First-Time Home Buyer Incentive Canada: The Program Is Gone — Here's What Replaced It

If you have been searching for the First-Time Home Buyer Incentive and cannot find current application details, there is a reason: the program was officially discontinued in March 2024 and is no longer available.

This matters because many articles, government resource pages, and real estate blogs still reference the FTHBI as if it is an active program. Buyers who budget around a down payment contribution that no longer exists arrive at their mortgage appointment with a shortfall they did not plan for.

This guide explains what the program was, why it failed, what has replaced it, and what first-time buyers in Ontario should actually be using in 2026.

What the First-Time Home Buyer Incentive Was

Launched in September 2019, the First-Time Home Buyer Incentive (FTHBI) was a shared-equity program administered by the Canada Mortgage and Housing Corporation (CMHC). The government contributed 5% of the purchase price for an existing home or 5% to 10% for a new build, added to the buyer's down payment.

In exchange, CMHC took a corresponding equity stake in the property. When the buyer eventually sold or repaid after 25 years, they repaid the government's percentage of the property's value at that time — not the original dollar amount contributed. If the home appreciated, the government shared in the gains. If it declined, CMHC shared in the loss.

The stated purpose was to reduce the CMHC insurance premium (by increasing the effective down payment) and lower monthly mortgage payments by reducing the loan amount.

Why the Program Failed

The FTHBI attracted minimal uptake and was widely considered ineffective for exactly the buyers it was supposed to help. The core problems:

Income caps eliminated most GTA buyers. The program required qualifying household income of $120,000 or less, and in Toronto this was later raised to $150,000. In a market where a household income of $150,000 barely qualifies for a starter condo in the GTA, the income cap excluded the buyers who needed help most.

Purchase price limits made it useless in Toronto. The maximum qualifying purchase price was 4.5 times the qualifying income — which capped at $675,000 for a $150,000 income household. Average GTA condo prices in 2022 and 2023 ran $700,000 to $800,000. The program literally could not be used to buy an average-priced condo in the city where it was most needed.

The shared equity structure created long-term risk. Buyers giving up equity in their home in exchange for a modest down payment contribution signed a long-term financial obligation with the government that was poorly understood and difficult to exit. The repayment is based on the market value at time of sale, not the amount received — so a property that appreciates significantly makes the FTHBI contribution very expensive in retrospect.

Uptake data confirmed the failure. Budget 2024 documents showed that CMHC had disbursed a small fraction of the program's intended capacity. The government quietly announced the end of new applications in February 2024 and closed the program entirely on March 31, 2024.

What Actually Works for Ontario First-Time Buyers in 2026

The federal government's response to the FTHBI's failure was not to create a replacement program but to enhance existing vehicles that demonstrably work. Here is what is available:

First Home Savings Account (FHSA)

The FHSA is the most effective tool available to Ontario first-time buyers and the closest thing to a replacement for the FTHBI — with significantly better mechanics.

You can contribute $8,000 per year to a lifetime maximum of $40,000. Contributions are tax-deductible (like an RRSP), reducing your taxable income in the year of contribution. Withdrawals used for a qualifying first home purchase are tax-free (like a TFSA). This dual tax advantage means every dollar contributed is shielded both going in and coming out.

Unlike the FTHBI, there is no government equity stake, no income cap, and no repayment obligation. The money is yours.

A couple who opened FHSAs at launch and has contributed $8,000 per year for five years has $80,000 in the account. That is a meaningful down payment contribution built entirely through their own contributions, with every dollar sheltered from income tax.

If you have not opened an FHSA yet, do it immediately. The contribution room does not start accumulating until the account is opened, and unused room from a previous year can be carried forward by one year.

Expanded Home Buyers' Plan (HBP)

The 2024 federal budget also expanded the Home Buyers' Plan withdrawal limit from $35,000 to $60,000 per person. A couple can now withdraw up to $120,000 combined from their RRSPs for a qualifying first home purchase, with no tax owing on the withdrawal.

The funds must be repaid over 15 years, but there is no interest on the outstanding balance. For buyers who have been contributing to RRSPs, this is often a significant source of down payment capital.

The sequencing matters: maximize your FHSA first, then use HBP for additional capital. FHSA withdrawals never need to be repaid. HBP withdrawals do. Use the permanent tax-free shelter first.

CMHC Insurance Cap at $1.5 Million

The change that functionally replaced the FTHBI — without the government taking an equity stake — is the December 2024 elevation of the CMHC insured mortgage cap from $1 million to $1.5 million.

Previously, buyers of properties priced between $1 million and $1.5 million (a significant portion of the GTA freehold market) needed 20% down — a hard requirement of $200,000 to $300,000 in cash. This effectively locked first-time buyers out of the 905 townhouse and semi-detached market.

With the cap at $1.5 million, buyers can now access insured financing on these properties with less than 20% down, dramatically reducing the capital barrier. The tradeoff is the CMHC insurance premium, which is added to the mortgage principal. But the premium is substantially less onerous than the 20% down payment requirement it replaces for buyers who do not have that capital.

New Build HST Relief

For purchase agreements signed between April 1, 2026 and March 31, 2027, the federal and Ontario provincial governments are rebating the full HST on qualifying new builds under $1 million. The combined maximum rebate is $130,000. This is a time-limited window that makes new construction significantly more affordable for buyers who can act before the deadline.

Ontario Land Transfer Tax Refund

Ontario first-time buyers receive up to $4,000 in provincial LTT refund at closing. Toronto first-time buyers receive an additional municipal rebate of up to $4,475. These are applied directly by your lawyer at closing — no separate application required after the fact.

The Takeaway

If you were counting on the FTHBI as part of your down payment strategy, it is unavailable. The program closed permanently in March 2024.

The replacement toolkit is more useful for most Ontario buyers: the FHSA offers a genuine tax-free accumulation vehicle with no government equity stake; the expanded HBP unlocks more RRSP capital; the raised CMHC cap opens the freehold 905 market to insured-mortgage buyers; and the LTT refunds directly reduce your closing cost burden.

For a full walkthrough of how to use these programs in sequence and how they interact with the Ontario mortgage qualification process, the Ontario First-Time Home Buyer Guide includes a structured approach to down payment optimization and program stacking.

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