Everything You Need to Know About First-Time Home Buyer Mortgages in Canada
Blog Introduction: Buying your first home can be a daunting experience, but it doesn’t have to be. Knowing all the details of the mortgage process ahead of time can help you feel more comfortable and prepared when it comes time to make your purchase. The Canadian government offers a number of different mortgage options specifically designed for first-time home buyers, so let’s take a look at what they have to offer.
Mortgage Default Insurance
One of the most important pieces of the mortgage puzzle is understanding mortgage default insurance. Mortgage default insurance is required by law if you are putting down less than 20% as a down payment on your home. This type of coverage protects lenders from borrowers who are unable to pay back their loans, and helps ensure that buyers get access to affordable financing even if their downpayment isn’t very large. In general, Canada Mortgage and Housing Corporation (CMHC) provides this type of insurance for mortgages up to $500,000, while Genworth Financial and Canada Guaranty provide coverage for mortgages over $500,000.
The First-Time Home Buyer Incentive Program
The Canadian government also offers an incentive program for first-time homebuyers called the First-Time Home Buyer Incentive Program (FTHBI). This program helps reduce monthly payments on insured mortgages by providing up to 10% of the purchase price as financial assistance through CMHC or Genworth Financial. To qualify for this program, homebuyers must meet certain criteria such as having an annual household income under $120K (or $150K in larger cities), having enough savings for a minimum 5% down payment on the purchase price, and more. The FTHBI can help reduce monthly payments significantly—for example, a buyer with an annual household income of $90K could save up to $228 per month on their mortgage payments depending on where they live in Canada!
First Time Home Buyers Tax Credit (HBTC)
Finally, there is another incentive available specifically for first-time homebuyers called the Home Buyers Tax Credit (HBTC). This credit provides purchasers with a one-time non-refundable tax credit equal to 15 percent of the amount they paid towards buying or building their principal residence. Eligibility for this credit depends on several factors such as whether or not you were considered a first time home buyer when purchasing your residence, how much money was spent on buying/building it, what province you live in etc., so it’s best to speak with an accountant or financial advisor before applying for this credit.
Buying your first home can be overwhelming but with proper research and planning it doesn’t have to be! Knowing about all the various incentives offered by both private lenders and the Canadian government will go a long way towards helping you find the right loan product that suits your needs. Whether you need help getting insured or want to take advantage of tax credits like HBTC or FTHBI – there are lots of options available that can make buying your first house much easier! With these tips in mind, you should now be better prepared when it comes time to make your purchase! Good luck!