Home > Help Centre > Blog For many, buying their first home is a significant milestone, symbolizing financial stability and realizing long-held dreams. In Ontario, the journey towards buying a home has been made more accessible and affordable thanks to the First Time Home Buyer Incentive (FTHBI). This initiative by the Canadian government aims to aid first-time homebuyers in the competitive real estate market. In this blog post, we will explore the details of Ontario's First-Time Home Buyer Incentive and how it can help you take the first steps toward owning your dream home. Click below to jump to sections
What is the First Time Home Buyer Incentive? On average, a home in Ontario costs upwards of between $800,000 to $900,000. According to Zolo’s October 2023 real estate trends, the average house price is $1,162,828 in Toronto. It’s become challenging for many first-time homeowners to buy their first property. Increasing real estate costs, inflation, and interest rates have created more barriers to entering the housing market. To help combat rising costs, FTHBI was created to help people on their buying journey. This incentive helps first-time get access to funding to purchase a home without additional upfront or monthly cost. Participants must meet insured mortgage down payment requirements. It's available for annual incomes of $120,000 or less. The incentive and insured mortgage can't exceed four times the annual income of those involved. Home buyers who qualify for an FTHBI loan will receive one of the following: There are countless benefits to the program to assist new homeowners with being successful on their journey. Here are the top four reasons why this incentive supports Canadians: Let's use a hypothetical scenario to illustrate how Ontario's First-Time Home Buyer Incentive can be used. Sarah is a 30-year-old professional who lives and works in Toronto, Ontario. She has been renting an apartment for several years and desires to own her home in the city. The high real estate prices and the need for a sizable down payment have been significant obstacles for her. Fortunately, she discovered Ontario's First-Time Home Buyer Incentive, which could help her become a homeowner. She would then follow the following steps: The first thing Sarah does is to check her eligibility for the FTHBI. She meets the criteria as a first-time homebuyer with a household income within the defined limits. This is the first hurdle she successfully clears. Sarah also realizes that more than her savings are needed for a conventional down payment on a Toronto property. With the FTHBI, she can receive a shared equity mortgage from the government, covering up to 5% of the purchase price of a newly constructed home. With the knowledge that she has the support of the FTHBI, Sarah starts her house-hunting journey. She explores various new developments in Toronto and falls in love with a condo that meets her needs and budget. The condo is listed at $450,000, and Sarah has $22,500 (5% of the purchase price) covered by the government. Sarah applies for a mortgage from a recognized lender, and with the assistance of her financial advisor, she successfully secures a mortgage to cover the remaining 95% of the purchase price. Sarah's offer on the condo is accepted, and she proceeds to complete the purchase. She uses her mortgage for 95% of the property value and the FTHBI shared equity mortgage for the remaining 5%. She finalizes home insurance on the property. There will likely be the need for a home inspection to ensure the home is up to standard. Sarah enjoys living in her new condo without the immediate financial strain of a large down payment. She is aware that she'll need to repay the government's 5% shared equity mortgage, but there's no need for monthly payments. The repayment can be deferred until she decides to sell the property or until 25 years have passed. Over the years, Sarah continues to build equity in her condo as property values in Toronto appreciate. She enjoys the benefits of homeownership, which include building wealth and having a stable place to live. After a few years, Sarah's circumstances change, and she decides to sell her condo. She sells it for a higher price, thanks to the Toronto real estate market's growth. At this point, she repays the government's 5% shared equity mortgage using the proceeds from the sale, without incurring any additional interest charges. Sarah used Ontario's First-Time Home Buyer Incentive to enter the Toronto real estate market. The program reduced the initial financial burden, making her dream of homeownership a reality. It's important to note that the credit must be claimed within the year of purchase after buying your first home. To be eligible for the First Time Home Buyers' Tax Credit, your home must meet the following requirements: If you are a first-time home buyer, the Government of Canada offers a shared-equity mortgage called the First-Time Home Buyer Incentive. This incentive allows you to receive 5% or 10% funding towards purchasing a newly constructed home and 5% funding towards purchasing a resale (existing) home. The average cost for home insurance for a new first time home buyer varies on a few factors. Depending on the property, renovations, and other requirements needed, policies can start around $50 a month. You’ll need to consider lender requirements. For coverage there may be specific areas of your policy that need to be met for you to buy the house. Most lenders require your property to be fully insured for its total replacement cost, as they want to make sure your home can be rebuilt if it's destroyed. Insurers may also require you to have certain coverage based on your location. It’s always worth considering additional coverage, such as overland flood damage protection, as this isn’t included in basic policies. It’s important to shop around and explore what the market is offering. First-time homebuyers often have co-signers on their mortgage, which could affect their eligibility for the first-time homebuyer land transfer tax rebate. Be sure to speak with a legal representative to learn more.
