The first-time home buyer incentive

Home ownership is now more affordable thanks to a new initiative.

First-time homebuyers who meet certain criteria can benefit from the First-Time Home Buyer Incentive, which lowers their monthly mortgage payments without increasing their financial constraints.

Using a shared equity mortgage with the Government of Canada, the First-Time Home Buyer Incentive provides:

  • 5% or 10% off the price of a newly built home for a first-time buyer
  • 5% for the purchase of a resale (existing) home by a first-time buyer
  • 5% for the purchase of a new or used mobile/manufactured home by a first-time buyer

With respect to the incentive’s shared equity component, the government will partake in both the gains and losses associated with the value of the property, subject to a maximum gain or loss of 8% per year (not compounded) on the incentive amount from the date of advance until the date of repayment.

The borrower may not need to save as much money for a down payment if they are able to receive the Incentive and afford the mortgage payments. A smaller mortgage has the result of a higher down payment, which ultimately results in lower monthly expenses.

The incentive must be repaid by the homebuyer based on the market value of the property at the time of payback equal to the percentage (for instance, 5% or 10%) of the original home value used to compute the incentive, up to a maximum repayment sum equal to:

  1. Cases where the value of the residence has increased, the Incentive plus an annual gain on the Incentive amount of no more than 8% (not compounded), from the date of advance until the time of repayment;
  2. The Incentive less a maximum loss of 8% per year (not compounded) on the Incentive amount from the date of advance to the time of repayment when the value of the residence has declined.

After 25 years or, whichever occurs first, when the property is sold, the homebuyer is required to refund the incentive. Additionally, there is no penalty for early repayment if the incentive is paid back in full by the homebuyer at any time.

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