What Are First-Time Home Buyer Incentives in Canada?
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UPDATE: The FTHBI program was discontinued on March 21, 2024
Note: The federal First-Time Home Buyer Incentive (FTHBI) was discontinued on March 21, 2024. While this program is no longer available, we’ll explore other beneficial options for first-time homebuyers below.
The now-discontinued First-Time Home Buyer Incentive (FTHBI) was initially designed to help make homeownership more affordable by reducing monthly mortgage payments through a shared-equity loan. This program offered first-time home buyers up to 5% of the purchase price for resale homes and as much as 10% for newly constructed homes. By increasing the buyer’s down payment with this shared equity approach, the FTHBI aimed to lower mortgage costs, allowing buyers to qualify more comfortably under Canada’s strict mortgage qualification rules.
The program was introduced when high Canadian home prices and tighter mortgage regulations—such as the federal stress test—created significant barriers for first-time buyers. While the government intended to help ease some of these challenges, the FTHBI ultimately faced low uptake due to its restrictive eligibility requirements and limited applicability in higher-cost regions, making it impractical for many Canadians.
Although the FTHBI is no longer available, the government’s focus on affordability remains, with other tools like the First Home Savings Account (FHSA) now in place.
Alternative Programs
Since the discontinuation of the FTHBI, first-time homebuyers still have access to several beneficial programs:
First-Time Home Buyers’ Tax Credit (HBTC): Eligible buyers can claim up to $10,000 on their tax return, resulting in a rebate of approximately $1,500.
Home Buyers’ Plan (HBP): First-time buyers can withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to purchase a home, with a 15-year repayment period.
First Home Savings Account (FHSA): This account allows contributions of up to $8,000 annually (with a lifetime limit of $40,000), providing tax-deductible savings and tax-free withdrawals for home purchases.
Provincial and Municipal Incentives
Many provinces and cities offer incentives to support first-time homebuyers in addition to the federal programs available.
Ontario
Land Transfer Tax Refund: First-time homebuyers in Ontario may qualify for a refund of up to $4,000 on the provincial Land Transfer Tax, easing closing costs. Eligibility limits this to Canadian citizens or permanent residents who have never owned a home anywhere.
Municipal Land Transfer Tax (MLTT) Rebate: In Toronto, first-time buyers can receive up to $4,475 back on the MLTT. Eligible first-time buyers who have never owned a home are purchasing within Toronto.
County of Simcoe Homeownership Program: This program provides a forgivable loan of 10% of the purchase price for eligible first-time homebuyers, with a maximum purchase price of $462,645. Applicants must have a household income of at least $75,100 and intend to buy within Simcoe County.
Waterloo’s Affordable Home Ownership (AHO): This program assists low- to moderate-income renters in purchasing homes by providing interest-free, forgivable loans for down payments. Eligible applicants can receive a loan covering 5% of the home’s purchase price, applicable to properties valued at $600,000 or less. Notably, first-time homebuyer status is not a requirement for this program.
Lambton County Homeownership Down Payment Assistance Program: This program offers a 20-year forgivable loan covering 10% of the down payment for homes valued at less than $215,000. Eligible applicants are renters over 18 with a household income below $84,100 purchasing within Lambton County.
Dufferin County Home Ownership Program: This program provides moderate-income households with interest-free down payment assistance or second mortgage options. The program offers 10% of the home cost within Dufferin County, with a maximum loan of $45,000. The loan is forgivable if the home is not resold within 20 years. Applications are accepted chronologically, so eligible applicants are encouraged to apply promptly.
Niagara Homeownership Program: This program helps low- to moderate-income households achieve affordable housing through a no-interest, 20-year forgivable loan. Down payment assistance covers 5% of the home cost, with a maximum loan amount of $19,537. Eligible homes in Niagara include detached, semi-detached, townhomes, duplexes, or condos that are modest in size and features.
St. Thomas & Elgin Affordable Home Ownership Program: This program offers moderate-income households affordable housing options through forgivable down payment loans. Assistance covers up to 10% of the purchase price, with a maximum loan of $10,000. The no-interest loan is forgiven if the home is not sold within 20 years.
