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Canada’s First-Time Home Buyer Incentive: Shared Equity Mortgage and More

First 20Time 20Home 20Buyer 20Incentive First-Time Home Buyer Incentive
Canada's First-Time Home Buyer Incentive: Everything You Need to Know!

Canada’s First-Time Home Buyer Program, New Immigrants to Canada!

If you are thinking about buying your first home, but are not sure if you can afford it, here is how Canada’s First-Time Home Buyer Incentive can help make your dream of home ownership a reality.

Today, we’ll discuss the First-Time Home Buyer Incentive Program in Canada and how you may take advantage of it to reduce the initial cost of buying a home.

Canada’s First-Time Home Buyer Incentive Program was introduced in September 2019 and revised in May 2021 to extend the eligibility requirements for the Toronto, Vancouver, and Victoria metropolitan areas.

To facilitate the First-Time Home Buyer process more affordable and accessible for Canadians by financing a part of their home through a shared equity mortgage with the Government of Canada, and administered through the Canada Mortgage and Housing Corporation CMHC. That means both you and CMHC share the ups and downs of the property value. I will discuss this in more detail when we get to the repayment section.

Let’s dive deeper and learn everything you need to know about Canada’s First-Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is a shared equity mortgage with the Government of Canada, that provides 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. This means the government of Canada will help you finance part of your first home, without increasing your financial burden.

First-time homebuyers buying a home in Toronto, Vancouver, or Victoria area. Meaning 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 times their qualifying income.

What is Census Metropolitan Areas (CMA &  CA) Learn more here

You might also want to look at First-Time Home Buyer Incentive

In addition to First-Time Home Buyer Incentive, the Government of Canada offers two more incentives to help first-time home buyers, the Home Buyers’ Amount tax credit, and the Home Buyers’ Plan (HBP), In addition to these federal initiative, the majority provincial governments offer First-Time Homebuyers land transfer tax rebates.  Canada Mortgage and Housing Corporation also provides mortgage loan insurance.

If you’re a first-time homebuyer, you may qualify for a low-interest loan from the federal government. This loan amount is dependent on the purchase price of the home and varies by property type.  This helps first-time homebuyers by decreasing their monthly payments without requiring a larger down payment. Additionally, there is no need to be concerned with paying interest, monthly payments, or prepayment penalties.

How does the First-Time Home Buyer Incentive lower my mortgage payments?

Let’s say you got your ideal home and it costs $200,000. You have $10,000 saved, which covers a 5% down payment (a minimum requirement for the First-Time Home Incentive).  The remaining $190,000 must be financed through a mortgage.

Imagine you get a First-Time Home Buyer Incentive for 10% of the purchase price on a new property, that’s $20,000. This will lower the total mortgage amount from $190,000 to $170,000, which in turn lowers your monthly mortgage payments by approximately $114 per month (Monthly mortgage payment amount is based on today’s mortgage qualifying rate of 4.79% and 25 years amortization and the Annual Percentage Rate (APR) of 3.5% per annum and 25 years Amortization), This amounts to a yearly savings of about $1,300. Mortgage default insurance premiums might be reduced if a larger down payment is made.

How can you benefit from the First-Time Home Buyer Incentive?

If you’re buying a home in Canada for the first time, you may be eligible for the incentive subject to program requirements.

To be eligible, you must be a Canadian citizen, a permanent resident, or a non-permanent resident who’s legally authorized to work in Canada. 

At least one home buyer must be a first-time home buyer and the combined yearly income of all borrowers must be $150,000 or less for a property purchased in the Greater Toronto Area, Vancouver and Victoria or $120,000 or less for a property purchased in the rest of Canada.

At least 5% of the down payment must come from conventional down payment sources. This could be from your savings, your Registered Retirement Savings Plan (R R S P), or a gift from a close relative.

Your combined mortgage and incentive can not exceed 4.5 x 4.5 times your qualifying income if you buy a home in the Greater Toronto Area, Vancouver and Victoria area, or 4 x 4 times your qualifying income if you buy a home anywhere else in Canada. For instance, if your annual qualifying income is $100,000 a year, then your incentive plus the mortgage amount cannot be more than $450,000 in the Greater Toronto Area, Vancouver and Victoria area, or $400,000 elsewhere in Canada.

