First Time Home Buyers Incentive Canada

Today we are going to be taking a look at Canada’s First Time Home Buyers Incentive Program.

We are a team of highly experienced real estate agents and we would love to share our expertise with you.

In this post, we’ll be breaking down this program and showing you how you can use it to help you purchase your home or condo. So let’s get started.

First Time Home Buyers Incentive

Learn all about the First Time Home Buyers Incentive and how it can help you

First Time Home Buyers Incentive: What It Is

Purchasing your first home can be difficult, especially when it comes to financing it. The First Time Home Buyers Incentive is a Government of Canada program designed to make it easier for eligible first-time home buyers to purchase a home.

Through the program, you can borrow 5 or 10% of the purchase price of your home from the government through a shared equity mortgage

When you sell your home, you pay the government back the same percentage that you borrowed. This means that the government will share in both the positives and the negatives of your property’s value.

For example, if you purchased your home for $400,000 and the government gave you 5% to make that purchase, then they would have given you $20,000. 

If you later sell your home for $500,000, then you will need to pay the government back 5% on $500,000 or $25,000. On the other hand, if you sell your home for only $350,000 then you pay back 5% of the $350,000 or $17,500.

Purchase Price:
Government Gives You (5%):
If You Sell Your Home for:
Pay Government (5%):
If You Sell Your Home for :
Pay Government (5%):


buying your home

Through the incentive program, the government will give you 5-10% of the property value

First Time Home Buyers Incentive: Who It Applies to

The First Time Home Buyers Incentive is for people who are buying their first home. You qualify as a first-time home buyer if:

  • You have never purchased your own home before.
  • You haven’t lived in a home that you or your current spouse or common-law partner purchased in the previous four years. The four year period is counted from January 1st of the fourth year before the incentive is funded and ends 31 days before the date the incentive is funded.
  • Your marriage or common-law relationship has recently broken down, regardless of whether or not you meet the previous two requirements.
first time home buyers

You can qualify for the incentive if you have never purchased a home before

First Time Home Buyers Incentive: Qualifications for Being Considered

In addition to being classified as a first-time home buyer, you must also meet a few additional conditions in order to qualify, including:

  • You need to have a total annual qualifying income of less than or equal to $120,000
  • The total amount that you are borrowing is not greater than 4 times your qualifying income
  • Either you or your partner needs to be a first-time homebuyer
  • You must be a Canadian citizen, permanent resident, or non-permanent resident who is authorized to work in Canada
  • You must also have a minimum down payment that comes from traditional funds such as savings, withdrawal or collapse of a Registered Retirement Savings Plan, or a non-repayable financial gift from your relative or immediate family member

You'll need to enough enough money saved for a minimum down payment

First Time Home Buyers Incentive: How the Program Works

The Incentive Is a Second Mortgage on Your Home

The First Time Home Buyers Incentive works like a second mortgage on your home. In order to qualify for it, your first mortgage:

You Do Not Pay an Insurance Premium on the Incentive

The money that you receive through the incentive program will be included as part of your down payment and you don’t need to be paying a mortgage loan premium on that amount.

first home

You'll need to have enough money saved for a minimum down payment

The Type of Home You Buy Affects the Amount You Receive

The type of property that you choose to purchase will affect the percentage that you are given through the incentive. The incentive percentages are as follows:

If you are building a new home: 5% or 10%
If you are purchasing an existing home: 5%
If you are purchasing a new or existing mobile or manufactured home: 5%

The higher percentage for a new home construction reflects the desire of the government to encourage new builds due to the overall current housing shortage especially in larger Canadian cities.

The following types of residential properties can qualify for the incentive:

  • Single family homes
  • Semi-detached homes
  • Duplexes, triplexes and fourplexes
  • Town Houses
  • Condominium units
  • Mobile homes
condo ownership pitfalls

Condominium units qualify for the incentive

You Need to Live in Your Home

In order to qualify for the First Time Home Buyers Incentive, your property needs to be:

  • Located in Canada
  • Suitable for full-time occupancy all year round
  • Your personal home that you live in and not an investment property

How to Repay the Incentive

You will need to repay the full amount of the incentive if you sell your home or after 25 years, whichever comes first. In addition there are other cases when the incentive will need to be paid back. These include:

  • If you break up with your co-borrower and you want to buy them out. If you need additional insured funds to do this then you will have to pay back the incentive in full
  • If you decide to port your mortgage
  • If there is a partial release of security on your property
  • If you change the intended use of the property – for example if you decide to rent it out
family home

You need to live in the house you buy

How to Apply for the First Time Home Buyers Incentive

If you are eligible for the incentive, there are a few steps you need to take in order to apply for it.

Step 1: Get pre-approved for a mortgage and find the home that you want to purchase.

Step 2: Fill out the following two application forms and give them to your lender.
FTHBI – SEM Information Package (PDF)

SEM Attestation and Consent Form (PDF)

Step 3: Your lender will submit your application on your behalf.

Step 4: Once you have received the final signed copy of your shared equity mortgage package, give it to your lawyer to keep for you.

*Note: You may need to pay higher fees to your lawyer because you are actually getting two different mortgages on your property.

Step 5: Call First Canadian Title at 1-833-974-0963 as soon as you receive your acceptance in order to activate your incentive. You will need to give them the name of your lawyer.

*Note: You will need to do this at least two weeks before your closing date.

kw condo living

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Wanting to buy your first home or condo? We’re here to help. A condo is a great way to get into home ownership. If you are looking to buy a condo, contact the professionals at Real Condo Experts. 

We are a team of highly experienced real estate professionals who specialize in helping our customers buy and sell condos in Kitchener, Waterloo, Cambridge, Guelph, Woodstock, and Stratford. 

We can help you find your perfect home or investment property. Contact us today to start your search.

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