10 More Details About the First Time Buyer Incentive

1. Total borrowing is limited to 4 times the qualifying income. The combined mortgage and Incentive amount cannot exceed four times the total qualifying income. The amount for the mortgage loan insurance premium is excluded from this calculation.
   
2. The maximum threshold for debt service ratios are GDS 39% and TDS 44%. This is only applied on the first mortgage and is subject to requirements by lenders and mortgage loan insurers.
   
3. The Incentive is a second mortgage on the title of the property. There are no regular principal payments. It isn’t interest bearing and has a maximum term of 25 years.
   
4. The Government of Canada will share in the upside and downside of the property value upon repayment.
   
5. Mortgages must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth. The first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium.
   
6. The premium is based on the loan-to-value ratio of the first mortgage only. That is, the first mortgage amount divided by the purchase price. The Incentive amount is included with the total down payment.
   
7. Mortgage loan insurance premiums may be subject to provincial taxes.
   
8. Minimum down payment is 5% of the first $500,000 of the lending value and 10% of the lending value above $500,000.
   
9. The minimum down payment must come from traditional down payment sources.
   
10. Traditional down payment comes from the borrower’s own resources and may include:

• savings
• withdrawal/collapse of a registered retirement savings plan (RRSP)
• non-repayable financial gift from a relative

Note: Unsecured personal loans or unsecured lines of credit used to satisfy minimum down payment requirements are not eligible for the program.

Reference: https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive