Hamilton Residents Not Likely to Qualify for Government Incentive
If you were hoping the First-Time Home Buyer Incentive (FTHBI) would be your key to the Hamilton-Burlington real estate market, you will need to head back to the drawing board.
The FTHBI has been in effect for a little over a week now, but a recent report from Zoocasa finds that the average homebuyer in Hamilton-Burlington likely won't be able to take advantage of it.
Designed to alleviate mortgage costs for first-time home buyers, the FTHBI will take a bite out of monthly payments by providing shared equity loans (from the Canadian government) of five per cent toward the down payment of a resale home, and five or 10 per cent for newly built homes.
By boosting the size of buyers' down payments, the FTHBI is meant to cut down monthly mortgage costs, offering some relief on the costs of homeownership.
To qualify for the FTHBI, home buyers must satisfy the following:
- At least one person in the household must be a first-time homebuyer, meaning they have not owned a home, or dwelled in a home owned by their spouse, over the last four years. (An exception is made for buyers who've had a breakdown of a marriage or common-law relationship.)
- Buyers must have a minimum five per cent down payment saved in order to qualify for an insured mortgage.
- Buyers' combined household income cannot exceed $120,000. This includes the income of any guarantors co-signing on the mortgage, as well as any rental income generated if part of the home is tenanted out.
- The buyers' Mortgage-to-Income Ratio (MTI) cannot exceed four times their income, including the portion that's provided by the FTHBI. This means that the maximum amount an eligible buyer can borrow is $480,000.
The FTHBI's income and MTI caps have been a source of contention since the program was unveiled earlier this year; based on the criteria, a household earning the maximum income of $120,000 and making a five per cent down payment would be limited to a resale home purchase price of $505,000 - an amount too low to have much traction in larger markets.
In Hamilton, that will barely get you an East End starter home and in Burlington — well, at those numbers it would be virtually impossible to find a detached home.
The Zoocasa report finds that he FTHBI may be an option in the majority of the nation's major urban centres; a study of July 2019 average prices in 25 markets across the nation finds homebuyers could feasibly qualify for the incentive in 19 cities.
Six markets where the average home buyer would not qualify for the FTHBI include homes for sale in Toronto and several nearby markets which includes Hamilton-Burlington.
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