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Insights & advice

What is the First Time Home Buyer Incentive?

Oct 2021 – 15 min read

Key takeaways

  • If you’re a first-time homebuyer, you may qualify for the first-time home buyer incentive (FTHBI).

  • This is a shared-equity mortgage provided by the Canadian government.

  • The FTHBI could help you lower your monthly mortgage payments and make homeownership more affordable.

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What is the first-time home buyer incentive (FTHBI) ?

Buying your first home can be an exciting time – but also an expensive one. To help Canadians with the costs of first-time ownership, the federal government launched the first-time home buyer incentive (FTHBI) in 2019. 

Provided by the Canada Mortgage and Housing Corporation (CMHC), the program offers eligible homebuyers a shared-equity mortgage with the Canadian government. This means the government offers interest-free loans of up to 10% of the purchase price, and in return, they share in any gains or losses of the property value.

With the FTHBI, first-time buyers can reduce their monthly mortgage payments and enjoy substantial savings over time. The amount you could receive depends on the property type you’re planning to purchase Footnote 1.

Property type
FTHBI Amount
A newly built home
5% or 10%
An existing (resale) home


A new mobile or prefabricated (prefab) home


An existing mobile or prefabricated (prefab) home


As the FTBHI is a loan and not a grant, you’ll need to pay it back. You’ll pay back CMHC either when you sell your home or in 25 years, whichever comes first. As with all loans, there a few things to think about when deciding whether to opt for the FTBHI.

  •  You can use the FTBHI to purchase a range of different properties, as long as it’s your primary residence and not an investment property.
  • As the FTBHI is like a second mortgage on the home, your lawyer might ask for more in closing fees when finalizing the sale.
  • There’s no penalty if you want to pay the incentive back early.
  • Choosing this government program might rule you out of being able to use other grants or incentives available at provincial or municipal level.Opens in a new window

How to know if you’re eligible

To be considered a ‘first-time’ homebuyer, you must not have bought a home before, and must not have lived in a home that you or your current spouse/partner has owned in the last 4 years. You’re also considered a first-time buyer if you’re buying after the breakdown of a marriage or common-law partnership.

In addition to this, there’s other government criteria you’ll need to meet before you can apply:

  • You have a combined annual income of less than $120,000
  • You have a down payment of at least 5% of the property’s value
  • Your mortgage is more than 80% of the property’s value
  • Your mortgage is a maximum of 4 times your qualifying income
  • The property you want to buy qualifies for mortgage insurance
  • You’re a Canadian citizen, a permanent resident, or a non-permanent resident with permission to work in Canada
  • You’re buying a home in CanadaOpens in a new window - Opens in a new window, and plan to live in it all year round
  • Remember – if you want to buy a home with a down payment of less than 20%, you’ll need CMHC mortgage loan insurance. This helps protect your mortgage lender in the event you can’t make your payments.

You could use the FTHBI towards the purchase of your property, provided it is a:

  • Detached house
  • Semi-detached house
  • Duplex, triplex, or fourplex
  • Freehold townhouse
  • Condo townhouse
  • Condo apartment
  • A mobile or prefabricated home

Before you close on your property, it’s important to factor in repaying your FTHBI loan.

How do you pay back the FTHBI?

One key thing to remember is that when you repay your loan, you pay back the same percentage you borrowed, not the same amount.

For example, if you borrowed 5% of your property value through the FTHBI, you’ll need to pay back 5% of the property’s price when you sell it, regardless of whether that’s a higher or lower sum than you originally borrowed.

  • The home you bought for $500,000 is now worth $650,000. If you borrowed 10% of the purchase price when you bought your home, you borrowed $50,000 from the FTHBI. However, as the price of your home has since increased, you now need to repay 10% of the $650,000 figure, or $65,000. Similarly, if your home decreases in value and is now worth $450,000, you still need to pay back 10%, which would in this case be $5,000 less than the amount you borrowed.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.