The First-Time Home Buyer Incentive (an overview)
This piece was originally published on December 9, 2020, by Tim Bennett and was updated on March 3, 2026.
The First-Time Home Buyer Incentive (FTHBI) was a federal program introduced in the 2019 budget to help first-time buyers lower their monthly mortgage payments. Administered by the Canada Mortgage and Housing Corporation (CMHC), the program contributed 5% to 10% toward a home purchase, which reduced the size of the buyer’s mortgage. In exchange, the government held the same percentage of the stake in the home. When the home was sold, or after 25 years, the buyer had to repay the government based on the home’s value at that time.
Why was the FTHBI discontinued?
The First-Time Home Buyer Incentive was officially discontinued on March 31, 2024, after years of lower-than-expected participation. When it launched in 2019, the federal government projected it would help 100,000 families purchase a home, but uptake fell far short of that target.
One of the main criticisms of the FTHBI was its strict income and borrowing limits. To qualify, household income generally had to be $120,000 or less (later increased to $150,000 in Toronto, Vancouver, and Victoria), and the total mortgage plus incentive amount could not exceed four times the borrower’s income (4.5 times in select cities). In Canada’s higher-priced markets, these caps significantly limited what buyers could afford.
While the incentive reduced monthly mortgage payments, it did not help buyers increase their down payment savings or meaningfully expand purchasing power in expensive markets. Because it was structured as shared equity, some buyers were also hesitant to give up a portion of future home appreciation.
What can first-time home buyers use instead in 2026?
Although the first-time home buyer incentive has ended, several other federal and provincial programs are still available to help Canadians purchase their first home, without giving up equity.
- First home savings account: Using an FHSA, Canadians can contribute up to $8,000 per year, with a lifetime limit of $40,000. Contributions are tax-deductible, similar to an RRSP. Funds grow tax-free, and withdrawals for a qualifying first home purchase are completely tax-free, like a TFSA. Unlike the former FTHBI, there is no shared equity component — buyers retain 100% ownership of their home.
- RRSP home buyers’ plan (HBP): This plan allows first-time buyers to withdraw up to $60,000 from their RRSP to put toward a home purchase. The withdrawn amount must be repaid to the RRSP over 15 years, to avoid it being taxed as income. For buyers who already have retirement savings, the HBP can provide a significant down payment boost.
- GST/HST new housing rebate: Buyers purchasing a newly constructed home may qualify for the GST/HST New Housing Rebate, which refunds a portion of the federal sales tax paid on the property. Eligibility depends on the purchase price and whether the home will be used as a primary residence.
In addition to federal programs, many provinces and municipalities offer first-time buyer incentives, such as land transfer tax rebates or local down payment assistance programs. Availability and eligibility vary by location.
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Is there any scenario where the FTHBI still applies?
Yes, it still applies to buyers who previously received the incentive and remain in the program. For those participants, the original terms continue to apply. The incentive must be repaid either when the home is sold or after 25 years, whichever comes first. Because it was structured as shared equity, the repayment amount is based on the home’s market value at the time of repayment, not the original amount received. Participants may choose to repay the incentive early without penalty, but the repayment must be made in full. If the home has increased in value, the repayment amount will be higher; if it has decreased, the amount owed may be lower.