First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a program initiated by the Government of Canada. It is designed to assist eligible first-time home buyers by providing additional funds for a down payment.

What is the First-Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is a shared-equity mortgage program with the Government of Canada. It provides an extra 5% of the purchase price for a resale home and an extra 5% or 10% of the purchase price for a newly constructed home. This is in addition to your required down payment.

This incentive is not a traditional loan. Instead, it’s a shared equity mortgage, which means that the government shares in the gains and losses of your home’s value. It’s designed to help reduce monthly mortgage costs without increasing the amount needed for a down payment.

How does the First-Time Home Buyer Incentive work?

The incentive works like a second mortgage on your home. This means it’s a loan that’s secured by your property. Unlike a traditional mortgage, however, this loan doesn’t require monthly payments.

Your first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. It also must be eligible through Canada Guaranty, CMHC, or Sagen.

The incentive is interest-free and can be repaid at any time without penalties. However, as a shared-equity mortgage, the amount you repay when your home is sold or after 25 years, whichever is earlier, will be calculated using your original incentive percentage and your home’s current market value.

Eligibility for the First-Time Home Buyer Incentive in Ontario

To be eligible for the First-Time Home Buyer Incentive, you need to meet several criteria:

  • You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
  • Your total annual qualifying income doesn’t exceed $120,000, or $150,000 if you are purchasing property in Toronto.
  • Your total borrowing is no more than 4 times your qualifying income (4.5 times if the home you are purchasing is in Toronto).
  • You or someone you are purchasing the home with may be considered a first-time home buyer if:
    • You have never purchased a home before.
    • You have gone through a breakdown of a marriage or common-law partnership.
    • In the last 4 years, you didn’t occupy a home that was owned by you or a spouse or common-law partner.
  • You meet the minimum down payment requirements with traditional funds such as savings, RRSP withdrawal, or non-repayable financial gift from family.

Understanding the Mortgage Process

When you’re buying your first home, understanding the mortgage process can be overwhelming. Here’s a brief overview to help you understand what to expect:

  1. Pre-Approval: Before you start house hunting, it’s a good idea to get pre-approved for a mortgage. This will give you an idea of how much you can afford to borrow.
  2. House Hunting: Once you know your budget, you can start looking for a home within your price range.
  3. Making an Offer: When you find a home you love, you’ll make an offer to buy it. If the seller accepts your offer, the home will be reserved for you until the sale is finalized.
  4. Home Inspection and Appraisal: During this period, may hire a home inspector to check the home for potential issues. Your mortgage broker might need to order an appraisal to determine the home’s value for the purpose of financing.
  5. Closing: Closing is the final step where all the necessary paperwork and procedures will be finalized by your lawyer, and you will get the keys to your new home!

Tips for First-Time Home Buyers

Here are some tips to help you navigate the home buying process:

  • Save for a Down Payment: Start saving for a down payment as early as possible. The larger your down payment, the less you’ll need to borrow.
  • Check Your Credit Rating: Your credit will significantly impact your mortgage interest rate. Make sure you know how your credit is, and that doesn’t mean just your score, and, if necessary, take steps to improve it before applying for a mortgage.
  • Apply to Get Pre-Approved: Getting pre-approved for a mortgage will give you a better idea of how much you can borrow and show sellers that you’re serious about buying.
  • Hire a Real Estate Agent: A real estate agent can guide you through the process, help you find homes within your budget, and negotiate with sellers on your behalf.
  • Be Patient: The home buying process can take time. Don’t rush into buying a home until you find one that meets your needs and fits your budget.


Buying your first home is an exciting journey. Don’t go through the mortgage process alone. Contact Ltd. today for a free consultation! We can offer you helpful advice on getting a mortgage, current mortgage rates, and assist you every step of the way. For any questions or further assistance, feel free to reach out to us via our website or call us at (519) 252-9665. Your path towards homeownership starts here. Let us be your guide.

Please note that this information is current as of the time of writing and is intended for general informational purposes only. It should not be relied upon as financial advice. Always consult with a mortgage professional for advice tailored to your specific circumstances.

This article was brought to you by Ltd., a licensed mortgage brokerage. Our licensing status with the Financial Services Regulatory Authority of Ontario (FSRA) can be confirmed through this link.

Similar Posts