As compared to previous years, an average young person needs to toil harder to make his homeownership dream come true. According to a 2022 report, a person needs to work full-time for 22 years to save a 20% down payment on an average-priced home in Canada.
The prices of houses for sale in Barrie are also not looking favourable for first-time homebuyers. The average price of a house in Barrie in 2018 was $497,824 while in 2023 the average price is currently at $951,231. Thus, the home prices in Barrie have increased by over 91%, pushing away homeownership dreams even further.
This has led to a majority of aspiring homebuyers thinking - should I drop down my homeownership dream?
NO, you shouldn’t!
You don’t have to close the book on homeownership yet. The government extends many first-time homebuyer incentives in Barrie for aspiring homeowners who are struggling to save for a down payment. With the help of these funds, you can cover the downpayment on the home as well as the closing costs you will need to hand over to seal the deal.
Scroll down below to learn about the first-time homebuyer programs available for aspiring homeowners in Barrie!
What It Takes to Be Eligible for First-Time Home Buyer Programs in Barrie?
You can qualify as a first-time homebuyer in Barrie under the following circumstances -
- You must be 18 years or older.
- You must be either a citizen of Canada or must have permanent residency.
- The properties or homes for sale in Barrie you are looking at and are planning to buy must be within the city or in Canada.
- You cannot have possessed a home in the last four years.
- In case you are buying the house with a spouse or common-law partner (who is not a first-time homebuyer), you must not have resided in a house they owned in the last four years.
- You need to make the property your primary residence for at least one year from the purchase date.
Quick Overview of the Most Popular First-Time Homebuyer Incentives in Barrie
First-Time Homebuyer Incentive (FTHBI)
The FTHBI program was launched by the Canada Mortgage and Housing Corporation (CMHC) in September 2019. It is an interest-free loan that eligible homebuyers can use for their down payment and lower their monthly mortgage payments.
As per the First-Time Homebuyer Incentive, homebuyers can get up to 5-10% of the total cost of the home. This loan amount needs to be returned to the government within 25 years or when you sell the home (whichever happens first).
The First-Time Homebuyer Incentive is like a shared equity mortgage. This means the government has a share in the equity of your home.
By increasing the down payment amount, the FHTBI can help first-time homebuyers save a significant amount of money in mortgage payments. However, most people are claiming that this government initiative doesn’t really help homebuyers. This is because while the FTHBI program is categorised as an interest-free loan, the government has a share in the equity of the home.
So, if the price of the home appreciates, you will have to pay more than the borrowed amount. This will happen anyway since the prices of houses for sale in Barrie have been increasing steadily over the given years.
Also, the total borrowing amount from the First-Time Homebuyer Incentive is capped at $480,000. This cap is much lower given the high cost of housing in Barrie.
Home Buyers’ Plan
Home Buyers’ Plan is one of the most helpful first-time homebuyer incentives in Barrie that was launched in 1992. Under this program, you can withdraw money from your Registered Retirement Savings Plan (RRSP) to buy your first home. But yes, you will have to return the money you borrowed from the RRSP within 15 years. Eligible first-time homebuyers can withdraw a maximum amount of $35,000 in a single tax year from the RRSP.
First Home Savings Account (FHSA)
The First-Home Savings Account is a new first-time homebuyer incentive in Barrie which was officially launched on April 1, 2023. Combining the features of both a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP), this savings account plan helps aspiring homeowners save for the down payment of their first home.
Homebuyers who are eligible for the program must first open a First Home Savings Account in any financial institution. You can go to a financial institution in Barrie that offers TFSAs and RRSPs such as banks, credit unions, and life insurance companies. After you open the account, you can deposit funds for the down payment of your house.
But the amount of money you contribute to the First Home Savings Account has a limit. In the first year after you open the account, you can contribute only up to $8,000. In case you cannot put in funds up to the given limit in a year, the unused amount will get carried over to the next year. The lifetime contribution limit to the First Home Savings Account is $40,000. Just like an RRSP, contributions made to the First Home Savings Account are tax-deductible.
When you start hunting for houses for sale in Barrie, submit a request to the FHSA account issuer. If you are deemed qualified to make the withdrawal, you will receive the savings which you can put toward the down payment of the house.
Turn Your Barrie Homeownership Dream into Reality with First-Time Homebuyer Programs!
With the rising prices of houses, saving for the down payment, closing costs, and other expenses of your first home may be looking nearly impossible. You may be even compelled to call it quits on your homeownership dream.
This is where the first-time homebuyer incentives in Barrie come in! By taking advantage of these programs, you can easily buy a place you can call your own in Barrie without stretching your finances too thin. So, explore the above-mentioned first-time homebuyer programs and decide which one meets your needs the best.