Federal First Time Home Buyer Incentive Program

The enhanced housing affordability measures introduced in the federal budget in March are not expected to have a significant effect on home prices. The increase in the registered retirement savings plan withdrawal limit to $35,000 from $25,000 has been in effect since it was announced. The First-Time Home Buyer Incentive – a three-year, $1.25 billion shared equity mortgage program whereby the Canadian Housing and Mortgage Corporation (CMHC) will co-invest up to five per cent of the purchase price of an existing home – is expected to begin in September.  The program is expected to help young Canadians afford a first home closer to urban centres.

The First-Time Home Buyer Incentive helps first-time homebuyers without adding to their financial burdens. Eligible first-time homebuyers who have the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.

For many Canadians, especially young people and first-time buyers, finding an affordable place to call home is not just a challenge – it feels like an impossibility. There aren’t enough houses for people to buy, or apartments for people to rent. That makes finding a good place to live too expensive and beyond what many people, especially younger Canadians, can afford.

This initiative is designed to help young Canadians access home ownership in a fiscally responsible and affordable way. Statistically this is the demographic group with the lowest percentage of homeownership.

What properties are eligible? 

The Incentive is to help first-time homebuyers purchase their first home. Eligible residential properties include:

  • new construction
  • re-sale home
  • new and re-sale mobile/manufactured homes 
  • Residential properties can include 1 to 4 units

Types of residential properties include:

  • single family homes
  • semi-detached homes
  • duplex
  • triplex
  • fourplex
  • town houses
  • condominium units

Incentive by Property Type

  • New Construction 5% or 10%
  • Existing Home 5%
  • New or re-sale mobile/manufactured home 5%

Who can apply? 

  • Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada
  • Borrowers must have a maximum qualifying income of $120,000
  • Total qualifying income must be $120,000 per year  or less
  • This is subject to qualifying income requirements set out by lenders and mortgage loan insurers At least one borrower must be a first-time homebuyer, as per the definition below.

What is a qualifying income?

To be eligible for the FTHBI the combined qualifying income on your application cannot be higher than $120,000. That means whether you are applying by yourself, with a friend or a spouse you have to add your qualifying income and make sure it is less than $120,000.

Here are a few examples of qualifying income:

  • annual salary (before taxes)
  • investment income
  • rental income

What are the terms of repayment? 

The first-time homebuyer will be required to repay the Incentive amount after 25 years or when the property is sold, whichever comes first.

The homebuyer can also repay the Incentive in full at any time, without a pre-payment penalty. Refinancing of the first mortgage will not trigger repayment.

Before selling the property, the homebuyer must obtain approval of the sale from the Program Administrator. For more information consult the Operational Policy Manual, section 7.12.

How is repayment calculated?

  • If a homebuyer receives a 5% Incentive, the homebuyer will repay 5% of the home’s value at repayment.
  • If a homebuyer receives a 10% Incentive, the homebuyer will repay 10% of the home’s value at repayment.

What if I am unable to pay back both my first mortgage and the Incentive when I sell my property?

The Program Administrator will work with borrowers who are experiencing financial hardship on a case-by-case basis to offer solutions to the repayment requirements.

Are there other costs involved with the First-Time Homebuyer Incentive?

The Incentive may be associated with additional costs:

  • Additional legal fees: Your lawyer is closing 2 mortgages so you may be charged higher fees.
  • Appraisal fees: To repay your incentive, you may need to have an appraisal done to value determine the fair market value of your home.
  • Other fees: Additional fees may be incurred throughout the life cycle of the incentive, like switching your first mortgage to a new lender or refinancing your first mortgage.


If you want to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price). 

Under the First-Time Home Buyer Incentive, You can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.

This lowers the amount you need to borrow and reduces the monthly expenses.


As a result, your mortgage is $228 less a month or $2,736 a year.  

Ten years later, you sell the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.

This would result in Anita repaying 10%, or $42,000 at the time of selling the house.

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