CMHC First Time Home Buyer Incentive

Once you have entered a mortgage term loan for a property, you will be able to add the CMHC loan. These are interest-free loans of up to 5% of the value of a resale property or up to 10% of the value of new construction.

In brief, the rules for CMHC incentive loans are:

  • Qualifying income must be less or equal to $120,000.00 (\$150,000.00 for Toronto, Vancouver and Victoria).
  • There must be an insured mortgage on the property. That is the downpayment must be less than 20% and greater or equal to 5%.
  • Overall borrowing on the property must not exceed 4 times the qualifying income. That is the sum of the CMHC incentive loan and the mortgage.
  • The buyer(s) must be first-time home buyers (by their definition, which is quite broad).

So the maximum $120,000.00 qualifying income gives rise to $480,000.00 borrowing capacity, and a maximum house value of close to $600,000 (with downpayment just below 20).

Similarly with the new rules for Toronto, Vancouver and Victoria, the maximum house value is now just over $843,000

We do not check for the eligibility of your inputs under the rules, but we do provide some warnings if the minimum qualifying income needed to support the level of total borrowing is above the limits.

The Incentive loan must be paid back when the property is sold or 25 years, whichever comes first. The amount due is the original Incentive plus a percentage of the market value of the home at the time of repayment equal to the percentage (i.e., 5% or 10%) of the original home value used to determine the Incentive, up to a maximum amount equal to:
  • where the home’s value has appreciated, the Incentive plus a maximum gain of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment
  • or where the home’s value has depreciated, the Incentive minus a maximum loss of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.

The amount to be repaid on the 25-year anniversary, or the date entered to sell the property if sooner, will be calculated given your assumed rate for the growth in value of the property entered in REAL ESTATE (and any future rate in RATES/YIELDS/CURRENCIES). The TIME MACHINE results will show a balance for the loan which is the repayment amount calculated if you sold the property at the end of the year shown. The actual amount repaid in the TIME MACHINE is shown in the Warnings column.