What is required to purchase a home?

Start With Your Down Payment

This is the amount of money you will contribute towards buying a home. The minimum down payment varies, depending on the purchase price.

For properties under $500,000, a minimum down payment of 5% is required to qualify for a mortgage. For properties over $500,000 but under $1,000,000, the minimum down payment is 5% of the first $500,000 in purchase price, plus 10% of the remainder purchase price above $500,000. For properties $1,000,000 and over, a minimum of 20% down payment is required.

Save More With 20% Down Payment

To minimize your monthly mortgage expenses and the total amount of interest will pay throughout the term, a down payment of 20% may be more suitable for you if feasible.

Mortgage default insurance is legally required if you contribute a down payment of less than 20%. The three default insurers in Canada are Canada Mortgage & Housing Corporation (CMHC), Sagen, and Canada Guaranty.

Take advantage of the First-Time Home Buyers Incentive (FTHBI)

The First-Time Home Buyer Incentive (FTHBI) is a Government of Canada program designed to make homeownership more affordable for first-time home buyers. The government will contribute 5% or 10% of the cost of the home toward your down payment provided you meet the program requirements. This contribution will have to be paid back within 25 years or when you sell the home, but in the meantime your monthly mortgage payment will be lower because your down payment was larger with the shared-equity mortgage provided.

Eligibility

In just 3 easy steps, you can determine if you qualify for the FTHBI and how much of an incentive you can receive:

1. Find out whether you or your partner have ever bought a property before. A first-time buyer meets at least one of the following requirements:

You’ve never owned a house before and haven’t lived in one that you, your spouse, or your common-law partner owned in the previous four years.
You’ve recently experienced the breakdown of a marriage or common-law partnership.

2. The following program-specific requirements must be met by both you and your partner.

Your total annual qualifying income does not exceed $120,000 (or $150,000 if the house you are purchasing is in Toronto, Vancouver, or Victoria).
Your total borrowing is no more than 4 times your qualifying income (or 4.5 times if the home you’re purchasing is in Toronto, Vancouver or Victoria).
You are a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
You meet the minimum down payment requirements, such as savings, RRSP withdrawals, or non-reimbursable financial gifts from family members.

3. The amount of money you will receive varies according to the type of property you are purchasing. Review the table to figure out the different incentive amounts.

Property type	Incentive amount
New construction	5% or 10%
Existing home	5%
New and existing manufactured home	5%

How to apply

Five simple steps to apply for the First-Time Home Buyer Incentive:

1. Get pre-approved for a mortgage.
2. Search for the home of your dreams.
3. Ensure that you are qualified to apply for the program.
4. Give your lender the completed FTHBI – SEM Information Package and SEM Attestation and Consent Form. On the National Housing Strategy website, you may find both of these forms. opens a fresh window.
5. Become a homeowner.

Repayment process

After 25 years or when the house is sold, the loan must be repaid in full. Additionally, the amount you must repay is probably not the same as what you borrowed. The down payment assistance provided by the government is not a typical loan; rather, it is a shared equity mortgage. As the house’s value changes, so does the value of this type of mortgage. If your down payment was 5% of the original value of the house, you must return that amount plus 5% of the home’s current value when you sell it or the 25 year term is up, up to a maximum payback sum equal to:

in the case of appreciation, the Incentive amount plus a maximum gain to the Government of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
in the case of depreciation, the Incentive amount minus a maximum loss to the Government of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.

The maximum gain to the Government in the event of an appreciation is effective retroactively to the implementation date of the FTHBI program. The maximum loss to the Government in the event of a depreciation will only apply to the borrowers who signed their Shared Equity Mortgage (SEM) agreements on or after the effective date of June 1, 2022.

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First Time Home Buyers

What is required to purchase a home?

Start With Your Down Payment

Save More With 20% Down Payment

How to Save Money for Your Down Payment?

There are multiple options nowadays for a borrower to contribute towards their down payment and ultimately reduce the total mortgage needed.

First Time Home Buyer Programs

Savings & Investment Accounts

Other Sources

Take advantage of the First-Time Home Buyers Incentive (FTHBI)

Eligibility

How to apply

Repayment process

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