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
or refinance.

– 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!

Example 1:

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

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.

Example 2:
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
constructed home.

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.

My Opinion:


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