Mortgage Professional First-Time Home Buyer Incentive Toolkit | Place to Call Home
Skip to main content
 

Mortgage Professional First-Time Home Buyer Incentive Toolkit

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 a down payment lowers mortgage carrying costs, making homeownership more affordable.

HOW DOES THE INCENTIVE HELP ME HELP MY CLIENTS?

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 a down payment lowers mortgage carrying costs, making homeownership more affordable.

This incentive helps 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 DO I NEED TO KNOW ABOUT THE INCENTIVE?

  • The total amount of funding will be $1.25 billion over 3 years.  
  • The Government of Canada assumes the risk and shares in the upside and downside of the property value upon repayment. 
  • The Incentive is a second mortgage on the title of the property. There are no regular principal payments. It’s not interest bearing and has a maximum term of 25 years.
  • A port is considered a sale and that will trigger repayment of the incentive.

Mortgage highlights:

  • Mortgages must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth. The first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium.
  • The 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. The Incentive amount is included with the total down payment.
  • Mortgage loan insurance premiums may vary depending on the mortgage loan insurer and may be subject to provincial taxes. 
  • Total borrowing is limited to 4 times the qualifying income. The combined mortgage and Incentive amount cannot exceed 4 times the total qualifying income.  (This doesn’t include the  amount for the mortgage loan insurance premium.)
  • The maximum threshold for debt service ratios is subject to requirements by lenders and mortgage loan insurers, and only applied on the first mortgage.
  • The first mortgage can be switched to a different financial institution without having to repay the Shared Equity Mortgage Loan (‘the Incentive’). The terms of the first mortgage can’t be altered in this case.

Down payment requirements

  • The minimum down payment is 5% of the first $500,000 of the lending value and 10% of the lending value above $500,000.
  • For properties with 3-4 units, the minimum down payment is 10%.
  • Borrowers must meet 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).

Repayment Details

  • The borrower must repay the Incentive after 25 years or when the property is sold, whichever comes first.
  • The homebuyer can repay the Incentive in full at any time, without a pre-payment penalty. 
  • Before selling the property, the borrower must obtain approval of the sale from the Program Administrator. For more information, consult the Operational Policy Manual, section 7.12.
  • Repayment is based on the percentage of the Incentive received and the property’s fair market value when repayment is required.
  • 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.
  • Refinancing of the first mortgage will not trigger repayment.
  • Porting will trigger repayment of the Incentive.

IS THERE ANY DOCUMENTATION I CAN USE?

Use these informational pieces to help your clients understand more about the incentive.

Program - Highlights (PDF)

Application Process - Interactive Illustration (PDF - Download)

Operational Policy Manual (PDF)

Questions & Answers (PDF)

Lender Checklist (PDF)

First-Time Home Buyer Incentive Examples


Use these application forms and legal documents to help your client apply for the incentive.

FTHBI - SEM Information Package (PDF) - For borrowers to use, solicitors to retain this document

SEM Attestation and Consent Form (PDF) - For borrowers to use, lenders to retain this document

Still have questions about the First-Time Home Buyer Incentive?

Call us at

1-877-884-2642.

 

 See what actions we are taking in response to COVID-19.