Are You Aware of the New Federal Governments First Time Buyer Incentive Program

Saturday Dec 14th, 2019

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ARE YOU AWARE OF THE  NEW FEDERAL GOVERNMENTS FIRST TIME BUYER INCENTIVE PROGRAM

 

 

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To Be Eligible-

The obvious fact – this Incentive is for First Time Home Buyer with an annual income of $120,000 or less.

Since this is a Federal program, based on the Federal definition, some homebuyers can be First Time Home Buyers more than once in their lifetime.

Terms

The Incentive provides 5% of the purchase price (10% for new houses) as an interest-free loan towards your down payment.  Note that Homebuyers still need at least 5% (6.5% if including closing costs) of their own money — the Incentive simply boosts up their down payment.

Limit

The limit for the home purchase price is $600,000, due to the following criteria:

Loan size (including the incentive, excluding mortgage insurance premium) must be no more than 4 times the homebuyer’s income.  Hence, the maximum will be $120,000 x 4 = $480,000.

Loan-To-Purchase Price must be at least 80% or above.  So the maximum purchase price will be $480,000 / 80% = $600,000.

Each homebuyer's limit will differ depending on his or her circumstances.  The $600,000 figure represents the theoretical maximum limit that a homebuyer may enjoy. 

Repayment

As this benefit is provided in the form of an interest-free loan, it needs to be repaid.  This shall be done when the house is sold; the Incentive shares the profit or loss (think of the Incentive as your silent partner).  If the house hasn’t been sold in 25 years, the loan needs to be repaid also.

 

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