Keep following points in mind how to qualify for the First-Time Home Buyer Incentive:

You must be a Canadian citizen, permanent resident, or non-permanent resident of Canada with the legal right to work to work in Canada.

You or the person with whom you are buying the home must be a first-time homebuyer.

Your total annual income of all borrowers is either:

$150,000 or less for a property purchased in Greater Toronto Area, Vancouver and Victoria area or

$120,000 or less for a house purchased elsewhere in Canada

You must have at least 5% in traditional down payment sources

The amount of your mortgage including the incentive is limited to either:

4.5 x 4.5 times your combined qualified annual income plus down payment for a property purchased in Greater Toronto Area, Vancouver and Victoria area; or

4 x 4 times your combined qualified annual income plus down payment for a property purchased elsewhere in Canada

What is house eligibility for First-Time Home Buyers Incentive?

You may be qualified for the First-Time Home Buyers Incentive, but, you must also ensure that the home you buy is eligible for the First-Time Home Buyers Incentive.

Single-family homes, semi-detached homes, duplexes, triplexes, and quadplexes, townhouses, condominium units, and mobile/manufactured homes are eligible as well as new construction and resale residential homes.

Up to four units may be included in your house. It must be located in Canada and be suitable and available for full-time, owner occupied, year-round occupancy.

How much money can I get as a first-time home buyer?

First-time homebuyer incentive amounts are conditional on a number of factors. You’ll be able to borrow either 5% or 10% of your home purchase price depending on the property type of your purchase.

How much of an incentive can you expect to receive? That depends upon the sort of property you intend to buy:

Type of property     Percentage of incentive

New construction     5% or 10%

Resale home     5%

Mobile/manufactured home (new and resale)    5%

When do I pay it back the First-Time Home Buyer Incentive?

There are a few conditions that must be met before repayment restarts.  When you sell your home or after 25 years, whichever comes first, you must repay your First-Time Home Buyer Incentive in full. 

However, that’s exactly when repayment is needed.  There is no prepayment penalty if you decide to repay your incentive in full before the end of the term.

This is beneficial if you receive a large sum of money, such as raise, inheritance, or lottery winnings. Just keep in mind that any change in the value of your home will affect how much you have to pay back. 

The First-Time Home Buyer Incentive has no prepayment penalty. That means you won’t be charged any prepayment penalties if you pay it off early. It’s critical to understand that when you repay your incentive, you’ll be paying it back to CMHC, not your mortgage lender.

How much do I need to repay? 

With a conventional loan, you borrow money from a bank and then repay the principal amount plus any accrued interest. The First-Time Home Buyer incentive works in a somewhat different way.

At the time of repayment, you’ll be required to refund the initial incentive percentage (either 5% or 10%) based on the home’s fair market value.

Therefore, if the worth of your home has increased, you will pay more than you initially bought. If your home value has gone down, you’ll pay less.

For example, you received 10% incentive on a house you originally purchased for $400,000. That means the government lent you $40,000.

Now you want to sell that house, and the appraised value has gone up to $500,000. You’ll need to repay the government 10% on the new market value of your home, which is $50,000 (10% of $500,000).

On the other hand, if the appraised value of your home goes down and is now worth $300,000, you’ll need to repay the government $30,000 (10% of $300,000) instead of the original $40,000.

If you are eligible for the First-Time Homebuyer Incentive, buying a home may be more affordable than you thought. It is aimed at reducing mortgage payments for average Canadians without increasing their down payment.  While the incentive is interest-free, it is crucial to know that the amount you will be required to repay will vary based on your home’s market value.

If you have been considering Buying, Selling, or Renting your home or have avoided the notion due to a negative experience, let Arsh Syed, a Real Estate Agent in Toronto, manage the transaction.

His experience and understanding have been indispensable. He desires Toronto’s housing crisis to improve. He wants to establish relationships and spread the word about his exceptional service, increasing the likelihood that renters and property owners would place their faith in him.

Arsh wants property owners to know that by hiring him, they are drastically reducing risks, saving time and saving money.

For further information about his services, please visit or contact (416) 844-2217


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