First-Time Home Buyers Incentive in Alberta

The first time home buyer incentive gives you the option of giving the Government of Canada a 5% or 10% stake in your home. In return for that stake in your home, the government will pay 5% or 10% towards your down payment which will reduce your monthly mortgage payment.

Requirements

You must be a first time home buyer
You must have the minimum 5% down payment from your own funds
Your mortgage must be insured with CMHC, Sagen, or Canada Guaranty
The government will put in 5% or 10% for you to build a new home
The government will put in 5% towards an existing home purchase
You must intend to live in the home within the first year of purchase
Mortgage amount plus incentive must not exceed 4.5 times your qualifying income if you are purchasing in Vancouver, Victoria or Toronto
Mortgage amount plus incentive must not exceed 4 times your qualifying income if you live anywhere else in Canada.

Borrower Eligibility

If you live in Vancouver, Victoria or Toronto, you cannot have an income greater than $150,000
If you live anywhere else in Canada, you cannot have an income greater than $120,000 per year to qualify
You must be a first time home buyer
You must be either a Canadian citizen, permanent resident or non-permanent resident who is legally employed in Canada

How does the first time home buyers incentive work?

The 5% or 10% that the government put in is a second mortgage on the property. This second mortgage has no payments made to it and there is no interest charged to it.
Your first mortgage must be between 80% LTV and 95% LTV.
The incentive needs repaid in 25 years or when the home is sold, whichever comes first.
The repayment upon sale or 25 years of ownership will be an equity-like payout based on the market value of the home upon sale/25years.
The program will share in upside as well as downside in home value
The government of Canada has allocated $1.25B over 3 years for this program beginning in 2019

Example

Jessica wants to build a new home for $400,000. Using the incentive program, Jessica can receive $40,000 in a shared equity mortgage (10% of the new home purchase price) through the program, on top of the 5% minimum down payment ($20,000) from her own funds.

Utilizing this program would decrease Jessica’s mortgage payment by approximately $180 per month.

If Jessica sells her home for $500,000, she would then have to repay 10% or $50,000 to the program.
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If Jessica sells her home for $300,000, she would then have to repay 10% or $30,000 to the program.

First Time Home Buyer Incentive

Requirements

Borrower Eligibility

How does the first time home buyers incentive work?

Example

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