As of April 2021, the changes to the First-Time Home Buyer Incentive program the federal government announced as part of the Fall Economic Statement on November 30, 2020 are in effect. The eligibility for the program has been expanded in the higher priced housing markets of Victoria, Vancouver, and Toronto.
Changes to Eligibility
Two changes will allow more home buyers in these cities to qualify for the incentive:
- The eligible annual household income is increased to $150,000; and
- The total borrowing cap is increased to 4.5 times your qualifying income.
The federal government seems to consider the entire Capital Regional District, including the West Shore and the Saanich Peninsula, as part of Victoria for the purposes of this program according to the maps provided on the program website. Maps are also available to define the program boundaries for Metro Vancouver and the Greater Toronto Area.
What Isn't Changing?
- You must still have the minimum down payment for your purchase, so 5% of the first $500,000 of the purchase price and 10% for the portion of the purchase price above $500,000.
- The program still only provides 5% of the purchase price of the property, or 10% if it's a new build.
- You must still be approved for a high-ratio first mortgage that is eligible for mortgage insurance.
- You can repay in full at any time without a penalty, but you must repay when the property is sold or after 25 years.
Let's Calculate the Maximum Mortgage
Using the government's stated maximum of a $722,000 purchase price, you would need to have a down payment of $47,200. The government contribution would be 5% of the purchase price for an existing property, or 10% if it's a new build. That would lower your monthly payment by around $150-$300 versus borrowing the full mortgage amount from a lender. And with mortgage rates still at historic lows, almost 68% of every dollar you make in payments will be going to principal, building your equity.
More details on eligibility and applying are available on the National Housing Strategy website.
The Auxilium Team keeps track of key developments relating to home ownership in order to provide you with the best possible solution for your situation. If you're considering buying your first home, contact us for a free consultation with one of our mortgage specialists: call 250-590-6520 (toll-free 1-855-590-6520) or book a time that works for you. We can also arrange an appointment evenings or weekends to work with you.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.
Originally posted December 1, 2020
Updated April 15, 2021