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What are the best available first time home buyer programs in Canada?

“Always pick your yard based on your Summer lifetstyle.”


April 29, 2019 - Karl Yeh

Buying a home first the first time? Wondering what programs are available to help first time home buyers? In this episode, we discuss what are the best first time home buyers programs available such as the First Time Home Buyer's Plan and the recently announced First Time Home Buyer Incentive. We also explore available down payment assistance programs.



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Hi everyone, I'm Karl and welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics and tips from home buying experts.

And remember, if this is your first time on this channel and you want to get the latest strategies from the experts, hit the subscription button below, hit the little notification bell, so you don't miss [00:00:30] anything.

Karl Yeh:                      

So today, I'm joined by Mujtaba Syed, Mortgage Specialist with the Bank of Montreal, and the question we're going to answer today is:

What are the best first-time home buyer programs?

So, Mo, I know most of our audience are first-time home buyers. What are some of the best programs that they should be aware of when they're going about buying their first home?

Mujtaba Syed:             

That's a good question, Karl.

First Time Home Buyer's Plan

So, the best first-time home buyer programs that we technically have is one's called a First-Time Home Buyer's Plan, where you get to take out RRSP's tax free [00:01:00] from your investment to use as down payment. It's considered to be for first-time home buyers.

Previously, it was $25,000, but based on the new budget, it's actually being raised to $35,000 per individual.

So, if you have two people looking at buying a home, that's $35,000 each. If you have three people or more, that's also $35,000 each.

That works out to be a considerable amount of down payment that you can take out of your RSP's tax free, which is a great program.

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First Time Home Buyer Incentive Program

Mujtaba Syed:             

Another program that just came out very recently, we kind of touched base and discussed it previously ...

Karl Yeh:                       Watch the video above

Mujtaba Syed:             

[00:01:30] ... is the home buyer incentive program that the government has rolled out.

The way that one works, for example, if you have a home that's $400,000, traditionally, you put five percent down, your mortgage would've been $380,000.

So, your mortgage payments and the stress test is actually based on that amount, which is $380,000.

On the new home buyer incentive program, the way it works, let's say you're buying a home for $400,000 again, you still have to come up with the five percent down payment, there's no change there, but then CMHC (Canada Mortgage and Housing Corporation) would do an equity re-stake [00:02:00] that will kick back 10 percent all of the purchase price, which is in the area of $40,000 into that loan.

So, your mortgage amount reduces to $340,000 compared to $380,000. Then, your mortgage amount and your stress test is going to be based on that legal amount of $340,000.

That's a potential savings of over $222 a month.

And for a lot of first-time home buyers, that's just enough for them to get into their home. It's another really great program.

Unfortunately, we don't have a lot of information about it right now, but [00:02:30] definitely stay with us, stay tuned with us, so as soon as we get more information, we'll roll it out to you guys.

And it seems like a great program.

Karl Yeh:                      

Perfect and what we were talking about is ... and we covered this in the previous video, but the stress test is based on the actual mortgage, so it isn't based on the $400,000 purchase price.

Originally, it was based on after the five percent down payment, $380,000, that would be the stress test, but with this new first-time home buyer incentive, [00:03:00] the stress test actually applies to $340,000, not the $380,000, so it does significantly impact how much ...

Mujtaba Syed:             

Significantly. It would help a lot of people. What the government is predicting,

100,000 new first-time home buyers will be able to use this program against a market, which is significant. That's 100,000 new people with actually achieving their dreams, right?

Getting a lot closer to home ownership, which is a great, great program, so I'm very excited to see it rolled out.

Karl Yeh:                      

And remember, if you want to watch both these videos, I know ... I [00:03:30] pointed it out earlier, but you can see both of the links below in the description below.

Down payment assistance programs

So, we covered those types of programs, but how about down payment assistance programs? What are some of your thoughts on those?

Mujtaba Syed:             

So, down payment assistance programs are great programs as well.

It helps you get into a home a lot sooner. It's technically done through lenders, so it's not CMHC required or a government type of program as of right now, so you can [00:04:00] ... if you're buying a certain type of home, for example, with a builder, a bank can actually assist you with a down payment by giving you a deposit loan or something to that extent.

Mujtaba Syed:             

So, you have the down payment up front and then, you can sign your builder contracts and the build can start and over the 12-month period, you just have to pay it off, so that's another great incentive.

A lot of builders have their own, like Brookfield has a great down payment program where they take installments from you, they don't charge any interest, which is [00:04:30] perfect, and then, you just have to talk to your ASL manager to find out more about that.           

But anything that helps you get sooner into home ownership, that's the key.

Anything, any program that gets you into a home sooner in my opinion, is a great, great program. You should definitely look at all your options and see what works best for you.

Karl Yeh:                      

And if you want to know more about how much to save for a down payment, watch our video above and in the description below.



Do you have anything else to add in terms of first-time home buyer programs?

Mujtaba Syed:              

[00:05:00] What I would like to really enforce the idea is just to get to know exactly what's available to you.

There's a lot out there as a first-time home buyer.

Definitely do your research, ask us questions.

We'll be happy to get back to you with our answers.

But there's so much incentive for you guys to actually become home owners a lot sooner, definitely take advantage of that.

Because it actually is for you guys. It's technically rolled out for first-time home buyers and I think I maybe failed to mention the first-time home buyer incentive program, there's [00:05:30] some strict requirements to that and you can't have a household income over $120,000, which is ideal for first-time home buyers.

So, people who are making more than this money cannot use this program and the maximum amount of mortgage that can be taken out under this program, it's $480,000, so you can't take $700,000, $800,000, $900,000, you can't do that.

So, it's ideally tailored for you guys. Get out, follow us, so we can get the information over to you guys as soon as we find out and then, really see how it impacts you guys to get into [00:06:00] a home sooner.

Karl Yeh:                      

Perfect, so the question of the day I have for you is:

Have you ever used a first-time home buyer program before when you bought your first home? And if so, how was your experience with it?

Let us know in the description below. Thank you very much for joining us and remember, if you enjoyed this video and found it helpful, hit the subscribe button below, hit the like button, and leave a comment. Thank you ...

Mujtaba Syed:              And definitely share. Share as much as possible.

Karl Yeh:                       Yes, what he said. Thank you and we'll catch you next time. 


Your turn:

Let us know if you have additional mortgage or financing related questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from home buying experts.  

About Mujtaba Syed:

Mujtaba is an experienced mobile mortgage specialist with a demonstrated history of working in the banking industry. Skilled in Negotiation, Commercial Lending, Banking, Sales, and Credit Analysis. Strong product management professional.

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