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Your Ultimate Guide to First-Time Home Buyer Incentive

The Canadian government has long been a proponent of affordable housing, and in an effort to encourage more people to buy homes, it has introduced a new incentive program for first-time homebuyers.

Dubbed the First-Time Home Buyer Incentive, this program provides qualified buyers with a shared equity mortgage worth up to 5% of the purchase price of a new home. This shared equity mortgage is interest-free and can be repaid at any time or when the home is sold— whichever comes first. The idea behind the program is to help reduce the financial burden of buying a home, making it more accessible for first-time buyers and bringing hope to Canadians who are looking to enter the housing market.

So, if you are on your journey to homeownership, let’s take an in-depth look at how the First-Time Home Buyer Incentive works and how you can qualify.

Who is eligible for the First-Time Home Buyer Incentive?

The Canadian government understands the struggles of first-time homebuyers, and has made an effort to assist them by introducing the First-Time Home Buyer Incentive (FTHBI). The FTHBI is a shared equity mortgage program that aims to make it easier for first-time homebuyers to purchase their first home in the Edmonton housing market—without having to save for a large down payment.

To be eligible for the FTHBI, you must meet all of these requirements:

1. Be a first-time homebuyer (meaning you haven’t owned a home or had an ownership interest in a home in the past four years)
2. Be a Canadian citizen and have the legal right to live in Canada permanently
3. Have your mortgage pre-approved by an insured lender (meaning you have been assessed for creditworthiness and affordability by an approved lender)
4. Have saved at least 5% of the purchase price of your new home as a down payment (not including any incentives from the Government of Canada or any other government)
5. The purchase price of your home is another determining factor, as it cannot exceed four times your household income or 4.5 if you live in Vancouver, Toronto, or Victoria.

How To Apply for the First-Time Home Buyer Incentive

Now that you know who can apply, let’s look at how to actually apply. The first step in applying for the FTHBI is to pre-qualify with a lender; once you have your pre-approval letter, you must then complete and submit an application to Canada Mortgage and Housing Corporation (CMHC). There are two different ways you can do it. You can submit your application online yourself or let your lender submit your First-Time Home Buyer Incentive form on your behalf. Once your application has been approved by CMHC, they will send a confirmation of approval to your lender. Your lender will then give you an estimate of what kind of shared equity mortgage you qualify for so that you can make sure it fits within your budget and purchase price requirements.

Now, all there is left to do is call 1 (855) 844-4535 to initiate the transfer of the approved incentive for your new home purchase. With your approval in hand, you will be able to go ahead and start a new journey.

What Is the Expanded First-Time Home Buyer Incentive?

Homeownership is a prized Canadian dream but saving up for a down payment can be tough, especially for first-time buyers. To address this issue, the Federal government recently announced an expansion to the First-Time Home Buyers Incentive (FTHBI) program. Revised in May 2021 with newly implemented criteria, FTHBI now allows for an annual income of $150,000 and a mortgage amount of up to 4.5-time household’s salary for individuals living in metropolitan areas of Vancouver, Victoria, and Toronto.

Is the First-Time Home Buyer Incentive Worth It?

Being interest-free and not having to pay back the loan for 25 years sounds like a great deal. At first glance, it may seem like a no-brainer, but it’s important to look at all of your options before deciding if it’s right for you. With so many variables involved in buying a home-like location, price, time frame, and size—there are always things that need to be considered when taking out any type of mortgage. Here are some significant factors to take into account before applying:

You Could Pay Back More Than You Originally Borrowed

The incentive is designed so that borrowers won’t pay back more than they originally borrowed. However, if someone were to sell their house in the future and there was equity in the house, they would need to pay back any profits made from selling the property. So, if you were to sell your home for a profit in the future (which many homeowners do), this could be an issue.

Finding an Eligible Property Can Be Quite Difficult

This program is only eligible for buyers with a household income of no more than $120,000 a year. Also, the home you’re looking to buy must have a purchase price of less than $ 480,000. If you earn more than the maximum or are looking at buying a more expensive property, it’s probably best to look at other programs that might suit your needs better. As of now, this incentive doesn’t offer great financial benefits for people who are close to being able to afford their dream home—so you might be better off saving up until you can afford it outright or look into other programs with similar incentives.

Extra Costs

There are always extra costs when buying a home—like legal fees, purchase taxes, and moving expenses. These will all be the responsibility of the borrower and must be paid in addition to a down payment. The First-Time Home Buyer Incentive can lower those costs but can’t cover all of them.


In conclusion, there are many things to consider when looking at a mortgage program. It’s important to research all of your options and determine what works best for you. There’s no point in taking out a mortgage that isn’t suitable for your lifestyle or needs.

If you need more information about the topic or any other questions about mortgages, don’t hesitate to contact us.

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