Office of the Superintendent of Financial Institutions
The First-Time Homebuyer Incentive (FTHBI) comes into effect this fall and will allow eligible first-time homebuyers to apply to finance 5% or 10% of their home purchase through a 2nd position, non-interest bearing, shared equity mortgage with CMHC. In order to use the FTHBI program the combined borrower down payment and shared equity from CMHC must be less than 20% of the property value, i.e. the borrower will have a first position, high-ratio mortgage and will be required to purchase mortgage insurance. We refer to this first mortgage as a "FTHBI mortgage" throughout this document.
The MICAT is not currently designed to capture the mortgage insurance risk associated with FTHBI mortgages compared to non-FTHBI mortgages with the same risk drivers, e.g., loan-to-value, outstanding balance.
We took the following steps to develop an approach to capture the risks associated with FTHBI mortgages and calculate their total requirements in the MICAT:
The objective of this advisory is to complement the existing MICAT Guideline taking risks of FTHBI mortgages into account.
OSFI recommends the development of a sound, consistent and tailored solution that can be implemented before any FTHBI mortgages are funded. This solution gives the mortgage insurers time to update their systems and plan.
The new advisory will come into effect on November 1, 2019. OSFI will monitor the effectiveness of the new advisory and make any necessary modifications.