Edmonton Mortgage Blog

Programs to assist First Time Buyers:

June 8, 2023 | Posted by: Natalie Wellings

• Mandate is to make home ownership a bit more affordable for first time buyers. 
• The First-Time Home Buyer Incentive program is an initiative created by the Government of Canada to assist with housing affordability. The program works as a second mortgage where the loan is interest and payment free.
• The program will lend additional down payment funds on an interest and payment free basis. 
• It is available to first time buyers with a total household income of $120,000/year or less.
• Borrowers must provide a minimum of 5% down.
• For qualified individuals, the FTBI will offer:
  • 5% shared equity Incentive for an existing home and new/existing mobile or manufactured homes
• 5% or 10% shared equity Incentive for a new construction purchase
• Maximum Mortgage Amount + Incentive Amount cannot exceed 4 times the qualifying income
• Maximum Purchase Price = (4x Total Qualifying Income) + Down Payment
• Incentive amount must be repaid upon sale of the home or after 25 years. Homeowner may repay Incentive in full within the 25 years, without penalty.
• No monthly payments on the Incentive amount; however, sharing of upside and downside of property value. Incentive repayment based on assessed value at time of repayment.

• The FHSA is another avenue to save for the down payment. 
• Annual contributions are capped at $8,000 up to a $40,000 lifetime contribution limit.
• The FHSA and HBP (Home Buyers’ Plan – RRSP down payment program for First Time Buyers) can now be combined on the same qualifying purchase.
• Applicant must be a resident of Canada and between the age of 18 and 71 years old.
• Must be a first-time home buyer, defined as someone who has not owned a home in which they have lived at any time during the calendar year before the account is opened, or at anytime in the preceding four years.
• Owner of the plan would have the ability to hold a broad range of investments, just like an RRSP or TFSA.
• Unlike an RRSP, contributions made in the first 60 days of a calendar year cannot be applied to the previous tax year.
• Home buyer has up to 15 years from their first contribution or until their 71st birthday, whichever comes first, to use the funds to purchase a home.
• Home buyer can carry forward unused portions of their annual contribution (up to max. $8,000) to subsequent years, as long as they do not exceed the lifetime limit of $40,000.
• Funds that are not withdrawn from the plan to purchase a home can be transferred to an RRSP or RRIF on a tax-free basis.
• Non-qualified withdrawals from the plan are permitted but will be subject to a withholding tax, just as they apply to taxable RRSP withdrawals.

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