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.

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 mortgage. This means that the government shares in the upside and downside of the property value. It allows you to borrow 5 or 10% of the purchase price of a home. You pay back the same percentage of the value of your home when you sell it or within a 25-year window.

It works like this:

  • You receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000.?
  • You receive a 10% incentive of the home’s purchase price of $200,000, or $20,000 and your home value decreases to $150,000, your repayment value will be 10% of the current value or $15,000.

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)
home

Am I eligible for the Incentive?

These are a few criteria to determine your eligibility for the First-Time Home Buyer Incentive:

  • you have your minimum down payment
  • your total annual qualifying income doesn’t exceed $120,000
  • your total borrowing is no more than 4 times your qualifying income?
  • 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

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 Genworth.

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%
Existing Home 5%
New and existing mobile/manufactured home 5%

Residential properties can have 1 to 4 units and include:

  • single family homes
  • single family homes
  • semi-detached homes
  • duplex
  • triplex
  • fourplex
  • 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.

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.

Repayment Details

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.
  • A change in the intended use of the property.

How do I Apply for the Incentive?

Please Check with Ritesh Jhamb or Call 416 844 6000:

Line 369 – Home buyers' amount

You can claim $5,000 for the purchase of a qualifying home in the year if both of the following apply:

  • you or your spouse or common-law partner acquired a qualifying home
  • you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer)

GST/HST new housing rebate

Find out if you are eligible for the GST/HST new housing rebate

You may be eligible for a new housing rebate for some of the GST/HST paid if you are an individual who:

  • purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
  • purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
  • constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

Qualifying housing also includes mobile homes (including modular homes) and floating homes. For mobile and floating homes, you may have the option to treat your mobile or floating home as a purchased home or as an owner-built home when claiming your new housing rebate.

Copyright - © 2019 Ritesh Jhamb. All rights reserved. Powered By Only4Agents