Update on CMHC’s First-Time Home Buyers Incentive

Details have been few and far between on the government’s new First-Time Home Buyers Incentive (FTHBI) since it was announced in last month’s budget. But CMHC has finally provided a little more clarification.

In a statement released on its website, the Canada Mortgage and Housing Corporation (CHMC), which will administer the FTHBI, acknowledged that, “we still have work to do. While we can’t yet share all program specifics, we can nonetheless elaborate on the program’s intent and some of the rationale behind its design.”

CMHC noted that some of that work will involve consultations with lenders and other industry stakeholders “to make sure the program works as intended.”

The program will see the CMHC provide 5% of a first-time buyer’s down payment for the purchase of existing homes, or 10% for the purchase of a new build. The mortgage must be default-insured.

Among the criticism levelled against the FTHBI is that the maximum purchase price permitted under the programnow confirmed at $505,000won’t do much to assist first-time buyers in the country’s largest marketsVancouver and Torontowhere prices are significantly higher.

“Despite the income and borrowing limits, we are confident this program can work in all markets, including Vancouver and Toronto,” CMHC countered in its statement. “The average insured home in Canada is worth $284,000, less than the national average house price of $470,000 and this program applies up to a house price of $505,000, assuming a 5% down payment. However, we shouldn’t confuse market average prices ($1 million in Vancouver and $770,000 in Toronto) with starter home prices.”

The agency noted that 23% of transactions in the Toronto area are for under $500,000, and that 10% of Vancouver purchases are under that threshold.

CMHC also said it’s difficult to estimate what the uptake for the program will be like once it’s rolled out in September, but that “based on last year’s activity…more than 2,000 homebuyers in Toronto would have been eligible for the FTHBI and over 1,000 in Greater Vancouver.”

While many details are yet to be worked out over the coming months, CMHC summarized some of the intents and benefits of the program:

  • A way to assist first-time homebuyers without adding to their financial burden.
  • No monthly payments.
  • The program will require borrowers to meet minimum insured mortgage down payment requirements, “ensuring they are invested in their purchase.”
  • While aimed at first-time buyers, the program will result in freed up rental supply and will thus ease pressure on rents, CMHC says.
  • The cost of the program is capped at $241 million over three years. It is also limited to a maximum combined income of $120,000 and total borrowing limited to four times income.

The agency also argued that the FTHBI is more desirable from a housing affordability perspective compared to some of the other policy changes many had been calling for, including tweaks to the mortgage stress test.

CMHC said it doesn’t expect the FTHBI’s inflation effect to be beyond a maximum of 0.2-0.4%.

“Limiting house price inflation will keep housing more affordable, more so than some of the other suggested policy and regulatory changes,” CMHC’s statement said. “For example, a reduction of one per cent in the mortgage insurance stress test or an extended amortization limit of 30 years would have added to indebtedness and resulted in house price inflation of five to six times more than this maximum.”

  1. Thank you for posting. I take fault with CMHC’s fear-mongering that higher amortizations would’ve increased prices by 5-6 TIMES the .2-.4% that the shared equity plan will. They make it seem like 6 times .4% (or 2.4%) is a HUGE number – which it isn’t.

  2. Quick question. Will this apply for home bought after september or for mow bought in the current fiscal year meaning between April and August.

  3. Hi Michelle

    I have been to the bank to try to get approved for a mortgage I brought all documents in etc, chasing down the .mortgage specialist only to find the mortgage specialist has been negative from the get go If he does not think I will get approved from the get go,why does he bother putting me through all I mean your hopes are up only to get rejected sucks big time I do not have tons of time to lose daily like everyone else to get the run around Worse yet he does a credit check which I am fine with but when this happens,it impacts your credit score big time I feel this should be done if you will be approved and you get the mortgage ,not straight away and go from there If you do not get approved just now,you may later but with credit checks being done after expiry of the last hugely affects your credit score Each time it is checked it goes down I have a the down payment I have money invested I have a good credit score Only problem is I am on disability income which will be permanent if I cannot return to work It is not as much as I get if I was working but it is guaranteed income Also my work is offering a good sized buy out amount to retire with as well as another smaller buy out amount for a benefit There are options so to tax shelter this money or take some of the money and tax shelter the rest I know I can afford to buy this house I want I am worried I will lose it to someone else that has put a conditional offer on this house I have been wanting this house since I saw it last summer I have been waiting for this buy out offer to happen I thought for sure I would be able to get it I have looked at other houses My heart always comes back to this house I have spoken to the owner twice It is a good house to buy to live in or for investment purposes How can I get this house before I lose it to someone else? I had liked another house like this one and it was sold quickly I missed out I do not want this to happen again My heart is set on this house Thoughts,suggestions,recommendations will be helpful I feel at a crossroads Help? :*(

    Thank you


    1. Hi Janet,

      Sorry to hear of all that frustration! I know what I’d is like have been there before.

      What you need is a good mortgage agent and realtor.

      Feel free to reach out to me for help. 416-823-9715

      Best Regards,

  4. Does it mean if I purchase my first home which is 800,000 around (as I stay near downtown Toronto and am interested in continuing staying nearby) I don’t get eligible though my combined household income is less than 120,000?

    I am fairly new in this country so my question could sound weird. TIA

  5. Thanks for update on issue..it is completely useless in Metro and lower mainland.Just a show off with no result.They better go through listings and actual sales to see if their plan can assist any first time buyer..Such disconnect from reality makes people angry and will affect their view on government policies.

  6. My partner is a first time home buyer and I’m not . Will we still qualify going joint for a new property. Thanks

  7. Do we know what exactly CMHC will look to verify the income of less than $120,000? Is it through the offer letter from employer/ paycheck /tax return from previous year? What if you are self-employed? How can I prove that my household income would be less than 120K?

  8. I am assuming the assistance will only be on the actual mortgage and not on deposits? Most new Condos for example, require 20% deposits – which for many first time buyers is near impossible to achieve ($100k on a $500K home). If I am reading this right the buyer will still have to pay the full deposit themselves initially, and once the home is actually constructed is when this will kick in and they will help by providing up to 10% of the down payment?


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