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What is the First Time Homebuyer Incentive?

Mortgage Tips Ahmet Dogan 12 Jun

The first-time homebuyer incentive program is a shared-equity mortgage with the Canadian government that helps qualified first-time buyers reduce their monthly mortgage payments to better afford a home!

First-Time Hombuyer Incentive:

This program allows you to obtain an incentive from the government to assist with your down payment, thereby lowering your overall mortgage amount and, in turn, your monthly mortgage costs.

For a first-time buyer’s purchase of a newly constructed home, the incentive is 5% or 10%.

For a first-time buyer’s purchase of a resale (existing) home, the incentive is 5%.

For a first-time buyer’s purchase of a new or resale mobile/manufactured home, the incentive is 5%.

Qualifying for the Incentive:

This program is designed to assist first-time homebuyers. Therefore, you must meet the following criteria:

  • Have never purchased a home before
  • Have not occupied a home that you, your current spouse, or common-law partner owned in the last 4 years
  • Have recently experienced a breakdown of marriage or common-law partnership

Further qualifications are based on your income and status:

  • Your total qualifying income is no more than $120,000 ($150,000 for homes in Toronto, Vancouver, or Victoria)
  • Your total borrowing is less than four times your qualifying income (four and a half times your income if you’re purchasing in Toronto, Vancouver or Victoria)
  • You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada
  • You meet the minimum down payment requirements

Additional Costs:

With the incentive, there are a few additional costs to be aware of. These include additional legal fees, appraisal fees, and potential fees such as refinancing or switching costs.

Repayment Process:

When it comes to repayment of the incentive, the homebuyer is required to pay back after 25 years or when the property is sold, whichever comes first. Repayment can be made anytime prior to this without penalty. The repayment is based on the fair market value at the time of repayment.

Keep in mind, if you choose to port your mortgage or go through a separation during the term and want to buy out your co-borrower, you will have to repay the incentive sooner.

Click here to learn more about the First Time Homebuyer Incentive and contact me today to get started on your home buying journey!