The first-time homebuyer incentive program is a shared-equity mortgage with the Canadian government that helps qualified first-time buyers reduce their monthly mortgage payments to better afford a home!

The Incentive: This program allows you to obtain an incentive from the government to assist with your down payment, thereby lowering your overall mortgage amount and, in turn, your monthly mortgage costs.

• 5% or 10% for a first-time buyer’s purchase of a newly constructed home
• 5% for a first-time buyer’s purchase of a resale (existing) home
• 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

Qualifying for the Incentive: This program is designed to assist first-time homebuyers, therefore you must:

• Have never purchased a home before
• Have not occupied a home that you, your current spouse or common-law partner owned in the last 4 years
• Have recently experienced a breakdown of marriage or common-law partnership

If you meet the above criteria, further qualifications are based on your income and status as follows:

• Your total qualifying income is no more than $120,000 ($150,000 for homes in Toronto, Vancouver, or Victoria)
• Your total borrowing is less than four times your qualifying income (four and a half times your income if you’re purchasing in Toronto, Vancouver or Victoria)
• You are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada
• You meet the minimum down payment requirements

Additional Costs: With the incentive, there are a few additional costs to be aware of such as additional legal fees (your lawyer is closing two mortgages, the one on your behalf and that on the Government’s behalf), appraisal fees to determine the repayment value of your home when it comes due, plus other potential fees such as refinancing or switching costs if you decide to move or update your mortgage.

Repayment Process: When it comes to repayment of the incentive, the homebuyer is required to pay back after 25 years or when the property is sold, whichever comes first. They are also able to repay anytime prior to this without penalty. The repayment is based on fair market value at the time of repayment and you would pay back what you received. For instance, if you received a 5% incentive, you would repay 5% of the current home value at the time of repayment.

Keep in mind, if you choose to port your mortgage or go through a separation during the term and want to buy out your co-borrower, you will have to repay the incentive sooner.

Contact Mortgage Man DLC  today to get started on your homebuying journey!

Source: https://dominionlending.ca/mortgage-tips/what-is-the-first-time-homebuyer-incentive?fbclid=IwAR1-wHGlWBpUReSgbYnzWjFBhKr8g6AEvd9XdP6qg2OKlAWpe-dzblhrtpo

Approximately 20% of Canadians are self-employed, making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key things to note as this process can differ from the standard mortgage.

Qualifying for a Mortgage

In order to obtain a mortgage as a self-employed individual, most lenders require personal tax Notices of Assessment and respective T1 generals be included with the mortgage application for the previous two years. Typically, individuals who can provide this proof of income – and with acceptable income levels – have little issue obtaining a mortgage product and rates available to the traditional borrower.

Self-Employed Categories

1. For those self-employed individuals who cannot provide the Revenue Canada documents, you will be required to put down 20% and may have higher interest rates.
2. If you can provide the tax documents and don’t have enough stated income, due to write-offs, then you have to do a minimum of 10% down with standard interest rates.
   1. If you are able to put down less than 20% down payment when relying on stated income, the default insurance premiums are higher.
3. If you can provide the tax documents, and you have high enough income, then there are no restrictions.

Documentation Requirements

For those individuals who are self-employed, you must provide the following, in addition to your standard documentation:

• For incorporated businesses – two years of accountant prepared financial statements (Income Statement and Balance Sheet)
• Two most recent years of Personal NOAs (Notice of Assessments) and tax returns
• Potentially 6-12 months of business bank statements
• Confirmation that HST/Source Deductions are current

Calculating Income

When it comes to calculating income for a self-employed application, lenders will either take an average of two years’ income or your most recent annual income if it’s lower.

If you’re self-employed and looking to qualify for a mortgage, or simply have, reach out to a Dominion Lending Centres mortgage professional today! We can work with you to ensure you have the necessary documentation, talk about your options and obtain a pre-approval to help you understand how much you qualify for.

Source: https://dominionlending.ca/mortgage-tips/self-employed-and-seeking-a-mortgage

Prospective homebuyers wanting to take advantage of the federal government’s new Tax-Free Savings Account will have to wait longer. This new tax free savings account wont be available until later this year.

All of the Big 6 banks confirmed to CMT that they weren’t in a position to offer the new account when it launched April 1st. They are working to finalize the logistics of offering the account to clients, including obtaining the required government authorizations and awaiting tax reporting guidelines from the Canada Revenue Agency.

The new registered plan allows first-time homebuyers to save up to $40,000 for the down payment on their home on a tax-free basis. Similar to the Tax-Free Savings Account (TFSA), funds in the account can be placed in a variety of investment vehicles, and can then be withdrawn tax-free as long as the funds are used for a qualifying first-home purchase.

Details of the new First-Home Savings Account

Do you have more questions about the account and how it can be used to assist with a first-time home purchase? The following are some of the key details of the program as well as its restrictions.

Who is eligible for the FHSA?

• Any resident of Canada who is at least 18 years old.
• Anyone who hasn’t owned a home or lived in a home owned by their spouse or common-law partner in the calendar year or four preceding calendar years.

How much can you contribute to your FHSA?

• You can contribute up to $8,000 per calendar year, up to a lifetime limit of $40,000.
• You can carry forward up to $8,000 in unused contributions in a calendar year to use in a later year.

What qualifies as a first home purchase?

• Funds withdrawn from the account are only tax-free if they are used for a qualifying first-home purchase. To qualify, the purchase must meet the following criteria:
  • Be a first-time homebuyer and a resident of Canada at the time of the withdrawal and during the purchase of the qualifying home,
  • Have a written agreement to buy or build a qualifying home located in Canada before October 1 of the year following the year of withdrawal,
  • Intend to occupy the qualifying home as your principal place of residence within one year of buying or building it.

What investments are eligible within an FHSA?

• The rules governing the FHSA are identical to those for Tax-Free Savings Accounts, meaning account-holders can invest in mutual funds, publicly traded securities, government and corporate bonds and guaranteed investment certificates (GICs) within the account.

What if you don’t use the funds to purchase a home?

• The funds in the FHSA account must be used to purchase a first home by either the end of the 15th year after the plan was opened or by the end of the year you turn 71 years old.
• At either of those points, or if you choose to use the funds for a purpose other than a first-home purchase, the unused balance can then be transferred to a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) or withdrawn on a taxable basis.

Source: Canadian Mortgage Trends – https://www.canadianmortgagetrends.com/2023/03/new-first-home-savings-account-launches-april-1-but-wont-be-available-until-later-this-year/?fbclid=IwAR32la1khhIQ8dSA320GxSMZR0yC5smpcUEs0ruw-HUmqe4_4oKIZsk8z_M.