First Time Home Buyers Incentive
The First Time Home Buyer Incentive (FTHBI) is a program that’s sponsored by the Government of Canada. It allows first-time home buyers who have the minimum required down payment from their own resources to finance a portion of their home purchase. The result is that First Time Home Buyers can reduce their monthly mortgage payment without increasing the amount that they must save for a down payment.
Through the FTHBI program, a homeowner shares equity in their purchase with the Government of Canada. This means the Government shares in the upside and downside of the value of the property at the time of repayment. The incentive provided to the borrower must be repaid at the earlier of 25 years from the date of purchase or the sale of the property.
The incentive will be structured as a second ranking mortgage, which will be registered immediately following the first insured mortgage. The security for the incentive must be the same for the first insured mortgage.
The incentive is not interest-bearing, with no regular principal payment and is repayable in full at any time without a pre-payment penalty.
If you have any questions about the first-time home buyers incentive, or buying your first home, give me a call. More information from the government website is available here.
Kevin Bell, CFA