What Is the First-Time Home Buyer Incentive and How Does It Work?
If you’re buying your first home in Canada, the First-Time Home Buyer Incentive could help reduce your monthly payments — without increasing your down payment. It’s one of the most talked-about government programs, but many first-time buyers still don’t fully understand how it works.
Let’s break it down.
What Is the First-Time Home Buyer Incentive?
This federal program is a shared equity mortgage, where the government offers 5% or 10% of the purchase price of your home to boost your down payment. You repay the same percentage — not a fixed dollar amount — when you sell the home or after 25 years.
Example:
Buy a $500,000 home with a 5% incentive ($25,000). If you later sell the home for $600,000, you repay 5% of that value — $30,000.
Who Qualifies?
You may be eligible if:
- You’re a first-time buyer
- Your household income is under $120,000 (or $150,000 in high-cost areas)
- Your mortgage is less than 4x your qualifying income
- You meet the minimum down payment requirements
Pros and Cons
Pros:
- Lower monthly mortgage payments
- No interest or ongoing payments on the government’s portion
- Helps you qualify for a more affordable mortgage
Cons:
- Shared equity means the government profits if your home increases in value
- You must repay within 25 years or when you sell
- Limited to homes under a certain price threshold
Is It Right for You?
It depends on your goals. If reducing your monthly payments is your top priority and you’re comfortable with the shared appreciation, the incentive may be a smart move. But if you expect your home to rise significantly in value, consider whether it’s worth sharing the future equity.
At Mortgages.ca, we help first-time buyers across Canada understand the First-Time Home Buyer Incentive and navigate the process with confidence. Contact us today for personalized advice.