Here’s what you need to know about the government’s new first-time homebuyer incentive program.
What do you need to know about the government’s new first-time homebuyer incentive program? Is it something you should take advantage of?
Before I answer that question, I first want to say that I think it’s wonderful that our government is trying to stimulate the first-time homebuyer’s market. This market is critical to the health of our market overall because it’s the start of an important domino effect—entry-level homes need to sell so everything else can sell.
However, in order to qualify for this incentive program, you have to fall within certain parameters.
First, you must be a first-time homebuyer with a household income of under $120,000. Also, the maximum amount you can spend with this program is $565,000, but the maximum amount you can borrow is $480,000. Here in Kelowna, this means you’ll likely use this program to purchase a condo or townhouse.
"I think it’s wonderful that our government is trying to stimulate the first-time homebuyer’s market."
With this program, the government is offering an interest-free loan and a contribution toward your down payment. The stipulation, though, is that they want to be a part of any future appreciation. So you’ll likely save about $3,000 per year by having lower mortgage payments, but once you sell your home, you’ll have to pay back a certain percentage of your home’s appreciation.
I don’t think it’s unfair for the government to ask for this, and the really cool part about this program is that they also participate in the downside. If you sell your home and lose money on the sale, the government will afford you a percentage of the sale at the same prorated amount.
Another important stipulation the government requires is a 4:1 income-to-household-debt ratio, which is a little more stringent than what banks require. Banks usually require a 3:1 ratio, meaning you have to earn 3x as much money as what your house will cost. This makes the program slightly harder to qualify for, but in the lower price ranges, it’s still very attainable.
Another great benefit of this program is that if you use it to buy a new construction property, the government will provide up to 10% of the property’s value.
If you have any more questions about this program or you have any other real estate needs I can take care of, don’t hesitate to reach out to me. I’d love to help you.