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Details about the First Time Home Buyer Incentive Program

In the market to buy your first home? Here’s a great incentive.

Being able to afford a home in Canada can be a challenge. Thankfully, the Government of Canada is helping make it a little easier with Canada’s First-Time Home Buyer Incentive.

Introduced in September 2019, this incentive makes buying a home more affordable and accessible for everyday Canadians by financing a portion of their home through a form of shared equity mortgage with the Government of Canada, administered by CMHC.

It’s designed to lower mortgage payments without increasing the down payment. Plus, there’s no interest, ongoing payments and no prepayment fees.

So how does it work?

Essentially, the incentive is a shared equity mortgage, which means the government will have a shared investment in the property. When it comes time to pay it back, the amount will fluctuate with the value of your home.

You’ll need to pay back your First-Time Home Buyer Incentive in full when you sell your home or after 25 years, whichever comes first. If you happen to come into some unexpected cash like a bonus or inheritance, you can choose to pay back your incentive in full any time you want without a prepayment penalty.

How much can you save?

Let’s say you want to buy a newly built home for $500,000. The minimum down payment (5%) would be $25,000. Your mortgage amount without the incentive would be $475,000. Since it’s a new construction home, you would get $50,000 (10%) with the incentive. That would lower your mortgage amount to $425,000.

In this example, the incentive would lower your monthly mortgage costs by $285/month, and more than $3,420 a year.

* Not including the mortgage default insurance premium reduction impact. With a higher down payment, you could benefit from a lower mortgage default insurance premium. Example is using an Annual Percentage Rate (APR) of 3.47%, and amortization of 25 years. For illustration purposes only.

How do you know if you qualify for Canada’s First-Time Home Buyer Incentive?

Here’s a look at who’s eligible as a first-time homebuyer and what you need to qualify:

  • You must be a Canadian citizen, permanent resident, or non-permanent resident who is legally authorized to work in Canada.
  • At least one homebuyer must be a first-time homebuyer with one of the following qualifications:
    1. Has never purchased a home before
    2. Has gone through a breakdown of a marriage or common-law partnership (even if/when the other first-time homebuyer requirements are not met)
    3. In the last 4 years, has not occupied a home that the homebuyer or homebuyer’s spouse or partner owned
  • You must have a maximum qualifying household income of $120,000 with a total borrowing amount that does not exceed 4 times the qualifying income (for example, if your qualifying income is $100,000 a year, then your incentive plus the mortgage amount cannot be more than $400,000.)
  • You must have a down payment from your own resources (such as savings or RRSP) of at least 5%, to less than 20% of the total purchase price including the incentive.


How much money can you get?

That all depends on the type of home you’re buying. You’ll be able to borrow either 5% or 10% of your home purchase price depending on the property type:

  • 5% for a first-time buyer’s purchase of a re-sale home
  • 5% or 10% for a first-time buyer’s purchase of a new construction home
  • 5% for a new or re-sale mobile/manufactured home

The next step

Want to learn more about Canada’s First-Time Home Buyer Incentive and how to get into a home you love and can afford? BMO mortgage specialists will work with you to help you make the right decision based on your needs and lifestyle.

Looking for more information? Take their mortgage calculators for a spin, or view their latest rates and special offers.


* The Canadian Mortgage and Housing Corporation (CMHC) is the administrator of the program and handles all inquiries.

1 – The program will be ready to receive Incentive applications on September 4, 2019. If approved for the Incentive, the purchase transaction must close on or after November 1, 2019. ®TM Trademarks of Bank of Montreal.