The New CMHC First Time Buyer Incentive 2019

August 29, 2019

New CMHC First Time Home Buyer Incentive

The First-Time Home Buyer Incentive launches September 2, 2019*


To access key documents homebuyers will need to review before they apply. –> SIGN UP HERE


How does it work?
The Incentive enables first-time homebuyers to reduce their monthly mortgage payment without increasing their down payment. The Incentive is not interest bearing and does not require ongoing repayments.

Through the First-Time Home Buyer Incentive, the Government of Canada will offer:

  • 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

Am I Eligible?

There are a few qualifiers to apply for this incentive:

  • you need to have the minimum down payment to be eligible
  • your maximum qualifying income is no more than $120,000
  • your total borrowing is limited to 4 times the qualifying income

If you meet these criteria, you can then apply for a 5% or 10% shared equity mortgage with the Government of Canada. A shared equity mortgage is where the government shares in the upside and downside of the property value.

Who can apply? 

  • Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada.
  • Borrowers must have a maximum qualifying income of $120,000
    • Total qualifying income must be $120,000 per year  or less
    • This is subject to qualifying income requirements set out by lenders and mortgage loan insurers
  • At least one borrower must be a first-time homebuyer

What are the terms of repayment? 

The first-time homebuyer will be required to repay the Incentive amount after 25 years or when the property is sold, whichever comes first. The homebuyer can also repay the Incentive in full at any time, without a pre-payment penalty. Refinancing of the first mortgage will not trigger repayment.


Let’s look at a specific example**
Anita wants to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price).

Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.

This lowers the amount Anita needs to borrow and reduces the monthly expenses.

As a result, Anita’s mortgage is $228 less a month or $2,736 a year.

Ten years later, Anita sells the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.

This would result in Anita repaying 10%, or $42,000 at the time of selling the house.


To access key documents homebuyers will need to review before they apply. –> SIGN UP HERE


Other major changes to housing rules any First-Time Home Buyer should know

  • In July 2019, the Bank of Canada lowered its qualifying rate from 5.34% to 5.19%, marking the first time the rate has dropped since September 2016. This decrease takes some of the pressure off first-time homebuyers and potentially makes it slightly easier for those with uninsured mortgages to qualify for a mortgage.
  • The 2019 federal budget increased this withdrawal limit from $25,000 to $35,000 (up from $50,000 to $70,000 for a couple). The increased limit is meant to give first-time homebuyers greater access to their RSPs to purchase or build a home.

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* The program will be ready to receive Incentive applications on September 2, 2019 (barring any unforeseen circumstances). The first closing will take effect on November 1, 2019. 

** These examples are for illustrative purposes only.  Anita will need to repay the incentive at 10% of the fair market value when they sell the property or after 25 years, whichever comes first. All property values and home prices used in this example are not an indicator on how property values are forecasted