide the completed forms to your lender. They will handle the submission of the application on your behalf.

Give the final signed copy of the shared equity mortgage package to your solicitor. They will retain it on your behalf.

Upon receiving your acceptance notification, call FNF Canada at 1-(855) 844-4535 to activate your incentive. Provide the name of your lawyer/notary at least two weeks before your closing date.

Why get an appraisal before applying for the first-time home buyer incentive?

While an appraisal might not be explicitly required to apply for the FTHBI, it can still play a significant role in the homebuying process for several reasons:
Assessment of Market Value: An appraisal provides an unbiased evaluation of the property’s market value, considering factors such as location, size, condition, and recent comparable sales. This valuation helps determine the fair price for the property and ensures that the buyer is not overpaying, which is crucial for maximizing the benefits of the incentive program.

Loan-to-Value Ratio: Lenders typically use the appraised value of the property to calculate the loan-to-value (LTV) ratio, which is the percentage of the property’s value that the mortgage will cover. This ratio is important in determining eligibility for financing and may impact the terms of the mortgage, including the requirement for mortgage insurance.

Shared Equity Calculation: Under the FTHBI program, the government provides a shared equity mortgage, where it shares in the appreciation (or depreciation) of the property’s value. The initial and subsequent values of the property, as determined by an appraisal, are essential for calculating the government’s equity share accurately.

Resolution of Disputes: In cases where there are discrepancies or disagreements regarding the property’s value, an appraisal can provide an impartial assessment to resolve disputes. This can be particularly useful if there are multiple parties involved in the homebuying process or if there are questions about the property’s suitability for the incentive program.
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