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First-Time Home Buyer Incentive program explained

UPDATE: As of March 31, 2024, the First-Time Home Buyer Incentive will be discontinued. Read our post “Federal government cancels the First Time Home Buyer Incentive” to find out more.

The federal government announced in March a new mortgage equity sharing program intended to help first-time home buyers enter the housing market, but scant details were available until recently. The Canada Mortgage and Housing Corporation (CMHC) finally came out with details in June that explains how the first time home buyer incentive works

Essentially, the government will be giving an additional interest free loan to some first time home buyers in Canada, which only needs to be paid back after 25 years or when the home is sold. Instead of interest, borrowers are required to repay the loan as a percentage of the home’s value when sold, or what its fair market value is after 25 years. If the house ends up being worth less than the purchase price, then that is also reflected in the paid-back amount.

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Since borrowers will be adding the loan to their own savings, they will be able to take out a smaller mortgage, and thus have lower monthly payments. It will allow first-time borrowers to purchase with a lower income than would be the case otherwise, and make home buying more affordable. In exchange, buyers are essentially giving the government equity in their home.

The program will officially roll out in September of this year.

To be eligible, home buyers must qualify for a high-ratio mortgage and have a household income of less than $120,000. They must have at least a 5 per-cent down payment saved and their mortgage must not exceed four times their income. That means their mortgage is capped at $480,000 and the house purchase price is capped at $505,000 (maximum income of $120,000 times four, plus a 5 per cent down payment of $24,000).

This purchase price cap is why this program is unlikely to help buyers in either Toronto or Vancouver.

Sold house prices in Toronto and Vancouver have topped $1.3 million dollars in the last five years or so, and only condo units are available at under half a million dollars. Even detached houses in the former boroughs, houses for sale in North York, Etobicoke and Scarborough exceed a $1 million. 

In fact, according to new data from Zoocasa, there are only 13 out of Toronto’s 35 MLS district neighbourhoods where condos are available for under that purchase price ( to see exactly which neighbourhoods, check out the infographic below).

Instead, this program may prove valuable for first-time home buyers in less expensive parts of the country, such as the prairies, the eastern provinces, Ottawa and Montreal. is a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings on the website or the free iOS app.