Last updated: June 3, 2022
What this tool is all about:
This tool helps you calculate the benefit of buying with the new First-Time Homebuyer Incentive (FTHBI) program. If you’re not familiar with the program, you can read more about it in this article.
Disclaimer: Perch does not guarantee the accuracy of these results and should not be treated as a recommendation. Consult a professional prior to making any decisions as it relates to your current or future real estate transactions. Please refer to our
The Government of Canada has changed the first-time home buyer incentive to limit the upside and downside payable per year in housing to 8%. This applies retroactively to anything done since 2019 as well.
the Government of Canada will limit its share in the appreciation of a home, where homeowners will need to pay back up to a maximum gain of 8% per annum (not compounded) on the incentive amount from the date of advance to the time of repayment. This incentive calculation is retroactive to the implementation date of the first-time home buyer incentive, September 2, 2019.
The Government of Canada will also limit its share in the depreciation of a home at the time of repayment. This is up to a maximum loss of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment. This incentive repayment calculation applies to all borrowers who have signed a shared equity mortgage agreement on or after June 1, 2022.
|PROPERTY TYPE||INCENTIVE (%)|
|New construction||5% or 10% of the purchase price|
|Existing home||5% of the purchase price|
|New/existing mobile or manufactured home||5% of the purchase price|
You have the option to pay back your first-time home buyer incentive at any time without any penalties, unlike a mortgage prepayment penalty where you would have to pay a fee if you decide to pay some or all of your loan off early. However, you are required to pay back your incentive in full at the earlier of 25 years or when you decide to sell your home. Keep in mind that if you do use your FTHBI and break your mortgage early, you will also have to pay a prepayment penalty.
There are other events that can trigger re-payment:
This incentive is meant to provide help for first-time home buyers. Many obtain the FTHBI so that they can have a larger down payment thus resulting in a smaller mortgage and lower monthly payments.
However, qualifying as a first-time home buyer doesn’t always mean it will be beneficial for you. Although you might be saving on your mortgage, if your home appreciates in value and you have to owe back your initial incentive and more, the amount you pay back could potentially be well above your interest and mortgage insurance savings. By taking the incentive, you could be giving up a significant portion of the tax-free upside of your home if it goes up in value.
The FTHBI is good for low income, first-time home buyers who want to get into the housing market sooner and don’t mind paying an extra amount later down the line, but it is not guaranteed to save you money.
If you’d like to learn more about the pros and cons of the FTHBI you can read about it here.
The path to owning your first home might be a little daunting, but we have created tools to help you along the way. Our First-Time Home Buyer Incentive Benefit Calculator provides you with a cost breakdown and will help you easily assess whether the program will be beneficial to you.
You’ll be able run a few numbers so you can make the right decision of whether you should move forward with the incentive. Ultimately, this tool will help you determine whether the mortgage savings are worth the payback in equity if the value of your home increases.
What you’ll need:
All you need to do is plug in your numbers and the calculator will determine:
Things to consider before obtaining the FTHBI:
Here are a few tips to help you maximize your value:
If you have used our FTHBI Benefit Calculator and still have questions, you can sign up for a free Perch profile today to speak to one of our mortgage advisors who can provide you with more insights on the FTHBI program.
If you are buying a house for the first time and want to know about the other tools to help you along the way, read our step-by-step Guide to Buying a Home.