1. What is the Government of Canada’s First Time Home Buyer Incentive program (FTHBI)?
The FTHBI program enables qualified first-time homebuyer/s (the “Homebuyer”) to reduce their monthly mortgage payment without increasing the amount they must save for a down payment, by providing the Homebuyer with a portion of the purchase price of the home (the “Incentive”). The Incentive is not interest bearing and does not require ongoing repayments.
2. How does the FTBHI Program work?
In exchange for providing this assistance through the FTHBI program, you agree that the Program Administrator will be entitled to share in the upside or downside of the market value of the home at the time of repayment.
3. How much Incentive will the Program Administrator provide?
• re-sale home, 5% of the original home value.
• new construction home, 5% or 10% of the original home value, as requested by the Homebuyer and approved by the Program Administrator.
• mobile/manufactured home, (new construction or resale) 5% of the original home value.
4. What amount is owing under the Incentive at the time of repayment?
• If a Homebuyer receives an Incentive of 5% of the original home value, the Homebuyer must repay 5% of the market value of the home at the time of repayment.
• If a Homebuyer receives a 10% Incentive of the original home value, the Homebuyer must repay a 10% of the home’s market value of the home at the time of repayment.
IMPORTANT: The amount of money that must be repaid to the Program Administrator will be based on the market value at the time of repayment. It may be beneficial to the Homebuyer to repay the Incentive early if the value of the home is increasing quickly. It may also be beneficial to the Homebuyer to repay the Incentive early prior to conducting any major renovations to the home.
Examples of repayment are shown below.
5. When does the Incentive have to be repaid?
The Homebuyer will be required to repay the Incentive after 25 years from the date of the purchase of the home, or when the home is sold, whichever comes first. In the event of a sale, the Homebuyer must notify the Program Administrator in advance and seek concurrence as to the market value of the home. In the event of a prepayment, the Incentive may also be repaid in full, by the Homebuyer at anytime subject to the amount being repaid being approved by the Program Administrator.
6. How do I apply?
Step 1: Read, print and sign the Information Package together with the Canada’s FTHBI Program Attestation, Consent & Privacy Notice both available here
Step 2: Take the executed Canada’s FTHBI Program Attestation, Consent & Privacy Notice with you to your first mortgage lender/mortgage broker.
Step 3: The first mortgage lender/mortgage broker will submit the application to the Program Administrator on your behalf and at your request.
7. What happens next?
Your first mortgage lender/mortgage broker will notify you if you have been approved for the Incentive under the FTHBI program. If your application for the Incentive is accepted, you MUST call 1.833.974.0963 or email FTHBIncentive@fct.ca to notify the closing service provider First Canadian Title (“FCT”) of the name of the lawyer/notary you have chosen to close your deal and to allow the Incentive to be activated and delivery of the required closing documents to be delivered to your lawyer/notary in time for closing. You must provide your lawyer/notary information as soon as you have chosen one and no less than 2 weeks prior to your closing. Once approved, a commitment to fund will be provided by the Program Administrator, which commitment will automatically terminate without further notice 90 days following:
1. for a resale home, the date that is 6 months from the date of the commitment to fund; or
2. for a new build home, the date that is 18 months from the date of the commitment to fund.
8. What if I am purchasing the home with someone else?
If there is more than one Homebuyer then each Homebuyer is jointly and severally (in Québec, solidarily) liable with the other Homebuyer under the shared equity mortgage and associated documents. Any guarantor under the first insured mortgage will also be jointly and severally (in Québec, solidarily) liable with the Homebuyer under the shared equity agreement and mortgage.
9. Who is eligible for the Incentive?
To qualify for the Incentive, the following must apply:
• The Homebuyer’s total qualifying annual income shall be no more than $120,000. If there is more than one Homebuyer, the combined qualifying annual income shall be no more than $120,000.
• Examples of qualifying annual income include salary before taxes and investment income
• Total borrowing is limited to no more than 4 times the qualifying income. The combined first insured mortgage and Incentive amount cannot exceed four times the total qualifying income.
