What is it?

The First-Time Home Buyer Incentive (FTHBI) is a government program that helps first-time home buyers* reduce their monthly mortgage payment without increasing their down payment.

 

HOW DOES IT WORK?

First you need to determine if you’re eligible for the incentive by seeing if you meet the eligibility criteria.





If you’re eligible for the FTHBI program, the Government of Canada helps with your mortgage by lending you 5% of the value of your home when you buy an existing residential property or a newly constructed or existing mobile home, or 10% of the value of your home when you buy a newly constructed residential property.

The FTHBI is an interest-free 2nd mortgage[1] and must be repaid after 25 years or when the property is sold. The repayment amount is calculated based on the value of your home at that time. You can also repay the FTHBI in full at any time without penalty.

You’re not required to notify the Canadian Mortgage and Housing Corporation (CMHC)—the program administrator—of any renovations you make to your home. However, keep in mind that those renovations could considerably increase the value of your home and therefore the amount you have to repay after 25 years or when you sell your home.

You can apply for the FTHBI right away, provided your closing date (the date the sale of the property becomes final and you’re the new legal owner) is on or after November 1, 2019. However, it must also be before March 31, 2024.

To access the FTHBI, your loan must be insurable by one of the 3 authorized mortgage insurers in Canada: Canada Guaranty, CMHC or ?Genworth.

 

ELIGIBILITY CRITERIA

Do you meet these criteria?

1)      *You must be a first-time home buyer, which means you must meet the following criteria:
2)      You must meet the minimum down payment requirements. This is 5% of the first $500,000 of the lending value and 10% of the remainder. Your down payment must come from traditional sources, which means:
3)      Your total qualifying income must not exceed $120,000 per year. Qualifying income corresponds to the total income from all borrowers/co-borrowers registered in title. If you buy a property with 2 to 4 units, the rental income from these units must be factored into the maximum total qualifying income of $120,000 per year.

4)      Your Mortgage to Income (MTI) ratio must not exceed 4.0.




Does your property meet these criteria?

1)      The property must be your primary residence.

2)      The property must be located in Canada and be accessible year-round.

3)      The amount of property insurance on your home must be not less than 100% of the full replacement costs of the building(s) with coverage against at least fire and other standard perils.

 

GOOD TO KNOW:

• Your FTHBI will be paid at the time of closing of your first mortgage.
• You’re responsible for all legal and other costs associated with the registration of the FTHBI.
• You must adhere to the documentation and retention requirements of your mortgage insurer.
• In the event of your death, your spouse or child is authorized to assume the obligations under the FTHBI without triggering a repayment.
• You can transfer your first mortgage from one financial institution to another without affecting your FTHBI. However, the terms and conditions of your first mortgage cannot be modified.
• Transferring the incentive and the first mortgage to another property is considered to be a sale, and the FTHBI will have to be repaid.

 

EXAMPLE OF FTHBI CALCULATION:

HOW TO APPLY FOR THE FTHBI:

Fill out the application forms and bring them to your lender, who will complete your submission.

 

Legal documents and forms

FTHBI Information Package – SEM (PDF) – To be completed by the borrower and submitted to the lawyer/notary

FTHBI – Attestation and consent (PDF) – To be completed by the borrower and submitted to the financial institution

To activate payment of the incentive, you must call 1-833-974-0963 and provide the name of the lawyer or notary who will be handling the transaction. You must provide this information as quickly as possible, no later than 2 weeks prior to the closing date.

 

FOR MORE INFORMATION

First-Time Home Buyer Incentive Program – Highlights (PDF)

First-Time Home Buyer Incentive Program – Application Process – Interactive Illustration (PDF – Download)

FTHBI - Operational Policy Manual (PDF)

FTHBI – Questions and Answers (PDF)

 

 

We’re here to help with all your mortgage needs. Call us today!

[1] Your 1st mortgage is the loan you take out from a financial institution to purchase your home.

[2] This period begins on January 1st of the fourth year before the incentive is funded and ends 31 days before the date the incentive is funded. For example, if the incentive will be funded on November 1, 2019, the 4-year period begins on January 1, 2015 and ends on September 30, 2019.