The RRSP Home Buyer's Plan (HBP) and the First-Time Home Buyer Incentive (FTHBI) are two different programs in Canada aimed at helping first-time homebuyers. They serve different purposes and have distinct features. If you're planning to buy your first home, you can use the Home Buyers' Plan (HBP) to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) for a down payment. You won't be taxed on this withdrawal if you meet the eligibility criteria of the program. However, you'll need to repay the withdrawn amount to your RRSP over 15 years. To enhance your finances while purchasing your first home, you can take advantage of both the HBP and FTHBI programs. The HBP facilitates your down payment, while the FTHBI minimizes your mortgage burden. Nevertheless, understanding the eligibility criteria and limitations of both programs is crucial to ensure that you meet the requirements and take advantage of the benefits. Be sure to speak to a financial expert to support your decision making. Are you a first-time home buyer in Toronto? If so, you may be eligible for a rebate of up to $4,475 if you're purchasing a new-build or a residential resale property. The same Ontario Land Transfer Tax requirements apply to this rebate so that you can qualify for both. Remember this incentive doesn’t include Toronto home insurance, so you must include that in your budget. Yes – you can get support from the Canadian government to buy a home in Ontario through the First Time Home Buyer Tax Credit and the First-Time Home Buyer Incentive. The First Time Home Buyers' Tax Credit was introduced in 2009 to assist Canadians in purchasing their first home. It covers closing costs and doesn't come with any strings attached. As of 2022, the credit provides a rebate of $1,500 for all first-time homebuyers, which is double the previous amount. The Ontario First-Time Home Buyer Incentive is a helpful program that addresses the common barriers of high down payments and soaring home prices for first-time home buyers by reducing the financial burden and offering interest-free shared equity. If you're a first-time buyer in Ontario, explore this program to secure your first home. Don’t forget to ask our brokers for the lowest Ontario home insurance quote.First Time Home Buyer Incentive
Oct 23, 2023
Do you qualify for the First Time Home Buyer Incentive in Ontario?
Features of the First Time Home Buyer Incentive
Benefits for First Time Home Buyer Incentive
How the First Time Home Buyer Incentive works
Who qualifies for the First Time Home Buyer Incentive?
How much is insurance for a first time home buyer?
Can a first-time home buyer have a co-borrower?
RRSP Homebuyers Plan vs First Time Home Buyers Incentive
First Time Home Buyer Incentive FAQs
What is the First Time Home Buyer Incentive?
Features of the First Time Home Buyer Incentive
Benefits for First Time Home Buyer Incentive
How the First Time Home Buyer Incentive works
Step 1: Check eligibility
Step 2: Financial assessment
Step 3: Property search
Step 4: Mortgage approval
Step 5: Closing the deal
Step 6: Repayment plan
Step 7: Build equity
Step 8: Selling the property
Who qualifies for the First Time Home Buyer Incentive?
How much does the First Time Home Buyer Incentive cover?
How much is insurance for a first time home buyer?
Can a first-time home buyer have a co-borrower?
RRSP Homebuyers Plan vs First Time Home Buyers Incentive
First Time Home Buyer Incentive FAQs
First Time Home Buyer Incentive can help you buy your first home
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