B-Home Down Payment Assistance: This program is a partnership between the City of Brantford, the County of Brant, and the Government of Canada. It offers interest-free, forgivable loans to first-time buyers in the B-Home district. The program provides up to 5% of the home’s purchase price, with a maximum of $16,710, to be used as a down payment.
Windsor/Essex Homeownership Down Payment Assistance Program: Provides a 20-year forgivable loan for 10% of the down payment on a house. Eligibility criteria include being a first-time buyer with a household income at or below $82,000 and purchasing a home priced at $368,000 or less within Windsor or Essex County.
Home in Peel Affordable Ownership Program: This program provides a 20-year, interest-free, forgivable loan for 10% (up to $20,000) of the down payment on a home. Eligible applicants are first-time buyers with a combined household income of $80,000 or less who purchase within the Peel Region.
City of Kingston Home Ownership Program: This program offers a 20-year forgivable loan for 10% of the down payment on a home, up to $45,000, for homes priced at $500,000 or less. Applicants must be renters over 18 with a household income of $130,000 or less and purchase within Kingston or Frontenac County.
Gateway Muskoka: A locally-funded program offering up to $70,000 or 10% in down payment assistance, forgivable after 20 years, for homes priced at $726,000 or less. Applicants must be modest-income individuals or families seeking homeownership in the District of Muskoka.
Options for Homes: Options Ready Program offers shared equity loans towards the down payment for Options condo developments, covering an additional 10% or 15%. Eligible buyers must provide a 5% downpayment and qualify for a mortgage.
Quebec
Quebec Home Buyers’ Tax Credit: This tax credit provides up to $1,400 for eligible first-time buyers in Quebec.
Montreal’s Home Purchase Assistance Program (HPAP): This initiative offers up to $15,000 for first-time buyers meeting specific eligibility criteria.
Quebec City Family Access Program (Programme Accès Famille): This program offers first-time buyers interest-free, downpayment loans for homes under $370,000.
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British Columbia
First-Time Home Buyers’ Program: This program offers full or partial exemptions on the Property Transfer Tax for homes up to $835,000. It is available to Canadians or permanent residents who have lived in BC for at least one year or filed two tax returns in the past six years.
Alberta
Edmonton First Place Program: This program defers land costs on townhomes for five years, making homeownership more affordable—eligible first-time buyers who have lived in Edmonton for at least one year and meet specific income criteria.
Attainable Homes Calgary Corporation (AHCC): This program offers downpayment assistance and affordable homeownership through a shared equity model for Calgary residents who do not currently own property. You can purchase a home below market price for as little as $2,000 in closing costs.
Saskatchewan
First-Time Homebuyers’ Tax Credit: This non-refundable provincial income tax credit provides up to $1,050 to eligible first-time homebuyers, calculated as 10.5% of the first $10,000 of the home’s purchase price. To make a claim, buyers can use indicate on their Saskatchewan income tax return.
Métis Nation–Saskatchewan First-Time Home Buyers Program: This program provides Métis citizens a one-time $15,000 contribution toward their first home down payment, plus an additional $2,500 for closing costs. Applicants must be registered Métis citizens and first-time buyers and meet specific income and residency requirements.
Manitoba
Rural Homeownership Program: This program is designed to encourage homeownership in Manitoba’s rural communities by providing financial support to eligible first-time homebuyers. The program offers forgivable loans of up to $30,000 for qualifying homes in rural or remote areas, primarily focusing on revitalizing communities. The loan amount and specific eligibility criteria vary based on the region and property, making it easier for buyers to settle in rural Manitoba.
First-Time Home Purchase Program for Métis Citizens: The Manitoba Métis Federation (MMF) offers this program to help Métis citizens achieve their dream of homeownership. Eligible applicants can receive up to $15,000 in forgivable loans for their first home purchase. Applicants must meet specific income and residency requirements and be recognized Métis citizens under MMF guidelines. The program also includes financial counselling and guidance to support sustainable homeownership.
