The First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive helped qualified first-time homebuyers reduce their monthly mortgage payments without adding to their financial burdens.

The First-Time Home Buyer Incentive was a shared-equity mortgage with the Government of Canada, which offered 5 or 10% of the home’s purchase price to put toward a down payment. The shared equity component of the incentive means that the government shares in both the upside and downside of the property value, up to a maximum gain or loss equal to 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment. 

By obtaining the Incentive, the borrower would not have to have saved as much of a down payment to be able to afford their mortgage payments. The effect of the larger down payment was a smaller mortgage and, ultimately, lower monthly costs.

The homebuyer will have to repay the Incentive based on the market value of the home at the time of repayment equal to the percentage (for example, 5% or 10%) of the original home value used to determine the Incentive, up to a maximum repayment amount equal to:

1. where the home’s value has appreciated, the Incentive plus a maximum gain of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment; or
2. where the home’s value has depreciated, the Incentive minus a maximum loss of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.

The homebuyer must repay the Incentive after 25 years, or when the property is sold, whichever comes first. The homebuyer can also repay the Incentive in full any time before, without a pre-payment penalty.

Learn about the First-Time Home Buyer Incentive

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Guides

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