Finance Minister Chrystia Freeland announced on Friday that the federal government will commit an additional $800 million to extend and expand the First-Time Home Buyer Incentive (FTHBI) program, which had been scheduled to wind down at the end of September. The new funding represents the largest single injection into the program since its launch in 2019.
The announcement also included several significant structural changes to the program. The income threshold for eligible applicants has been raised from $120,000 to $150,000 annually, and the maximum property price eligible under the program has been increased from $565,000 to $700,000 in high-cost markets including Toronto, Vancouver, and Victoria. Outside these designated high-cost markets, the cap rises from $480,000 to $575,000.
How the Incentive Works
The FTHBI provides a shared equity loan of 5% of the purchase price for existing homes, or up to 10% for newly constructed properties. The loan is interest-free, but the government participates in any appreciation or depreciation of the home's value when the loan is repaid. Repayment is required either when the property is sold, or after 25 years, whichever comes first.
For a first-time buyer purchasing a $650,000 home in Toronto, the incentive would provide up to $65,000 in shared equity financing, reducing the required mortgage principal and lowering monthly carrying costs by approximately $340 at current rates. Over a five-year term, that represents savings of more than $20,000 in interest payments.
Political Context
The announcement comes amid sustained political pressure on the federal government to address housing affordability, which consistently ranks as the top concern among Canadians under 40 in national polling. The opposition has criticised the program as insufficiently targeted, arguing that shared equity instruments do not address the fundamental supply shortage driving prices higher. The government counters that demand-side measures provide immediate relief while longer-term supply initiatives work through the planning and construction pipeline.