Real Estate

Expanded First-Time Home Buyer Incentive

  • Last Updated:
  • Dec 2nd, 2020 9:46 am
[OP]
Deal Guru
Feb 22, 2011
10175 posts
12596 upvotes
Toronto

Expanded First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive

To make homeownership more affordable, the government launched the $1.25 billion First-Time Home Buyer Incentive in September 2019, which gives eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home with the government.

The government is expanding the First-Time Home Buyer Incentive to enhance eligibility in the higher priced markets of Toronto, Vancouver and Victoria. This will help to make home ownership more affordable for Canadians who are buying their first home in these cities. To help people in Toronto, Vancouver and Victoria buy a house, the expansion will be available to eligible buyers to purchase a home up to 4.5 times their household income, an increase from the current limit of 4 times household income. Additionally, the eligible buyer’s income threshold is being raised from $120,000 to $150,000 for Toronto, Vancouver and Victoria. These changes will come into effect in spring 2021. With a minimum down payment, this targeted expansion will raise the maximum house price for eligible first-time home buyers in these cities from about $505,000—the current program parameters—to about $722,000.

https://www.budget.gc.ca/fes-eea/2020/r ... ent-Canada
12 replies
Deal Addict
Jan 15, 2010
1112 posts
1302 upvotes
Toronto
Useless program is still useless. Such a minor change. Why are they capping the maximum home price at all? Just cap the maximum you can borrow. This program is idiotic.
Deal Addict
Dec 23, 2010
1897 posts
929 upvotes
Moon
This program only encourages prices to go up. It is such a terrible idea. I still maintain the best way to ensure housing affordability is by ensuring that only income traced directly to Canadian sources is liable for use in a real estate purchase. Another smart strategy would be capping the purchase price of real estate to someone's lifetime taxable income. So if you earned 400k in income during your lifetime in Canada you can only buy a 400k house. Very easy to enforce. Very easy to track.
[OP]
Deal Guru
Feb 22, 2011
10175 posts
12596 upvotes
Toronto
DaMan12 wrote: Useless program is still useless. Such a minor change. Why are they capping the maximum home price at all? Just cap the maximum you can borrow. This program is idiotic.
From $505k to $722k is a pretty big increase.
Temp. Banned
Apr 29, 2010
569 posts
932 upvotes
GTA
Applesmack wrote: This program only encourages prices to go up. It is such a terrible idea. I still maintain the best way to ensure housing affordability is by ensuring that only income traced directly to Canadian sources is liable for use in a real estate purchase. Another smart strategy would be capping the purchase price of real estate to someone's lifetime taxable income. So if you earned 400k in income during your lifetime in Canada you can only buy a 400k house. Very easy to enforce. Very easy to track.
These are terrible ideas
Deal Addict
Dec 23, 2010
1897 posts
929 upvotes
Moon
lolbeast wrote: These are terrible ideas
Yeah, if you have vested financial interest in houses remaining detached from the Canadian economy and forever going UP UP UP these are terrible ideas.
Deal Fanatic
Dec 11, 2003
8201 posts
577 upvotes
mazerbeaner wrote: From $505k to $722k is a pretty big increase.
Just in time for the condo market.
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Deal Addict
Jan 15, 2010
1112 posts
1302 upvotes
Toronto
mazerbeaner wrote: From $505k to $722k is a pretty big increase.
It's tied to income though, when an average condo costs like 650K this still helps almost nobody who earns under like 130K per year. Unless you want to buy a studio or very small 1B.

They would be better off implementing control measures that try to restrict pricing, not inflate it more.
[OP]
Deal Guru
Feb 22, 2011
10175 posts
12596 upvotes
Toronto
DaMan12 wrote: It's tied to income though, when an average condo costs like 650K this still helps almost nobody who earns under like 130K per year. Unless you want to buy a studio or very small 1B.

They would be better off implementing control measures that try to restrict pricing, not inflate it more.
It's probably done that way on purpose so people buy small condos
Sr. Member
Jan 5, 2020
777 posts
1069 upvotes
A small boost for the Toronto condo market.
[OP]
Deal Guru
Feb 22, 2011
10175 posts
12596 upvotes
Toronto
Newuserid wrote: A small boost for the Toronto condo market.
A lot happening in 2021. Record low interest rates, record high money supply, record high immigration and vaccines rolling out in January. Many will not want to live with their parents anymore. I expect the wfh fad will decline, airbnb will be busier, universities will be in person. It's not one small bump it's many all at once.

Oh and I forgot Canadians sitting on largest cash pile ever. What happens when YoY compared to April is like sales up 400% given how bad that one month was, fomo rushes back in.
Deal Addict
Feb 19, 2019
1130 posts
1539 upvotes
Stouffville ON
DecayHeat wrote: I think this makes alot of sense.

I for one will most likely be participating in this program now.

I was JUST outside the qualifications (4x income requirement).
Now it looks like im eligible.

Good news
It's obviously your choice but IMO it's a terrible idea to participate in this program if there is any expectation of property values to go up by any means (market appreciation, property renovations and improvements etc). It also prevents you from putting 20%+ down if you had the ability and chose to do so.
This is even more true now than it was a year ago when the program was announced due to even lower mortgage rates.
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