First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a federal shared-equity program that reduced the mortgage a first-time buyer needed by having the government contribute part of the down payment in return for an equity share in the home. It was administered by the Canada Mortgage and Housing Corporation (CMHC) and was intended to lower the mortgage balance, and therefore the monthly payment, for eligible buyers.

How the shared-equity structure worked

Rather than charging interest, the program took a percentage ownership stake in the property. The contributed amount went toward the purchase in addition to the buyer's own down payment, so the buyer still had to supply the minimum down payment from their own resources. The size of the equity share varied by property type — a larger share was available for a newly built home than for a resale home — and current figures should be confirmed with CMHC, since the program is no longer open to new applications.

The incentive was registered as an interest-free second mortgage. No ongoing payments were required on it. It became repayable when the home was sold or at the end of the amortization period, and it could also be repaid earlier in some circumstances. Because repayment was generally tied to the home's value at that time, the amount owing could be higher than what was originally advanced if the property had appreciated.

Why it mattered to borrowers

Because the incentive reduced the mortgage principal, it also lowered the loan-to-value ratio. A smaller mortgage generally meant a smaller default insurance premium, less total interest over the amortization period, and a better chance of passing the federal mortgage stress test. The trade-off was that the borrower gave up a share of future appreciation and had to meet income, purchase price, and insured-mortgage limits, which varied by region.

Available only to first-time buyers, as the program defined them.
Required an insured mortgage, so CMHC rules applied.
The home had to be owner-occupied.
The borrower's qualifying amount had to fall within the program's limits.

Current status and alternatives

As of the current year, the incentive is not accepting new applications. First-time buyers commonly turn instead to the First Home Savings Account (FHSA) and the Home Buyers' Plan (HBP), which are tax-assisted savings and withdrawal mechanisms rather than equity sharing. A guide to first-time home buyer programs in Canada compares the options.

Frequently asked questions

Is the First-Time Home Buyer Incentive still available?

As of the current year, the program is not accepting new applications, so a first-time buyer cannot obtain a new incentive. Anyone who previously received one still has to repay it under the original terms when they sell the home or reach the end of the amortization period. Confirm the current status on the CMHC website.

Does the First-Time Home Buyer Incentive have to be repaid?

Yes. It was a shared-equity second mortgage, not a grant. The amount owing was generally based on the home's value at the time of repayment, so it could be more or less than the original contribution. It became payable when the property was sold or at the end of the amortization period.

Could the incentive be combined with the Home Buyers' Plan or an FHSA?

Generally yes. The incentive reduced the mortgage amount, while the Home Buyers' Plan allowed tax-free RRSP withdrawals and the First Home Savings Account allowed tax-deductible contributions with tax-free withdrawals for a qualifying purchase. Each program had its own rules, so eligibility and timing should be confirmed with CMHC and the CRA.