The 2019 first-time home buyer incentive explained

The 2019 Federal Budget includes what could be a very attractive pitch for prospective first-time home buyers. In short, it could see Canada's housing agency contribute up to 10% of the purchase price of a home, bringing down the mortgage amount for borrowers.

Sharing the cost lowers the borrowing amount

The First-Time Home Buyer Incentive is a shared equity mortgage that will give eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home with Canada Mortgage and Housing Corporation (CMHC).

The incentive aims to reduce monthly payments

First-time home buyers who have the minimum down payment may apply to finance a portion of their home purchase through a shared equity mortgage with CMHC. The incentive will reduce the monthly payments required to buy a new home or condo. This will give first-time home buyers greater flexibility both in purchasing a home and managing its ongoing costs.

The incentive will reduce the monthly payments required to buy a new home or condo

Who is this incentive for?

CMHC will offer qualified first-time home buyers a 10% shared equity mortgage for a newly constructed home or a 5% shared equity mortgage for an existing home. This incentive will be available to first-time home buyers with household incomes under $120,000 per year. At the same time, participants’ insured mortgage and the incentive amount cannot be greater than four times the participants’ annual household incomes.

Pay $228 less per month on a new $400,000 condo

The following example is adapted from the 2019 budget plan and illustrates how the First-Time Home Buyer Incentive will work.

how the First-Time Home Buyer Incentive will work

In this example, John is seeking to buy a new condo for $400,000 at Wellington West Lofts. Under the First-Time Home Buyer Incentive, John can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) from CMHC, lowering the total amount he needs to borrow.

John pays $228 less in mortgage payments every month

Compared with an insured mortgage, the CMHC First-Time Home Buyer Incentive would enable John to pay $228 less in mortgage payments every month. John can use these savings to invest in his future, such as buying a home better suited to his needs, paying down his insured mortgage sooner, or having more monthly disposable income. When John sells her condo in the future, CMHC is repaid.

More helpful home buying articles

Whether you’re a first time home buyer or seasoned real estate investor when you’re looking to buy a home, there are often many things you need to consider and questions you need answered. Here are some additional articles you may find helpful.

Updated information

New information has been released. Please see this recent article for further clarification.

New details released about the First Time Home Buyer Incentive program