First-Time Home Buyer Incentive
The First-Time Home Buyer Incentive helps people across Canada purchase their first home. The program offers 5 or 10% of the home’s purchase price to put toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making homeownership more affordable.
Find out how the program can lower monthly mortgage payments.
NOTE: First-time homebuyers purchasing a home in the Toronto, Vancouver, or Victoria Census Metropolitan Areas are now eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000, and an increased total borrowing amount of 4.5 instead of 4.0 times their qualifying income. Confirm if the home you are looking to buy is part of the Toronto, Vancouver or Victoria Census Metropolitan Area!
Updates to the First-Time Home Buyer Incentive can benefit more homeowners
The Government of Canada will limit its share in the appreciation of a home! Now, homeowners will pay back up to a maximum gain of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
This means that participants may be able to keep more when their homes increase in value
The Government of Canada will also limit its share in the depreciation of a home at the time of repayment. This is up to a maximum loss of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
In the case of appreciation, the above Incentive repayment calculation is retroactive to the implementation date of the First-Time Home Buyer Incentive (September 2, 2019). In the case of depreciation, the above Incentive repayment calculation applies to all borrowers who have signed a shared equity mortgage agreement on or after June 1, 2022.
Already repaid the First-Time Home Buyer Incentive?
You may expect to hear from a CMHC representative via telephone or email shortly.
WHAT IS THE INCENTIVE?
The First-Time Home Buyer Incentive makes it easier for you to buy a home and lower your monthly mortgage payments. This program is a shared equity instrument. It works by getting an extra 5% or 10% of the down payment of your home and then repaying the Government either 5% or 10% of the property’s market value at the time of repayment, up to a maximum repayment amount equal to:
- In the case of appreciation, the Incentive amount plus a maximum gain to the Government of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment; or
- in the case of a depreciation, the Incentive amount minus a maximum loss to the Government of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
Just as the name implies, this incentive is for first-time homebuyers. You’re considered a first-time homebuyer if:
- you have never purchased a home before
- you did not occupy a home that you or your current spouse or common-law partner owned in the last 4 years (the 4-year period begins on January 1 of the fourth year before the Incentive is funded and ends 31 days before the date the Incentive is funded)
- you have recently experienced the breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time home buyer requirements)
AM I ELIGIBLE FOR THE INCENTIVE?
These are a few criteria to determine your eligibility for the First-Time Home Buyer Incentive:
- your total annual qualifying income doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria)
- your total borrowing is no more than 4 times your qualifying income (4.5 times if the home you are purchasing is in Toronto, Vancouver or Victoria )
- you or your partner are a first-time homebuyer
- you are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada
- you meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)
The Incentive is like a second mortgage on your home. Your first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. It also must be eligible through Canada Guaranty, CMHC or Sagen.
The insurance premium is based on the loan-to-value ratio of the first mortgage only. That is, the first mortgage amount divided by the purchase price. You don’t pay mortgage insurance on the incentive – it is included with the total down payment.
The type of home you plan to purchase plays a factor. The table indicates the type of home that qualifies for the incentive and how much of an incentive it may be eligible to receive.
|Property Type||Incentive Amount(%)|
|New Construction||5% or 10%|
|New and existing mobile/manufactured home||5%|
Residential properties can have 1 to 4 units and include:
- single family homes
- semi-detached homes
- town houses
- condominium units
- mobile homes
The bottom line: Your property must be located in Canada and must be suitable and available for full-time, year-round occupancy. Your home is for you to live in and can’t be used as an investment property.
Other details you need to know
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 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.
- Property Insurance premiums: Additional costs may be incurred to account for an additional mortgage registered on the property. Talk to your insurance broker or insurance provider to find out more details.
HOW DO I APPLY FOR THE INCENTIVE?
Once you’ve been pre-approved for a mortgage, found the home you’re looking for and determined you’re eligible to apply for the incentive, it’s time to apply. Simply fill out these 2 application forms to apply for the First-Time Home Buyer Incentive:
Once complete, give these to your lender. They will submit the application for you.
Give the final signed copy of the shared equity mortgage package to your solicitor to retain on your behalf.
When you receive your acceptance, call FNF Canada at 1-(855) 844-4535 to activate your incentive and provide the name of your lawyer/notary. (This must be at least 2 weeks prior to your closing date.)
HOW DO I REPAY THE INCENTIVE?
The Incentive must be paid in full – that is no partial payment – after 25 years or when the home is sold. There are a few ways where changes to the Incentive can trigger repayment:
- You go through a break up and you want to buy out the co-borrower. If this requires additional insured funds, you must pay back the Incentive in full.
- Porting your mortgage will trigger a repayment of the Incentive.
- A partial release of security is considered a sale and will trigger repayment of the Incentive.
Use these informational pieces to understand more about the incentive.
- Repayment Document (PDF): A step-by-step process along with key information.
- Appraisal Document (PDF): Appraisal checklist to be provided to the appraiser in the case of a voluntary repayment or at the 25-year mark.
- Operational Policy Manual (PDF)
- Questions & Answers (PDF)
Borrowers should discuss with their lender if repayment of the incentive is required under certain refinancing situations.
Here’s an example:
Anita wants 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, Anita 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 Anita needs to borrow and reduces the monthly expenses.
As a result, Anita’s mortgage is $228 less a month or $2,736 a year.
Ten years later, Anita sells 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.
HOW DO I KNOW IF MY HOME IS IN THE TORONTO, VICTORIA, OR VANCOUVER CENSUS METROPOLITAN AREA?
Tip: See some examples of how the expanded program works in Toronto, Victoria, and Vancouver
New Toronto, Vancouver, Victoria criteria.
Please use any of the following Statistics Canada tools to
determine if your home falls into the Toronto, Victoria or
Note: All First time home buyer questions should be directed to the program administrator at [email protected]
Statistical Area Classification List and Census Subdivisions
Statistical Area Maps (Interactive)
Statistical Area Maps (PDF)
Postal Code Search (Please note that this tool is for Employment Insurance Economic regions, which are the same as the CMA for Toronto, Vancouver and Victoria. Confirmation of the location of the property will come from the Program Administrator).
Still have questions about the First-Time Home Buyer Incentive?
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