First-Time Home Buyer Incentive

Canada’s First-Time Home Buyer Incentive (FTHBI) helps qualified first-time home buyers reduce their monthly mortgage carrying costs without adding to their financial burdens.

The FTHBI can help a qualified first-time home buyer reduce their monthly mortgage payments by helping reduce their total mortgage price. This $1.25 billion program provides up to an additional 10% of the cost of a home in a non-interest bearing loan to create a shared-equity mortgage. 

Who is eligible?

All first-time home buyers as defined by the Canadian Revenue Agency (CRA) who have a household income of $120,000 or less are eligible.

What is a shared equity mortgage?

A shared equity mortgage is a mortgage in which the Government of Canada has a shared investment in the home and shares in both the upside and downside of the property value.

For example, if at the time you decide to repay your incentive and your home has appreciated by 10%, then your repayment amount will be the original incentive amount plus 10%. The inverse is true if your home depreciates by 10%.

Do I have to pay interest on the incentive amount I receive? 

No. The incentive is non-interest bearing. You can repay the incentive at any time before the end of a 25-year mortgage or when the home is sold. You can only repay the incentive in a one-time lump sum payment.

How does the incentive help?

The FTBHI provides a 5% incentive for an existing home purchase or the choice of 5% or 10% incentive towards the construction of a new home.

Decreasing the total cost of your mortgage from the date of purchase can save you thousands in interest costs over the life of your mortgage

Can I adjust how much of an incentive I receive?

No. If you wish to use the incentive you can only receive a 5% incentive on an existing home or a mobile/manufactured home.

If you are constructing a new home you can choose to receive a 5% or 10% incentive.

You cannot, for example, apply for a 7% incentive.

How do I qualify?

There are several ‘tests’ you must pass to determine if you are eligible for the FTHBI and what the maximum price of the house you wish to purchase can be.

  • You must be a first-time home buyer.
  • You must have a household annual income of $120,000 or less.
  • You must have a minimum personal 5% down payment of the total home price before the incentive is applied.
  • You must pass the CHMC mortgage stress test.
  • You must purchase a home that is less than 4 times your household income, plus your personal down payment.
  • Your mortgage-to-income ratio must be less than 4.0. 
The Canadian Government determines if you are eligible for the FTHBI and not your lender. 

Is there a limit to how much I can spend on a property?

Yes. There are a handful of calculations that determine the total amount you can spend on a home.

To determine the total value of a home you can purchase, multiply your household income by four and add your down payment. Your down payment plus the incentive cannot exceed 20% of the purchase price of the home. This is called your loan-to-value percentage. 

For example, if your household income is $100,000 and you have $20,000 saved for a down payment what will be the maximum price you can spend on a home?

In this example, if you have only $20,000 saved for a down payment you will need to increase your down payment to $21,000 to achieve a minimum 5% down payment or you must decrease your purchase price of your home. If you cannot increase your down payment beyond $20,000 then the maximum price you could pay for a home is $400,000 to maintain a minimum 5% down payment.

Additionally, your down payment plus the FTHBI cannot exceed 20% of the home property value.

How do I calculate my Mortgage to Income Ratio?

To qualify for the First-Time Home Buyer Incentive you need to purchase a property that meets the maximum purchase price criteria outlined above and has a mortgage to income ratio that is less than 4.0. These two calculations will determine what the maximum purchase price of a home can be in order to receive a First-Time Home Buyer Incentive. 

What types of properties can I buy?

 The First-Time Home Buyer Incentive applies to residential properties such as:

  • Single family homes
  • Semi-detached homes
  • Duplex
  • Triplex
  • Four plex
  • Town houses
  • Condominium units

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

How does the incentive lower my monthly mortgage payments?

Decreasing your mortgage principle decreases the amount of interest you pay over the life of a loan. This will lower your monthly mortgage payments. 

For example, let’s compare how much interest you would pay on a 25-year mortgage with a 3% interest rate on a $400,000 property with 5% down payment and a 5% First-Time Home Buyer Incentive.

How do I apply?

We recommend speaking to one of our mortgage experts before you submit your application for the First-Time Home Buyer Incentive. While this program offers benefits, it is important to discuss your financial goals to determine if this program is a fit for you. The First-Time Home Buyer Incentive is operated by the Government of Canada and they determine who is eligible or not. If you are approved for the First-Time Home Buyer Incentive and you wish to use your incentive, we will work with you and the Government of Canada to apply your incentive to your mortgage. 

Book your appointment online to discuss your options and financial goals with one of our experts. 

*Not an official quote or endorsement. Information to be used for learning purposes only and is not an official quote. TCU Financial Group reserves the right to change information at any time. The First-Time Home Buyer Incentive is administered by the Government of Canada and is not a product of TCU Financial Group. Approvals and applications are completed by the Government of Canada. For more information please visit

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