First-Time Home Buyer Incentive: Shared Equity and the Repayment Rules

Key takeaways

• The First-Time Home Buyer Incentive was a shared equity program that provided 5% or 10% of the home purchase price to reduce the mortgage
• The government shared in any future appreciation or depreciation in the home's value proportional to its equity stake
• The program was cancelled in March 2024 — no new applications are accepted
• Existing participants must repay the incentive after 25 years or on sale, whichever comes first
• The incentive did not reduce the buyer's RRSP room or affect TFSA contributions

The First-Time Home Buyer Incentive was launched in September 2019 and ran through to early 2024, when the government cancelled it citing low uptake and high administrative cost relative to the housing affordability impact. For buyers who used the program, understanding the repayment mechanics is still relevant.

How the incentive worked

The Canada Mortgage and Housing Corporation (CMHC) provided 5% of the purchase price for existing homes or 10% for new construction, in exchange for a proportional equity stake. The buyer's mortgage was reduced by the incentive amount — lowering monthly payments. There was no interest on the incentive, but the government shared in any value change.

Example: on a $400,000 home with a 10% incentive, the government contributed $40,000 for a 10% equity stake. If the home is later sold for $500,000, the government is owed $50,000 (10% of $500,000), not the original $40,000.

Repayment on sale or at 25 years

Participants must repay based on the home's fair market value at repayment — not the original incentive amount. If your home appreciated significantly, you repay more than you received. If the home declined in value, you repay less. You must get a government-approved appraisal to establish the value at repayment. The repayment triggers a deemed disposition for the government's equity interest, with no tax consequence to the homeowner.