Homebuyers locked out of the real estate market are about to get a leg up starting September 2, thanks to a controversial federal program called the First-Time Home Buyer Incentive (FTHBI).
Critics say it does nothing to help Canadians who are locked out of the country’s highest-priced markets, like Toronto and Vancouver. However, Zoocasa points out in a new report that there are plenty of other options if you’re not married to big city living.
The FTHBI helps bring down mortgage payments by kicking in 5 per cent towards the down payment of a resale home, and 5 or 10 per cent for new homes in the form of a shared equity loan, paid back when the house is sold or the mortgage matures, whichever comes first.
To qualify, at least one person needs to be a first-time buyer — that includes owning or living in a home owned by a spouse in the previous four years. Buyers coming out of a failed marriage are exempt.
Canadians looking to take advantage of the program need to come up with a 5 per cent down payment, and household income cannot exceed $120,000. The maximum down payment for a resale home can’t be more than 14.99 per cent, and can’t exceed 9.99 per cent for new builds.
That means a household earning the maximum income of $120,000 with a 5 per cent down payment in tow would be limited to a resale home of $505,000.
Zoocasa found that’s enough to get a foot in the door in 19 of the 25 markets it looked at.
“These include markets in Eastern Canada, Quebec, and Prairies, as well as smaller urban centres in Ontario,” says Zoocasa managing editor Penelope Graham.
“Not surprisingly, the six markets where the average home buyer would not qualify for the FTHBI include homes for sale in Toronto and several markets in its proximity in the Greater Golden Horseshoe such as Hamilton-Burlington and Kitchener-Waterloo, as well as in Greater Vancouver and neighbouring Victoria and Fraser Valley.”
Zoocasa’s calculations were based on average home prices and maximum incomes. Buyers’ ability to use the FTHBI may vary based on income, size of down payment, and the price of their desired home. As such, the data serves as a guideline.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains