Canada First-Time Home Buyer Incentive(FTHBI): Eligibility Requirements and Incentive Amount

Canada First-Time Home Buyer Incentive (FTHBI) is a shared-equity mortgage program introduced by the Government of Canada. This initiative aims to make homeownership more affordable for first-time buyers by offering financial assistance towards the down payment, ultimately reducing the monthly mortgage payments.

Canada First-Time Home Buyer Incentive (FTHBI)

Canada First-Time Home Buyer Incentive (FTHBI) provides eligible first-time buyers with either 5% or 10% of the home’s purchase price to be used towards the down payment. This larger down payment results in lower monthly mortgage payments, making homeownership more accessible without increasing financial strain.

Key Aspects of the FTHBI

Aspect	Details
Eligibility	First-time homebuyers with annual incomes of $120,000 or less. The sum of the insured mortgage and incentive amount cannot exceed four times the participant’s qualified annual income.
Incentive Amount	5% of the property value for existing homes. 5% or 10% of the property value for newly constructed homes. 5% for new or resale mobile/manufactured homes.
Repayment	Interest-free loan to be repaid when the property is sold or within 25 years of purchase. The repayment amount is based on the property’s current value at the time of repayment. Shared-equity mortgage: Up to 8% of the value appreciation or depreciation of the property is shared by the government. (not compounded) on the incentive amount.

FTHB Incentive Eligibility

The eligibility criteria for the Canada First-Time Home Buyer Incentive (FTHBI) are designed to support first-time homebuyers who have a certain level of financial need.

Eligibility Requirements

First-Time Homebuyer Status	The incentive is targeted at individuals or families buying their first home, promoting homeownership among new buyers.
Income Limit	Participants must have an annual income of $120,000 or less. This ensures the incentive benefits moderate-income individuals or families who might struggle to afford homeownership without assistance.
Mortgage and Incentive Amount Limit	The total of the insured mortgage and the incentive amount must not exceed four times the participant’s qualified annual income. For example, if a participant has an annual income of $100,000, the combined total cannot exceed $400,000.

These criteria ensure the program aids those in need and promotes responsible borrowing and homeownership sustainability.

How Much is the Incentive Amount?

The incentive amount under the FTHBI varies based on the type of property:

• Existing (Resale) Homes: The incentive is 5% of the property’s value, reducing monthly mortgage payments.
• Newly Constructed Homes: Buyers can choose between 5% or 10% of the property’s value. The higher amount encourages the purchase of newly built properties, stimulating the housing market.
• Mobile/Manufactured Homes: The incentive is 5% of the property’s value, whether new or resale.

Canada First-Time Home Buyer Incentive (FTHBI) is structured as a shared-equity mortgage, meaning the government shares in the appreciation or depreciation of the property’s value. This affects the repayment amount when the property is sold or at the end of 25 years.

How to Repay the Incentive?

Repaying the FTHBI involves understanding the shared-equity mortgage structure:

Repayment Timeline	The incentive is an interest-free loan, repayable when the property is sold or within 25 years of purchase.
Repayment Amount	The amount to be repaid is based on the property’s current value, not the original incentive amount, due to the shared-equity nature.
Shared-Equity Mortgage	The government shares in the property’s appreciation or depreciation, up to a maximum of 8% per annum (not compounded). For example, if the property value increases by 20%, the repayment amount increases by 20% of the incentive amount.
Evaluation of Property Value	An appraisal determines the property’s current value at repayment time to calculate the amount owed.
Combining with Other Programs	The FTHBI can be combined with other federal programs, such as the Home Buyers’ Plan, which allows withdrawals from Registered Retirement savings plans (RRSPs) to construct or purchase a property that qualifies.

How to Apply for the FTHB Incentive

Applying for the Canada First-Time Home Buyer Incentive (FTHBI) involves several steps:

Pre-Approval for a Mortgage	Obtain pre-approval to establish eligibility and the maximum amount you can borrow.
Finding a Home	Locate a home that meets your needs and budget.
Filling Out Required Forms	Complete the “Shared Equity Mortgage Information Package” and the “Shared Equity Mortgage Attestation and Consent Form.”
Submission by Lender	Your lender submits these forms on your behalf. Discuss the process with your lender to ensure accuracy.
Approval and Activation	Upon approval, call FNF Canada at least two weeks before your closing date to activate the incentive.

Conclusion

Canada First-Time Home Buyer Incentive (FTHBI) is a valuable program for first-time homebuyers in Canada, providing financial assistance to make homeownership more affordable. By understanding the eligibility requirements, incentive amounts, repayment process, and application steps, potential homebuyers can take advantage of this opportunity to reduce their monthly mortgage payments and achieve homeownership.

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