First-Time Home Buyer Incentive Focus

December 2nd, 2019

The First-Time Home Buyer Incentive came into effect in September of 2019 and is expected to serve about 100,000 Canadians. Have you tapped into it yet?

Your property data is the key to refining your real estate marketing strategy to find eligible first-time home buyers across Canada.

Before we get to how to target first-time home buyers, however, let’s look at what exactly the First-Time Home Buyer Incentive is and who is eligible.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive (FTHBI) promises to make real estate more affordable for those entering the market. The federal program launched on September 2, 2019.  It offers eligible buyers up to 10% of a home’s purchase price to put toward their down payment, lowering mortgage carrying costs.

Eligible buyers don’t have to make ongoing payments or pay interest on the loan, but they do need to repay it when they sell the house or after 25 years (whatever comes first).

The exact amount they have to repay depends on the percentage of the home’s fair market value at the time of sale or after 25 years. MoneySense has a good breakdown of what this might look like.

Who is Eligible?

There are several key measures a potential home buyer must meet to qualify for the FTHBI. These include:

  • Qualifying household income must be less than $120,000.
  • The buyer must have at least the minimum down payment — 5% of the first $500,000 of the home’s purchase price and 10% for any amount above that.
  • But the total down payment (including the FTHBI amount) must be less than 20% of the home’s purchase price.
  • The buyer must be borrowing less than four times their qualifying income. Since the highest qualifying household income is $120,000, the most any eligible buyer can borrow, and still be able to qualify for the FTHBI, is $480,000, including the mortgage, mortgage insurance, and the FTHBI amount. This amount changes with buyers’ incomes — if their household income is $100,000, for instance, $400,000 would be the qualifying borrowing amount.

Potential for Expansion

In the 2019 Canadian Federal Election, the Liberal Party of Canada campaigned to expand the FTHBI.

If expanded, it would cover home values of up to $789,000 (vs. the $480,000 limit) in the areas of Victoria, the Greater Vancouver Area, and the Greater Toronto Area. The proposed expansion of the program does not apply to areas outside of those three markets.

It has not yet been announced when or if this expansion will come into effect.

Real Estate Marketing Tips for Targeting First-Time Home Buyers

If you want to target first-home home buyers who are eligible for the incentive, your property data can help.

Look for eligible buyers in smaller centres. FTHBI limits might be too low for cities with high home prices, like Toronto and Vancouver. Use tools, like the Teranet National House Price Index, to find more affordable locations across the country.

  • Use your neighbourhood demographic tools to find eligible first-time buyers.
    • Look for neighbourhoods with a high percentage of renters, or areas with large single-family homes. First-time buyers might still be living with their parents to save up.
    • Look for age distribution to find areas with millennials and members of Generation Z who aren’t as likely to already own a home.
    • Look for average household income. You can assess if a neighbourhood has renters who earn below $120,000 household income per year (the eligibility limit).
  • Use comparable sale data. Because there is a limit to how much a qualifying home buyer can borrow (up to $480,000 currently, depending on household income), comparable sales can help you find neighbourhoods with homes selling below that limit when you have an eligible home buyer.
  • Look at market insights of first-time home buyers to gain a better understanding of the demographic. The Teranet Market Insights Report recently delved into this. See what the findings revealed: https://www2.geowarehouse.ca/july-2019-teranet-market-insights-report/

Learn more about the FTHBI program and eligibility: https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

Your GeoWarehouse property tools can help you tap into the First-Time Home Buyer Incentive or any other real estate market you would like to target.

Our insightful property data helps generate leads and close more deals for first-time home buyers and long-time homeowners alike.

Discover the power today. Become a GeoWarehouse subscriber by calling 1-866-237-5937 or visiting www.geowarehouse.ca.