What is The CMHC First-Time Homebuyer Incentive?
It is a $1.25 billion fund administered by the Canadian Mortgage and Housing Corporation (CMHC) over three years will provide 5% of the cost of an existing home and 10% of the price of a new home through what amounts to an interest-free loan to be repaid when the property is sold.
The money would go to first-time home buyers applying for insured mortgages.
The key stipulations & points are:
– Users must have a downpayment of at least 5%, but less than 20%;
– Household income must be less than $120,000
– The purchase price cannot be more than four times the buyers’ household
– The government will own the percentage of increase in equity when you sell
– The loan is repayable at anytime
For example, say you’re hoping to buy a $400,000 home with the minimum
required 5% down payment, which works out to be $20,000. With the new
incentive, you could receive up to $40,000 (for a new home) through the
Now, instead of taking out a $380,000 mortgage, you’d need to borrow only
$340,000. This would lower your monthly mortgage bill from over $1,970 to
less than $1,750.
Homeowners would eventually have to repay this mortgage at re-sale or
refinance CMHC will share in any capital gain (or loss)– receiving 5% or
10% of the sale price (not the purchase price).
These stipulations effectively limit purchases under this plan to
properties to maximum of $533,246.00 with a 10% incentive and $564,705.00 with a 5% incentive. ($480,000 maximum in insured mortgage and incentive, plus the downpayment),
Under this plan you will still have to qualify under the federal stress
You can find your first home here:
Take a look below for further examples and a link to a video where I talk about my opinion!
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
This lowers the amount Anita needs to borrow and reduces the monthly
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
John has an annual qualifying income of $83,125.
To be eligible for Canada’s First-Time Home Buyer Incentive, John can
purchase condominium unit up to $350,000. John has the required minimum
down payment of 5% of the purchase price, $17,500 from savings.
John can receive $35,000 in a shared equity mortgage – 10% of a newly
This would reduce John’s mortgage payments by $200 a month or $2,401 a
Years later, John has decided to sell the condominium unit, but it is now
worth $320,000. When the condominium unit is sold at the price of $320,000,
John will have to repay the incentive as a percentage of the home’s current
value. This would result in John repaying 10%, or $32,000 at the time of
selling the house.