CMHC Drops the First-Time Home Buyer Incentive: Finding Different Avenues 2024

The CMHC Drops the First-Time Home Buyer Incentive!

The dream of homeownership is a cornerstone of the Canadian identity. But for many First Time Home Buyers, that dream can feel out of reach due to the ever-increasing cost of housing. In an attempt to bridge this gap, the Canadian Mortgage and Housing Corporation (CMHC) introduced the First-Time Home Buyer Incentive (FTHBI) in 2019. This program helped countless individuals secure their first homes by offering a shared equity mortgage, essentially reducing their monthly mortgage payments.

However, in March 2024, with  the CMHC First Time Home Buyers Incentive, they announced the discontinuation of the FTHBI program overall. While this news might sound discouraging, fear not! This article empowers you, the aspiring homeowner, by exploring alternative assistance programs, down payment saving strategies, and valuable tips to navigate the home buying journey with confidence.

If you are a first time buyer looking to explore direct alternative for CMHC First Time Home Buyers, we can help you at The Steven Sarasin Real Estate Team!

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Understanding the FTHBI Discontinuation

The CMHC First Time Home Buyers Incentive had provided a significant boost to many first-time buyers. It allowed them to qualify for a larger mortgage by offering a 5% or 10% down payment contribution from the government in the form of a shared equity mortgage. This essentially reduced their monthly mortgage payments, making homeownership more attainable.

However, the program wasn't without its drawbacks. Concerns arose about rising housing prices due to increased buyer competition. Additionally, some critics argued that the program primarily benefitted those in higher income brackets who could still afford a down payment.

While the CMHC First Time Home Buyers  discontinuation might seem like a setback, it's important to remember that various other programs and strategies can help you achieve your homeownership goals.

Alternative Government Programs for CMHC First Time Home Buyers 

The federal government offers the Home Buyers' Plan (HBP), which allows first-time buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) towards a down payment. Remember, there are specific eligibility requirements and repayment conditions associated with the HBP, so it's crucial to research thoroughly before making any withdrawals.

Some provinces also offer additional programs specifically tailored to first-time buyers. Let's delve into these in the next section.

Provincial and Territorial Assistance Programs

Several provinces and territories offer programs that can significantly help first-time buyers with the down payment hurdle. 

Here are a few examples for current alternative regarding the CMHC First Time Home Buyers:

  • Ontario: The Ontario First-Time Home Buyer's Land Transfer Tax Rebate provides a rebate on the provincial portion of the Land Transfer Tax for eligible first-time buyers.

  • British Columbia: The Land Owner Registry Fee Exemption for First-Time Home Buyers exempts first-time buyers from paying the Land Owner Registry Fee on their new home purchase.

  • Alberta: The Alberta First-Time Home Buyer Tax Credit provides a refundable tax credit to eligible first-time buyers.

Remember: Provincial and territorial programs can change frequently. Research the programs available in your specific location to determine your eligibility and any potential benefits.

Getting Mortgage-Ready: Saving for Your Down Payment

Saving for a down payment is often the biggest hurdle for first-time buyers. 

Here are some tips to consider:

  • Create a Budget and Track Your Spending: Knowing where your money goes is crucial for creating a realistic savings plan. Track your income and expenses to identify areas where you can cut back and redirect those funds towards your down payment goal.

  • Prioritize Savings: Treat your down payment savings like a bill. Set up automatic transfers from your checking account to your savings account to ensure consistent contributions towards your goal.

  • Explore High-Yield Savings Accounts: Research high-yield savings accounts that offer a better return

Creative Down Payment Strategies

While saving diligently is crucial, there are some creative strategies to consider for boosting your down payment (Further tips for alternatives towards the CMHC First Time Home Buyers ):

  • Gift Funds: Some parents, grandparents, or close family members might be willing to contribute towards your down payment as a gift. These gifts are generally considered tax-free, but it's always wise to consult with a financial advisor for clarification.

  • CMHC First Time Home Buyers Alternatives: While the FTHBI is no longer available, some private lenders offer similar shared equity mortgage programs. These might come with different terms and conditions, so be sure to compare options carefully. We have access to the top and best mortgage professionals across Canada, contact us for more information.

  • House Hacking: Consider house hacking, where you purchase a multi-unit property and rent out one or more units to generate income that can help offset your mortgage payment and contribute to your down payment savings.

  • Down Payment Assistance Programs: Non-profit organizations and some government agencies offer down payment assistance programs to eligible first-time buyers, another great alternative for the CMHC First Time Home Buyers. These programs can provide grants or low-interest loans to help bridge the down payment gap.

Important Note: While these strategies can be helpful, remember that they might come with additional responsibilities or financial commitments. Evaluate your individual circumstances and risk tolerance before pursuing any of these alternative options relative to the CMHC First Time Home Buyers program.

Beyond Down Payment: Understanding Closing Costs

The down payment isn't the only financial hurdle to consider. Closing costs, typically amounting to 2-5% of the purchase price, cover various fees associated with finalizing the home purchase. 

These may include:

  • Lawyer fees
  • Land transfer tax
  • Appraisal fees
  • Home inspection fees
  • Mortgage insurance (if applicable)

Factoring in closing costs upfront helps you determine the total amount of money you'll need to secure your dream home. It’s great to know you alternatives for the CMHC First Time Home Buyers  incentive, BUT it’s also best to keep the financial costs associate with using other programs as an option as well.

