Guiding Your Clients Through First-Time Home Buyer Incentive

Starting in September 2019, first-time home buyers in Canada will become eligible for an incentive to help them fund this important purchase. Prospective buyers looking for their first home will be able to secure an interest-free loan from the Canada Mortgage and Housing Corporation (CMHC). As a result, realtors may have more first-time clients than ever before. Help them navigate this new credit following the tips below.

Figure Out If They Qualify

In order to qualify for the First-Time Home Buyer Incentive, buyers’ total household income must not exceed $120,000 per year. This includes all sources of income from all adults in the household, including all jobs and investments. Help your clients calculate their total household income before you go further. If they do not qualify for the incentive, they may change their minds about what type of property they are interested in, their approximate budget, or even if they want to buy a home at all.

Help Them Set a Budget

If your clients do meet the income requirements, the next step is to help them set a budget for their first home. The CMHC will offer 5% towards existing homes, which could increase the budget for your client. However, remind them that the total amount received through the incentive cannot exceed 4 times their total household income (or a maximum of $480,000). This cap could limit which neighbourhoods or types of properties the client can choose from. First time home buyers will also be able to increase withdraws from their RRSPs for use towards purchasing a property (the Home Buyers’ Plan) from $25,000 to $35,000 per individual, per year.

Suggest Options

To help your client figure out the best move for their first home using the First-Time Home Buyer Incentive, make sure you inform them of all their possible options. For example, the CMHC offers 5% towards existing homes but 10% on new builds. If they like the idea of building a new home, show them land-only properties in their price range and preferred neighbourhood if possible. Budget limits and loan caps set by the incentive may limit the buyers’ options, so emphasize the types of properties that could fit into the clients’ financial guidelines. For instance, condos are typically less expensive than single-family houses and homes in the
suburbs or country usually cost less than those downtown. 2019’s First-Time Home Buyer Incentive is actually pretty simple. Study the requirements so you can help guide your first-time clients through the benefit to the home of their dreams!