What to Know about the First-Time Home Buyer Canada Incentive

If you are a first time home buyer canada we have really great news for you! You may be a participant of a special governmental program, for those who are new to mortgages. It is called First-Time Home Buyer Incentive and as you can guess from the title it is very useful for you, especially if you like saving money. 

You do not have to dream about your own house anymore because the government really takes care of you. However, “nothing comes easy”, so there are both advantages and disadvantages. So we will talk about them today, state what the First-Time Home Buyer Incentive is, its alternatives, and other useful information. Stay tuned! 

What Does the Mortgage Consists of

First of all, a mortgage is a pledge of real estate. Mortgage can be used as in the purchase of housing (apartment, residential building, residential premises, etc.) in credit, and for other loans. Mortgage for many citizens is almost the only way to acquire their own housing. With its help, you can buy an apartment, house, garage, etc. on attractive terms. Banks meet clients halfway and develop special programs for various categories of citizens, and the state – support measures in the form of benefits and subsidies.

The mortgage contains different parts like:

  • Down payment (it goes first it. Usually, you can not receive a mortgage without it)
  • Interest (The bank profits from this part)
  • Main part of your loan (The First-Time Home Buyer Incentive helps you with this one, so you need to pay less monthly)

What Is a First-Time Home Buyer Incentive?

Generally speaking, it is a special program that was created in 2019 and modified in 2021 It was created for helping first time home buyer canada. This incentive also can be called shared equity mortgage, where the second part of the contract is the government of Canada. 

As far as it is a governmental program there are no fees and no interest. The amount of money that the federal government will give you depends on the price of a house you are buying. This program helps you to reduce your mortgage payments without increasing your down payment (because most of the down payment is paid by the country). 

Moreover, as far as it is an equal mortgage for both of you, the government and yourself, you both share investments and the ups and downs of the property value. 

Pros and Cons of First-Time Home Buyer Incentive

One of the main reasons to choose this governmental program is that there are no fees and nothing added to the price. So you really save a lot of money and also do not have to pay interest, which is good for those who prefer saving.

Moreover, as long as the government helps you pay your mortgage short term and cheaper in money, so, approximately, you can save 115$ per month, and that can become 1380$ per year, and that’s a lot, isn’t it?

On the other hand, as it is a governmental program, it means that you have no control over the property value. If something happens with your property price, there will be a significant loss for both parties. For example, let’s imagine you buy a house for $500 000 and 5 years later it has dropped to $480 000. In this case, the government will lose $20 000 from it. That is because you have no control over the property value, but you can use it as a great advantage.

Plus, there are some other inconveniences. For example, not every house and every person is suitable for this program. We will tell you about the conditions a bit later. In addition, you need to pay at least 5% of the down payment yourself (but it depends on your financial situation, for a lot of people this is no disadvantage at all).

Let’s revise it a little. 

  • Pros are
    • No fees
    • No interest
  • Cons are
    • Lack of control over the property value
    • Special conditions

Alternatives of First-Time Home Buyer Incentive

Let’s imagine that for some you can not apply for this program as a first time home buyer canada. No matter the reasons this is not a reason to fall into despair yet. There are some other ways to save money on your deal. Let’s talk about them now:

  • You can buy a house that has a mortgage on it already. Because these kinds of houses belong to the banks, they are sold off at very low prices, so if you find something interesting feel free to purchase it with your friends or family members who already have a good credit history. 
  • Another alternative is to purchase a house in which one of you or your family members lives now. You can buy it without any government program, but you do not have to pay all the costs. 
  • This is the simplest and most common way to make a home purchase without help from governmental programs – start saving as much as possible now and pay everything yourself.

It Is Important to Know These Conditions Before Applying for a Program

If you decide to apply, you should be very careful and serious with your application. First-Time Home Buyer Incentive is very popular, but if too many people start applying, the government can cancel it. In this case, nobody will get any help from the government program. 

So as we said at the beginning good things come easy, but because of this fact, they can also go away(just like everything good). It is also important to know that there is a waiting list for who is in the program right now and who wants to apply. It may take you months or even years before you can get in, but that depends on how many people apply and how they are dealt with by the government.

Moreover, not each house is suitable for this kind of program. The house that you are buying must be suitable and available for year-round occupancy. It can be as well as a new home, so re-sale residential, like (semi-detached homes, townhouses, and condominium units). It can also include up to four units.

Am I suitable for a First-Time Home Buyer Incentive?

We will talk about a perfect portrait of a first time home buyer canada who can apply for this program. First of all, he or she needs to be a Canadian permanent resident or at least have a special legal work permit. And as you can guess from the title he or she must be buying a house for the first time. If it is a family and there are several borrowers, then only one of them must not own a home yet.

The second point deals with the combined qualified annual income of all borrowers. It should not exceed 150.000$ for those, who are buying a house in the Greater Vancouver Area (GVA), Census Metropolitan Greater Toronto Area (GTA), and Victoria. Subcase of this situation is another area, so to say – the rest of Canada. In this case, the combined qualified annual income of all borrowers should not exceed 120.000$.

Furthermore, as was mentioned before, you should pay at least 5% of the down payment from traditional down payment sources. As traditional methods you can take into consideration:

  • Credit card
  • Lines of credit
  • Another mortgage
  • Your savings
  • A gift from relatives

In order to qualify for the incentive, the total amount of your mortgage including the incentive is limited to 4.5×4.5 times the qualifying income for a property purchased in the Census Metropolitan GTAG T A, GVAG V A, and Victoria, and 4×4 times the qualifying income for a property purchased in the rest of Canada. For instance, if your qualifying income is $100,000 a year, then your incentive plus the mortgage amount cannot be more than $450,000 in the Census Metropolitan GTAG T A, GVAG V A, and Victoria area, or $400,000 in the rest of Canada.


Let’s revise one more time. In order to qualify for this program, the following conditions should be met:

  • You have never been a homeowner or you have never owned a home in which you’ve paid down at least 20%.
  • Home has to be in Canada. 
  • Your total household income is $120 000 or less per year and it includes your spouse/common-law partner and everyone in the household. 

Mortgage payments cannot exceed 40% of your total household income. This means if your mortgage payments are $1,500 per month, 35% is $525 and $1,500 is 55% of $525, so 40% of your income would be about $800 per month.

That’s all we wanted to talk about today. We hope that now you know what this program is, its conditions, and how it can affect your life. We know it may be hard to get in, but if there are no other ways, feel free to apply. We wish you good luck. 

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