In order to qualify for the program, Canadians need to meet certain conditions. Only first-time buyers with a household income of less than $120,000 are eligible to receive up to 10 per cent of the cost of a new home. Additionally, that incentive must be repaid within 25 years or when the property is sold.

The incentive is interest-free, and there are no penalties for buying out the CMHC’s stake, CBC reports. However, if the house price goes up, the amount the homeowner owes will also increase. 

“The key issue remains qualifying, and this program diminishes the amount that a first-time home buyer can qualify for by about 15 to 20 per cent,” Laird said. “This is because the program limits the mortgage amount to four times the households’ income, whereas those not participating in the program can actually qualify for a mortgage that is 4.5 to 4.7 times their income.” 

The value of the CMHC incentive and the mortgage can’t be more than $480,000. That means the most expensive home a Canadian could own with the help of this program would be between $500,000 and $600,000.

“Those who would be attracted to the program would be Canadians who are trying to purchase at their maximum qualification,” Laird said, addressing the price cap. “However, because the program diminishes how much you can qualify for it doesn’t serve the needs of the group it is targeted at. Canadians can get a larger loan by not participating in the program.”

By: Mike Gustus