Canadian Mortgage and Housing Corporation (CMHC) Incentive to Help First-Time Home Buyers

March 22, 2019 Facebook Twitter LinkedIn Google+ Resources

CMHC Incentive to help first-time home Buyers – A brief primer on the 2019 Federal budget

There is good news on the horizon who want to become home owners in Canada. The Canadian Government has introduced the Canadian Mortgage and Housing Corporation Home Buyers Incentive. This new legislation is targeted towards young adults who are struggling to purchase home in the current economic landscape.  Some of Canada’s largest cities have skyrocketing real estate prices that are forcing many young millennials to keep renting, even while starting a family and foregoing long term security.

This incentive allows the CMHC to use up to 1.25 billion dollars in “shared equity mortgages” over the course of three years to help relieve some pressure from mortgage costs for eligible Canadians.


First time home buyers who apply for insured mortgages will be able to access the money available through the CMHC incentive. The prospective home owner still must come up with a minimum of 5% of the mortgage. Up until now, the home owner had to have a minimum 20% down of home value to qualify for a mortgage. Once they come up with the 5 per cent down payment and pass further criteria, the CMHC will provide 10% of the hose value on top of the 5% down payment you’ve provided.



Along with the 5% down payment the home buyer is providing and the 10 per cent CMHC incentive, the qualified candidate must make under $120,000 per annum.  This means The CMHC incentive and the insured mortgage will be capped at $480,000 or up to four times the buyer’s annual income. For instance, if a household is making $50,000 per annum, they will be able to qualify for home estimated around $200,000.

The 10 per cent provided will also allow the CMHC to have an equity stake in your property.



The 2019 Canadian Federal Budget allows changes for to the Home Buyers Plan as well.  Typically, the average Canadian would be eligible to take out $25,000 from their RRSP to put towards financing a home. As of the 2019 budget, that number has increased to $35,000. It will be important to note that the re-payment timeline has not changed and that homebuyers must put the money back into their RRSP withdrawal over a 15-year period. If they do not, that amount will be added to their taxable income. The new HBP limit has been effective on withdrawals as of March 19, 2019.



The 2019 budget doesn’t remove the federal stress test. The stress test requires that borrows be able to prove they can take on interest rate increases two percent points higher than current rates. It’s believed that the new incentive will lower the qualification metric for those taking the test as they would qualify for a lower mortgage.

The 2019 budget is still new, and some information still needs to be clarified. Many are calling this a step in the right direction for prospect first-time home buyers.