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What you need to know about the First-Time Home Buyer Incentive

Last updated on January 16, 2024

The desire to buy your first home manifests itself, but you don't have the funds to cover all the expenses related to making this dream come true? Since September 2, 2019, the federal government has offered an incentive program to help first-time buyers access to property ownership.

Here's everything you need to know about the First-Time Home Buyer Incentive (FPI).


What is the First-Time Home Buyer Incentive (FPI)?

Administered by the Canada Mortgage and Housing Corporation (CMHC), this first-time home buyer incentive program is intended to help buyers of an eligible home. Concretely, it is a mortgage loan with government participation which offers:

  • 5% to first-time home buyers for the purchase of an existing home;

  • 5% to first-time home buyers for the purchase of a new or existing mobile or manufactured home;

  • 5 or 10% to buyers of a first property for the purchase of a new house.

This loan is interest-free. It therefore makes it possible to reduce buyers' monthly mortgage payments without increasing their financial burden, which places them in an advantageous position to gain access to property ownership. Applications are approved on a first come, first served basis.

Eligibility criteria

This initiative aims to help first-time buyers access property. But be careful, this must be the borrower's first home, and they must intend to live in it. He will still have to assume the minimum down payment required for the purchase and his loan will be limited to 4 times his eligible income. Importantly, this income cannot exceed $120,000.

To qualify for a loan, beneficiaries must also be either a Canadian citizen, permanent resident or non-permanent resident authorized to work. They must meet the minimum down payment requirements from traditional funds (savings, a withdrawal or liquidation from a registered retirement savings plan (RRSP) or a non-refundable gift from a close relative) .

Little toy home next to coins and a piggy bank

What is the amount of the FPI?

The incentive is calculated based on a percentage of the property’s purchase price. It applies to new or existing homes, including mobile and prefabricated homes, and includes properties with 1 to 4 units. The amount offered may be up to 5% of the property value for pre-existing homes or up to 10% for newly-built homes.

For example, the loan for a home valued at $400,000 would be $20,000 if it is a pre-existing property or $40,000 for a new build.

What kind of loan is it?

This is a loan with government participation. That means the government has a stake in the appreciation or depreciation of your future home’s value. For instance, if the property purchased for $400,000 today is sold for $425,000 in 10 years, then the amount to pay back will no longer be $17,500 but $21,250.

Woman smiling while calculating

When does the First-Time Home Buyer Incentive needs to be paid back?

The loan must be paid back when you sell the property or after 25 years, whichever comes first. If you come into some money during that period, you can also pay the loan back at any time, penalty-free.

You should know that if you pay back early or if you still live in your home when it’s time to pay the loan back, then you must get a real estate appraiser’s report to determine the property’s value. If you sell before the 25-year limit, the most recent selling price will generally be used to calculate the amount you must pay back to the government.

Get all the details about the incentive on the First-Time Home Buyer Incentive website. You’ll also find tools to help you determine whether you qualify for the program and to calculate your maximum purchase price. It is interesting to calculate the costs of becoming an owner before carrying out such an exercise.

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