Search
  • Christianah

First-Time Home Buyer Incentive: more good news for homebuyers

Purchasing a new home comes with a lot of financial commitments and in our previous blog post, we examined how Ontario helps first-time homebuyers reduce the amount of land transfer tax through the land transfer tax refund. In our post today, we would discuss the First-Time Home Buyer Incentive (FTHBI), which is a financial incentive offered by the Government of Canada to first-time home buyers across Canada.


What is the First-Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is a shared-equity mortgage (SEM) whereby the Government of Canada provides homeowners with 5% of the purchase price of a home where it is an existing home, or 5% to 10%, where it is a newly constructed home. This program is very beneficial for homebuyers because it helps to lower monthly mortgage payments and allows a lengthy 25-year payback period with no interest.



Are you eligible for the incentive?

To be eligible for the First-Time Home Buyer Incentive, the homebuyer must be a first-time homebuyer and must not have purchased a home before. Furthermore, the Buyer must be a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada, to qualify for this incentive. Another important requirement is that the Buyer must not have an annual income that exceeds $120,000, or $150,000 where the home is in Toronto, Vancouver, or Victoria. The home in question must not be an investment property, but must be lived in by the first time home buyers. In addition to these requirements, the total amount that can be borrowed is 4 times the maximum qualifying income, or 4.5 times if the home is in Toronto, Vancouver, or Victoria.



How do you apply?

An eligible homebuyer can apply for the incentive once he or she has been pre-approved for a mortgage and has decided on a home. The next step is to fill out two applications forms: the FTHBI-SEM Information Package and the SEM Attestation and Consent Form. These forms should be given to the chosen lender, who submits the forms for the Buyer. It is important to engage the services of a lawyer who could collect the final signed copy of the FTHBI package and assist in processing the incentive. More information can be found in this article.



What should you consider before applying?

There are some important factors to consider before applying for the FTHBI such as additional costs. Since there are two mortgages i.e the mortgage on the property and the shared-equity mortgage, this may mean higher legal fees to close the two.


There may also a need for home appraisal fees as the repayment amount depends on the current property value at the time of repayment.



How do you repay the incentive?

As earlier mentioned, the payback period for this incentive is 25 years but this can be payable immediately in the following circumstances:

  • When the home is sold

  • When there is a partial release of security

  • When the Buyer wants to buy out the interest of a co-borrower

  • When the Buyer transfers his or her existing mortgage to a new property

It is important to note that the incentive must be paid in full and not in installments.


The First-Time Home Buyer Incentive is one of the many incentives provided by the Government of Canada to first-time homebuyers. Other programs include the Home Buyers’ Amount, Home Buyers’ Plan (HBP), GST/HST New Housing Rebate and the most recent, Canada Greener Homes Grant. More details on these programs can be found here.


If you have any questions about eligibility requirements for the First-Time Home Buyer Incentive, kindly book a free consultation with Northview Law on this link, or contact us at 416-639-7639. We look forward to hearing from you soon.