Refinancing With the Home Buyer Incentive
Often, yes. The First-Time Home Buyer Incentive was a shared-equity loan rather than a loan of a fixed number of dollars, and certain refinances require it to be repaid in full. What you owe is the government’s original percentage of what your home is worth today, not the amount that was advanced to you years ago. On a home that has gained value, you repay more than you received, and it comes off the top of the refinance before a dollar reaches whatever you were trying to pay off.
It is the most common surprise I run into with clients who bought their first home between 2019 and 2024, and it is not a reason to abandon a refinance. It is a reason to have the number in front of you on the first call instead of at the lawyer’s office.
The Incentive was a share of your home, not a sum of money
The First-Time Home Buyer Incentive ran from 2019 until it stopped accepting applications on March 21, 2024. The government put 5% or 10% of the purchase price toward your down payment, and in exchange it took a stake of that same percentage in the home.
Uptake was modest. A lot of buyers looked at the trade and decided they did not love it, and they were not wrong to think hard about it. But plenty of people did take it, and a fair number of them are now exactly the households a debt consolidation was built for: a decent amount of equity, a stack of higher-interest payments, and a mortgage quietly behaving itself in the background.
The Incentive charges no interest and has no monthly payment, which is precisely why it fades from memory. Repayment is normally due when you sell or at twenty-five years, whichever comes first. What catches people is the shorter list of events that can trigger it earlier, and a refinance can be one of them. CMHC’s own guidance tells borrowers to confirm with their lender whether their particular refinance requires repayment, which is a polite way of saying it is not the same answer for everyone.
One more detail matters when money is tight: repayment has to be made in full. There is no option to pay back half the government’s share and leave the rest.
What you actually owe, in numbers
Because repayment is a percentage of current value, the number moves with your home. Here are two illustrative files, both a 5% Incentive on a $400,000 purchase, differing only in what happened to the value afterward.
| Flatter market | Stronger market | |
|---|---|---|
| Purchase price | $400,000 | $400,000 |
| Incentive advanced to you (5%) | $20,000 | $20,000 |
| Appraised value at refinance | $440,000 | $520,000 |
| Repayment owed (5% of today’s value) | $22,000 | $26,000 |
| More than you received | $2,000 | $6,000 |
Those figures are illustrative rather than a quote, and your own number depends on an appraisal. The shape is the point. Every dollar in that bottom row leaves the refinance before it reaches your credit cards, so it belongs in the plan from the start. The appraisal is usually not an extra cost, since a refinance requires one anyway.
The cap that stops this running away
There is a ceiling on what the government can claim, and most people have never heard about it. The government’s share of the gain is capped at 8% a year, not compounded, on the original amount advanced. On a $20,000 Incentive held for five years, that caps the gain at $8,000, so the most you would repay is $28,000 no matter how much the home appreciated. Anything above that stays with you.
It works in the other direction too. If your home is worth less than you paid, the government shares the loss on the same terms and you repay less than you received. That is unusual for a government program, and worth knowing before you assume the worst.
You can also repay the Incentive voluntarily at any time without a prepayment penalty, which is a real option for anyone who has the cash and would rather stop the clock.
Two minutes of homework before you call
If the Incentive is on your title, that narrows your options far less than people fear. It changes how much equity is available to you, and that is a calculation, not a verdict.
It usually still makes sense. It just changes the math
For most of the families I see in this position, the refinance still wins by a wide margin, because clearing card and line of credit payments frees up far more each month than the repayment costs once. What changes is how much room is left over, and sometimes whether a refinance is the right tool at all compared with a second mortgage that leaves the existing arrangement untouched.
That is the whole reason to run the numbers before you commit to a direction. Arithmetic that turns up at the closing table is a bad surprise. Arithmetic we do on the first call is just a line in the plan.
Here is what that first conversation looks like. It takes about twenty minutes, it is free, there is no credit check just to talk, and you are speaking with me rather than a call centre. I will ask what you owe, what the home is likely worth, and whether the Incentive is in the picture, and you will leave knowing roughly how much equity is really accessible and what it costs to get at it. If the answer is that you should wait, I will tell you that, because I would rather lose the deal than put you in a worse position.
I have been arranging mortgages in Alberta since 2018, with access to 50+ lenders, and this comes up more often than you would think. If you took the Incentive and you are weighing a refinance in Calgary or anywhere in the province, or you are still at the first-time buyer stage and want to know what replaced it, get in touch and we will work out where you stand.
Related questions
Does a mortgage renewal trigger repayment of the Incentive?
A straight renewal with your existing lender is not on CMHC's list of repayment triggers, so signing a renewal offer generally does not force you to repay. Moving to a new lender at renewal is a different question, because the charge on your title has to be discharged and re-registered, and that is worth confirming with both lenders before you sign anything. The events CMHC does list are selling the home, reaching twenty-five years, porting the mortgage to a new property, certain refinances, some buyouts after a separation, and a partial release of the security.
Can I take the Incentive with me if I move?
No. Porting your mortgage to a new home is one of the events that triggers repayment, so the government's share gets settled on the way out rather than following you to the next property. That matters more than people expect, because the repayment comes off the proceeds at the same percentage of what the home is worth now, which is money you were probably counting on for the next down payment. If you took the Incentive and you are thinking about moving, work that number out before you decide what you can afford next, not after you have an accepted offer.
What happens to the Incentive in a separation or divorce?
It depends on how the buyout is financed. CMHC lists a buyout that requires additional insured funds as an event that triggers repayment, so if one partner is refinancing to buy the other out, the government's share may have to be settled at the same time. That is a real cost to build into the separation numbers and it is easy to miss when everything else is already complicated. Raise it early, because it changes what the remaining partner can actually afford to carry on their own.
How do I work out roughly what I would owe?
The repayment is calculated from an appraised current market value, so nobody can give you the exact figure without an appraisal. You can get close on your own in about a minute: take the government's percentage, either 5% or 10%, and apply it to a realistic estimate of what your home would sell for today. That is accurate enough to decide whether a refinance still makes sense for you. Remember the ceiling as well, because the government's gain is capped at 8% a year, not compounded, on the original amount advanced.