Canada’s First-Time Home Buyer Incentive

What is the First Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is a shared-equity mortgage with the Government of Canada. It helps qualified first-time homebuyers reduce their monthly mortgage payments without adding to their financial burden. 

The offer is as follows:

    • 5% or 10% for a first-time buyer’s purchase of a newly constructed home
    • 5% for a first-time buyer’s purchase of a resale (existing) home
    • 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

Here are some of the eligibility criteria:  

    • Your qualifying household income is less than $120,000. 
    • You are borrowing less than four times your qualifying income. 

Imagine you’re a first-time home buyer looking to purchase a newly constructed home. With the Canadian First-Time Home Buyers Incentive program, you can apply for a shared-equity mortgage with the government of Canada that covers up to 10% of the purchase price.

Now, this isn’t free; it’s a loan. You will lose equity interest in your home based on the mortgage loan granted. The government would now own 10% of your home. When your home appreciates, your equity growth would be 90% instead of 100%.

This program only works because the Canadian government shares in the profits of your home.

The good news? Buyers aren’t charged interest on the loan, and they don’t have to make ongoing payments. 

However, you have to repay the incentive, either when you sell the house or after 25 years—whichever comes sooner. 

With the market continuing in an upward trajectory, this can be an excellent opportunity for first-time homebuyers who want to reach that 20% downpayment mark & avoid mortgage insurance premiums.

Remember, before making huge financial decisions, talk to a qualified professional. Your real estate agent should be able to explain incentives to you in a clear & concise manner, but we also suggest speaking with your accountant or mortgage broker.