Inner City Homebuyer Program: SEED Winnipeg Inc. runs this program to help low-income families in Winnipeg’s inner city save for a down payment on a home. The program offers matched savings of up to $3 for every $1 saved by participants, with a maximum matching contribution of $1,500 per family, creating a possible total of $6,000 toward a down payment. In addition to financial assistance, participants receive budgeting and homeownership preparation training, making this program a valuable resource for those committed to homeownership within Winnipeg’s urban core.
Newfoundland and Labrador
First-Time Homebuyers Program (FHP): This program in Newfoundland covers up to 50% of closing costs (up to $1,500) and offers a repayable loan of up to 5% of the home’s purchase price, up to $19,000. Eligibility and limits vary by region and household income.
Nova Scotia
First-Time Home Buyers Rebate Program: This program provides first-time buyers purchasing newly constructed homes in Nova Scotia with a rebate of up to $3,000. The rebate covers either 18.75% of the provincial portion of the HST or 1.31% of the home’s purchase price, whichever is lower. To qualify, applicants must not have owned or occupied a home in Canada in the past five years, and the home must serve as their primary residence or that of a close relative.
Down Payment Assistance Program (DPAP): This program offers eligible first-time buyers an interest-free loan of up to 5% of the home’s purchase price up to $570,000, capped at $28,500, to assist with the down payment. Repayment is required over ten years, and the loan is solely for the down payment, not for other costs like legal fees or closing expenses. Applicants must have a household income below $145,000, be pre-qualified for an insured mortgage, be Canadian citizens or permanent residents, and have lived in Nova Scotia for at least one year. Limits and eligibility vary with the subject property location.
New Brunswick
Home Ownership Program: This program supports low-income families purchasing or building their first home in New Brunswick. Assistance includes purchasing an Existing Home as a repayable loan covering up to 40% of the purchase price, with a maximum of $75,000. You could also qualify for a repayable loan to build a home covering up to 50% of total construction costs, also capped at $75,000.
Prince Edward Island
Real Property Transfer Tax Exemption: This program provides first-time homebuyers in PEI an exemption on the Real Property Transfer Tax for the first $200,000 of their home’s purchase price. To qualify, applicants must be Canadian citizens or permanent residents, have resided in PEI for six months or filed taxes in the province for two of the past six years, and intend to use the property as their principal residence.
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Recent Policy Changes
In December 2024, new measures will be introduced to support first-time homebuyers further:
Increased Cap on Insured Mortgages: The cap has been raised to $1.5 million, enabling buyers to qualify for insured mortgages even in higher-priced markets.
Extended Amortization for New Builds: First-time buyers purchasing newly built homes can now access insured mortgages with a 30-year amortization period. These updates aim to provide greater access and flexibility for new buyers in the current housing landscape.
Practical Guidance for First-Time Homebuyers
As a first-time buyer, consider these steps to make the most of available programs:
1. Evaluate Your Eligibility: Research eligibility criteria for each program or incentive to find the best match for your financial situation.
2. Understand the Application Process: Each program may have a unique application process and timeline. Familiarize yourself with the requirements to avoid delays.
3. Consult a Mortgage Professional: A professional can guide you through available options, helping you maximize incentives and make an informed decision.
In Conclusion
The First-Time Home Buyers Incentive (FTHBI) in Canada was recently discontinued, highlighting significant missteps in its conception and rollout. According to CMHC, the federal government ended the FTHBI in favour of the First Home Savings Account (FHSA), citing it as a more effective tool for first-time buyers.
However, while the FHSA offers a savings-focused approach, the FTHBI’s shared equity model fell flat in its efforts to improve affordability. Many industry experts attribute the program’s challenges to overly restrictive criteria, like the $120,000 household income cap and the four-times income limit, which limited property options to regions with lower housing costs—ruling out Canada’s major cities with the highest demand for affordability support.
The program also saw low adoption due to a lack of lender buy-in and last-minute policymaking, leaving many mortgage brokers and CMHC’s team needing help to adapt. Ultimately, the FTHBI stands as a lesson on the pitfalls of policymaking that only partially considers lender feedback or market realities. While this chapter on shared equity policy has closed, other promising models may still provide viable paths to support first-time home buyers in Canada.
For insights on finding the best programs or financial tools tailored to your unique situation, contact nesto’s mortgage experts. Our team is here to guide you through alternative options for homeownership.
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