The Power of Pre-Approval: Why It Matters

Getting pre-approved for a mortgage is a crucial step in the home buying process. 

Pre-approval allows you to:

  • Determine your budget: Knowing the maximum loan amount you qualify for helps you focus your house hunting efforts on properties within your price range.

  • Show you're a serious buyer: A pre-approval letter makes your offer more attractive to sellers, especially in competitive markets.

  • Negotiate with confidence: Pre-approval strengthens your negotiation position by demonstrating your financial capability to complete the purchase.

Getting pre-approved is a free and relatively quick process. Shop around with different lenders to compare rates and terms before finalizing your mortgage selection.

House Hunting 101: Finding Your Dream Home

Now that you're armed with financial knowledge and pre-approval, it's time for the exciting part - house hunting! 

Here are some tips to navigate this crucial stage:

  • Define Your Needs and Wants: Make a list of must-haves and nice-to-haves in your dream home. Consider factors like location, size, number of bedrooms/bathrooms, amenities, and proximity to work or schools.

  • Work with a Real Estate Agent: A good real estate agent can be a valuable resource. They can help you refine your search criteria, identify suitable properties, and guide you through the negotiation process.

  • Explore Online Listings: Numerous online real estate platforms allow you to browse listings based on your preferences. This can be a great starting point to get a sense of the market and available properties.

Remember: Don't get emotionally attached to the first home you see. Take your time, visit multiple properties, and compare features before making a decision.

Making an Offer: Negotiation Strategies for Success

So you've found your dream home! Now comes the exciting but sometimes nerve-wracking process of making an offer. 

Here are some tips to increase your chances of getting your offer accepted:

  • Understanding Market Value: Research recent sales of comparable properties in the neighbourhood to determine a fair and competitive offer price.

  • Considering Seller Motivations: Think about the seller's situation. Are they in a hurry to sell? Are they flexible on closing dates? Understanding their motivations can help you craft a more attractive offer.

  • Start with a Strong Offer: While there's always room for negotiation, starting with a fair but slightly below-asking-price offer positions you well for discussions.

  • Be Prepared to Negotiate: Be prepared to counteroffer if the seller rejects your initial offer. However, avoid lowball offers that might offend the seller.

  • Highlighting Your Strengths: As a first-time buyer with pre-approval in place, emphasize your ability to close the deal quickly and smoothly.

Remember: Negotiation is an art, not a science. Be professional, courteous, and willing to compromise to reach a mutually agreeable price.

The Home Inspection: Protecting Your Investment

Before finalizing the purchase all while using your alternative choice for the CMHC First Time Home Buyers incentive, a home inspection is crucial. A qualified home inspector will thoroughly examine the property, identifying any potential structural, electrical, or plumbing issues. 

Here's why a home inspection matters:

  • Uncovering Hidden Problems: A home inspection can uncover hidden problems that you might not notice during a regular viewing. This allows you to negotiate repairs or factor in potential renovation costs before finalizing the purchase.

  • Peace of Mind: Knowing the condition of the home provides peace of mind as you embark on your homeownership journey.

  • Negotiation Leverage: If the inspection reveals significant issues, you can use them as leverage to negotiate a lower purchase price or request repairs from the seller.

The cost of a home inspection is a small investment compared to the potential financial burden of dealing with unforeseen repairs down the line.

Closing the Deal: Understanding the Process

Closing refers to the final stage of the home buying process, where all the paperwork is signed, and the ownership of the property is officially transferred to you. 

Here's a breakdown of what to expect:

  • Reviewing the Closing Documents: Carefully review all closing documents, including the mortgage agreement, title deed, and closing disclosure. Ensure you understand all terms and conditions before signing.

  • Finalizing Payments: Be prepared to make the down payment, closing costs, and any remaining balance on the purchase price at closing.

  • Homeownership Begins: Once all documents are signed and payments finalized, you officially become a homeowner! Congratulations!

Pro Tip: Having a lawyer review the closing documents is an additional step some buyers choose to ensure everything is in order.

FAQs: Your CMHC First Time Home Buyers incentive related Questions Answered

1. I don't have a large down payment. Can I still buy a home?

Absolutely! While a down payment is essential, several programs and strategies can help you bridge the gap. Explore the options mentioned earlier, like the Home Buyers' Plan (HBP), down payment assistance programs, or creative strategies like house hacking.

2. What are the ongoing costs of homeownership besides the mortgage?

Besides the mortgage payment, you'll be responsible for property taxes, homeowner's insurance, and utilities. Budgeting for these ongoing costs ensures you can comfortably manage your homeownership finances.

3. Is it a good idea to buy a house right now?

The housing market fluctuates. Conduct thorough research, understand your financial situation, and consider your long-term goals before making a decision. Consulting a financial advisor can be beneficial for personalized guidance.

4. What if I get cold feet during the process?

It's normal to have some doubts. Carefully assess your financial situation and comfort level. Don't hesitate to seek advice from a real estate agent, mortgage professional, or financial advisor if needed.

5. How can I make homeownership more affordable?

There are ways to make homeownership more manageable. Consider factors like location, property size, and potential energy efficiency of the home. Explore first-time homebuyer programs and compare mortgage rates from different lenders.

Remember, homeownership is a significant financial commitment. By planning, saving diligently, and utilizing available resources, you can navigate the process confidently and achieve your dream of owning a home.

We hope you enjoyed our tips and strategies for pursuing alternative options and pursuing new tips relative to the news of the  CMHC First Time Home Buyers ending.

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