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Incentive Program for First-Time Homebuyers​

As a first-time homebuyer, the chance of purchasing your first home may seem impossible. However, you shouldn’t get discouraged by how much money is required to buy a house and making monthly mortgage payments. Why? Because the Government of Canada has an incentive for first-time homebuyers. This Incentive helps reduce your mortgage payments without adding to your financial responsibilities and without increasing the amount, you must save for a down payment. 

How? By providing you with up to 5% or 10% additional down payment on the purchase of your property. This means that if the purchase price is $200,000, you may be eligible to receive an extra $10,000 or $20,000 towards your downpayment.

Here's a breakdown of how much the Government of Canada will provide:

  • 5% or 10% for a newly constructed home
  • 5% for a resale (existing) home 
  • 5% for a new or resale mobile/manufactured home
New House

One of the benefits of the First-Time Home Buyer Incentive Program is that there is no on-going repayments are required. The Incentive is not interest bearing. It is, however, a shared-equity mortgage with the Government of Canada. 

What’s the catch? There’s isn’t. You must repay the Incentive after 25 years, or when the property is sold, whichever comes first. You can also repay the Incentive in full any time before. Unlike a conventional mortgage, you can repay this Incentive without a pre-payment penalty.

What does this “shared-equity mortgage” look like?

  • If you receive a 5% Incentive, you will have to repay 5% of the home’s value at repayment.
  • If you receive a 10%, then you will have to repay 10% of the home’s value at repayment.

The amount you have to repay is based on the property’s fair market value at the point in time where repayment is required. Thus, if your property’s value increases to $400,000, then you would have to pay back $20,000 (5%). However, if your property’s value decreases to $200,000, then you would have to pay back $10,000 (5%). 

To qualify for the Incentive, you must be a first-time homebuyer. You must also have the required minimum down payment (5%). Your total annual household income is less than $120,000, and your maximum loan must be less than 4 x your income. Additionally, you have to purchase your first home with the intent to live in it, which means investment properties are not eligible. 

Last but not least, your first mortgage must be more than 80% of the value of the property. Plus, your mortgage must qualify for mortgage loan insurance through either Canada GuarantyCMHC or Genworth.

Not sure if you are a #propertyvirgin? Here’s what qualifies you as a first-time homebuyer?

  • You have never purchased a home before
  • You have gone through a breakdown of a marriage or common-law partnership
  • In the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned
Moving to a new house

The program is already in force, and the first wave of applications has already been received from September 2, 2019, and took effect on November 1, 2019. If you’re interested and want to know more about the First-Time Home Buyer Incentive Program, click on the button below.