The CMHC Incentive: Helping First-Time Home Buyers

29 August 2019 by National Bank
CMHC Incentive

Planning to buy your first home? We've got some good news! The Canada Mortgage and Housing Corporation (CMHC) is rolling out a new program: the First-Time Home Buyer Incentive. This incentive will be available as of September 2, 2019 and has a budget of $1.25 billion over the next three years. Interested? Here's what you need to know.

Summary of the incentive

The concept is simple: The government of Canada has rolled out this incentive to support first-time homebuyers by lending them a percentage of the value of the home they want to buy. The incentive complements their down payment, making it possible for them to take out a smaller mortgage loan. Its objective is to reduce the monthly burden on future homeowners by offering assistance that doesn't need to be repaid in the short term or at regular intervals.

Exactly how does it work?

The incentive is a shared equity mortgage representing a percentage of the value of the property. No interest will be charged on the loan, but it must be repaid as a percentage of the property value at resale or by 25 years after purchase.

How is the amount of the incentive determined?

The incentive depends on what type of property is purchased:

New homes 5% or 10% (home buyer's choice)
Existing homes 5%
Mobile/manufactured homes, new or existing 5%

What are the eligibility criteria?

Applicants must meet the following criteria:

  • Be a first-time homebuyer or be divorced/separated or not have lived in a home owned by their current partner/spouse in the past four years.
  • Be a Canadian citizen, permanent resident or temporary resident authorized to work in Canada
  • Have a combined qualifying annual household income up to $120,000.

N.B.: The sum of the mortgage and the incentive must be less or equal than 4 times the cumulative qualifying income of all co-borrowers.   

What types of homes are eligible?

The program is intended to help people buying a first home to live in, not as a rental property. It applies to residential properties with 1 to 4 units, including:

  • Single family homes, semi-detached homes and townhouses
  • Duplexes, triplexes and fourplexes
  • Condominiums

What about repaying the incentive?

Buyers will be permitted to repay the incentive at any time without penalties, but will be required to repay it when they sell the home or after 25 years.

In all cases, the incentive must be repaid in full and the exact amount will be determined by the fair market value of the home. The property will therefore have to be appraised when the incentive is repaid.

Repayment due for a 5% incentive:

5% of the value of the property at the time of repayment

Repayment due for a 10% incentive:

10% of the value of the property at the time of repayment


😍 You're planning to buy your first home, a new apartment with a purchase price of $250,000.

💰  You've saved up the 5% down payment needed, i.e., $12,500.

🤝 You are eligible for an incentive of up to $25,000, equivalent to 10% of the purchase price.

⛅️ That means you won't need to take out as big a mortgage, and will therefore pay less every month. Your loan insurance premiums should also be reduced.

 🔑 Let's say you decide to sell your apartment a few years later. After an appraisal, the property value is estimated at $280,000. You will be required to repay 10% of that new value, i.e., $28,000.

Ready to buy your first home?

Here's how to apply for the First-Time Home Buyer Incentive:

1. Submit a mortgage preapproval request online to determine your borrowing capacity.

2. Next, use the government calculator to verify your eligibility for the First-Time Home Buyer Incentive.

3. Find a home.

4. Once you put in an offer to purchase a home, contact a mortgage advisor to make your plans a reality.

5. Your advisor will draw up your mortgage and incentive applications.
Tip: Complete and sign the incentive application ahead of time to make your meeting with the mortgage advisor go quicker.

6. If your application is accepted, call First Canadian Title (FCT) as soon as possible at 1-833-974-0963. The legal professional you do business with will receive the incentive amount and conclude the transaction with you.

For many first-time buyers, saving for the down payment is a real challenge. With its National Housing Strategy, which encompasses this incentive, the Canadian government wants to encourage homeownership among young people and families. Over the long term, this initiative should also stimulate new construction to combat the housing crisis in major Canadian cities.

Need more information? Ready to apply for the incentive? Check out the CMHC's dedicated site at

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