If there is more than one Homebuyer, the combined borrowing is limited to no more than 4 times the combined qualifying income.
• The Homebuyer must be a Canadian citizen, permanent resident or non-permanent resident who is legally authorized to work in Canada.
• At least one Homebuyer (if more than one on title) must be a first-time Homebuyer, as per the definition below:
• they have never purchased a home before; or
• in the last 4 years, they did not occupy a home that they or their current spouse or commonlaw partner owned; or
• they are experiencing a breakdown of a marriage or common-law partnership (in certain cases, even if/when the other first-time Homebuyer requirements are not met). Note: It is possible that you or your spouse or common-law partner qualifies for the Incentive (if you are in a married or common-law relationship) with the 4-year clause even if you have owned a home previously. If in doubt, you should seek legal advice in this regard. However, you (whether as a borrower, co-borrower, or as a guarantor) are only permitted to obtain the Incentive once. The maximum of one Incentive includes any variation of borrower/co-borrower/guarantor (i.e. once an Incentive is advanced to a Homebuyer, that Homebuyer is not eligible for any additional Incentives regardless of any other new first-time homebuyer named on the application).
10. What properties are eligible for the Incentive?
The home must be the Homebuyer’s primary place of residence (in Québec, domicile), be suitable and available for full-time, year-round occupancy and be located in Canada. The home must be a residential property, which includes new construction or re-sale homes: single family homes, semi-detached, duplexes, triplexes, fourplexes, townhouses, condominium units, and mobile/manufactured homes.
11. Do I still need a down payment?
Yes. A minimum down payment of 5% is required from traditional sources such as savings, withdrawal/collapse of a registered retirement savings plan and non-repayable financial gift from a relative/immediate family member. Unsecured personal loans or line of credits are NOT acceptable to satisfy minimum down payment requirements.
12. What are the other requirements for the Incentive?
• The Homebuyer’s first insured mortgage (in Québec, immovable hypothecs) must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth.
• The Homebuyer’s first insured mortgage must be greater than 80% of the value of the home high ratio mortgage) and is subject to a mortgage loan insurance premium.
13. Are there any costs associated with the Incentive?
There is no application or processing fee payable to the Program Administrator. The Homebuyer may be responsible for payment of certain third-party expenses such as for closing services, funding advances and legal costs in connection with the Incentive and associated documents. The Homebuyer is also responsible for payment of administration costs such as costs related to valuing the home at the time of repayment, default management costs and fees for discharging the Incentive. Please visit FTHBI website for additional information about costs.
14. What about renovations?
Upon repayment, improvements will be included when determining the market value, therefore the Homebuyer will have to consider the cost and benefit of the planned renovations, and decide whether to repay the Incentive prior to making any home improvements. IMPORTANT: It may be beneficial to the Homebuyer to repay the Incentive prior to conducting any major renovations to the home.
15. What if I want to refinance the home?
The home can be refinanced without triggering repayment of the incentive, however, the shared equity mortgage will only be postponed to the outstanding balance that would otherwise be owing under the first ranking mortgage (i.e. no equity take-out will be permitted ahead of the shared equity mortgage). Note: The combination of all charges on a refinance must not exceed 80%.
16. Is a mortgage registered against the home?
Yes. A shared equity mortgage securing the Incentive will be registered against the home and will rank behind your first insured mortgage (in Québec, immovable hypothecs).
17. What if I no longer want to receive the Incentive or my circumstances have changed after having applied?
The Homebuyer has the right to cancel their application for the Incentive or their approved Incentive on notice to the Program Administrator given no less than 2 weeks before the closing date. The Homebuyer should also notify their own first mortgage lender as cancellation of the Incentive may affect their financing for the purchase of the home.
18. Where can I obtain more information?
More information on the Incentive can also be found on the following website. You can also contact the First-Time Home Buyer Incentive information line at 1-877-884-2642. You can also contact your lawyer/notary for further information either before applying for the Incentive or when you attend your lawyer/notary to execute the closing documents for your purchase. You may wish to seek legal and financial advice to confirm that the Incentive meets your needs and you are eligible for same.