First-Time Home Buyer Incentive (discontinued)

The short answer

It is over. CMHC’s own page for the program states that the deadline for new submissions has passed and that no new approvals will be granted.

If you are reading about the First-Time Home Buyer Incentive on a blog, a lender’s page or a real estate agent’s site that presents it as something you can use, that page is out of date. Check CMHC’s page directly.

What you can use instead is set out further down this page.

What it was

It was a shared-equity mortgage, which is an unusual structure and worth understanding even now.

The government contributed a percentage of the purchase price toward your down payment — a larger share for a newly constructed home, a smaller one for a resale home or a mobile or manufactured home. That contribution was not a grant and it was not a conventional loan. It carried no interest and no monthly payment.

Instead, the government took an equity share. When you repaid it, you repaid the same percentage of what the home was worth at that time, not the dollars you originally received. If your home went up in value, you paid back more than you borrowed. If it went down, you paid back less. There was a cap on how far that gain or loss could run in either direction.

Repayment was due when you sold the home, or at the end of a fixed period, whichever came first.

Why it appealed, and why it saw limited uptake

The appeal was straightforward: a bigger effective down payment meant a smaller mortgage, a smaller mortgage default insurance premium, and a lower monthly payment, without an extra monthly obligation.

The catch was the equity share. In a market that appreciates, giving up a percentage of the future value costs more than a low-interest loan would have. And the program’s eligibility rules capped household income and capped the total borrowing relative to that income, which in the GTA excluded a large share of the people it was aimed at — the price cap and the income cap did not stretch far enough for Brampton, Mississauga or Toronto prices.

CMHC ran an internal evaluation of the program. If you want the government’s own read on how it performed, that evaluation is published on the CMHC site.

If you already have one

The program closing does not cancel an existing shared-equity mortgage. If you were approved and closed on a home with the Incentive, your agreement continues on its original terms and your repayment obligation stands.

CMHC has said it will continue to consider post-approval changes for existing participants under the program’s operational policy manual, and it maintains a contact address for participants with questions.

If you are selling a home that carries one, tell your lawyer and your mortgage professional early. The repayment is calculated off the home’s value at repayment, it has to be settled on closing, and it is not a number you want to discover the week before. Get the repayment amount confirmed by CMHC in writing before you set your price expectations.

What exists instead

Nothing has replaced the shared-equity structure. There is no current federal program where the government takes an ownership stake in your home.

What does exist is a set of tools that help with the same problem from different angles: saving the down payment, and reducing the cash you need at closing.

The First Home Savings Account is the closest thing to a direct replacement in effect, because it is the main federal vehicle for building a down payment — contributions are deductible and qualifying withdrawals to buy a first home are not taxed. The Home Buyers’ Plan lets you withdraw from an RRSP for a first home and repay it over time. There is a federal tax credit for first-time buyers claimed on your return, a GST or HST rebate on qualifying new construction, and in Ontario a land transfer tax refund for first-time buyers, with a separate one in the City of Toronto.

None of these is a substitute for the Incentive’s structure. Together they are worth considerably more to most first-time buyers in the GTA than the Incentive was, and unlike the Incentive they do not take a share of your home.

• First Home Savings Account — the main federal down payment savings vehicle.
• Home Buyers’ Plan — withdraw from an RRSP toward a first home, repay over time.
• First-Time Home Buyers’ Tax Credit — claimed on your income tax return.
• GST/HST new housing rebate — for qualifying newly built or substantially renovated homes.
• Ontario land transfer tax refund for first-time buyers, plus the separate Toronto municipal refund.

How to check whether a program is still live

Programs come and go with every budget, and third-party pages take years to catch up. The habit worth building is short.

Find the body that administers it — CMHC, the Canada Revenue Agency, the Ontario Ministry of Finance, your city — and read that body’s own page. Not a lender’s summary, not a news article, not a real estate agent’s blog, including this one. If the administering body’s page does not say the program is open, treat it as closed.

Then check the date on the page. A government page that has not been touched in years is a warning sign on its own.