CMHC FTHBI Repayment Calculations: Standard vs. 8% Capped Math

In June 2022, the federal government introduced an 8% per annum cap to limit the maximum gain or loss the government can take on the property. We cover the formulas, show how the 8% cap limits what you owe in rising markets, and explain how the downside cap works if your home has lost value.

The core formulas

Repayments are calculated using two distinct figures. You will always repay the lesser of these two calculations in an appreciation scenario, and the greater of the two in a depreciation scenario.

1. The Standard Calculation

This is the simple percentage calculation based on the original terms of your agreement:

• For resale homes, the incentive percentage is always 5%.
• For new construction, the incentive percentage is either 5% or 10%.

2. The Capped Calculation (8% Per Annum Limit)

The capped calculation uses a simple interest formula (8% per year, non-compounded) based on the original incentive amount and the exact time elapsed:

The "Years Held" is calculated to the day. For example, if you held the loan for 4 years and 120 days, the calculation uses 4 + (120 / 365) = 4.33 years.

Worked example 1: Home value appreciation (The cap protects you)

Let's look at a typical scenario for a Langley or Surrey condo owner.

Outcome: Because the capped amount ($56,000) is less than the standard percentage-based repayment ($60,000), you repay the capped amount. The 8% cap saves you $4,000 in this scenario.

Worked example 2: Home value depreciation (Loss is limited)

Let's look at a scenario where a property has lost value.

Outcome: Because the standard percentage-based repayment ($22,000) is higher than the minimum floor ($17,000), you repay the standard amount of $22,000. You get the full benefit of the price decline (repaying $3,000 less than the original $25,000 you received).

Worked example 3: Extreme home value depreciation (The floor is hit)

What happens if the property value drops severely?

Outcome: Because the standard percentage calculation ($15,000) falls below the minimum protected floor ($17,000), you must repay the capped minimum of $17,000. In this case, the government's shared loss is capped, and you must pay the $17,000 floor.

Note: For depreciation losses, this cap only applies to agreements signed on or after June 1, 2022. For agreements signed before that date, there was no loss limit floor; the buyer simply repaid the standard percentage of the market value, even if the loss exceeded 8% per year.

Frequently Asked Questions

These are the common mathematical and calculation-related questions we hear from homeowners regarding FTHBI payoff statements.

How is the property value determined for the standard calculation?

If you are selling your home in an arm's-length transaction, the sale price in your contract is typically accepted as the market value. If you are doing a voluntary early repayment without selling (e.g., during a refinance), you must obtain a professional appraisal from a designated appraiser to establish the fair market value.

Can I include legal fees or real estate commissions to reduce the market value?

No, the repayment math is based strictly on the gross market value or sale price. You cannot deduct conveyancing fees, real estate commissions, or other closing costs from the value used to calculate the government's share.

What if I disagree with the appraiser's valuation?

If you believe the appraisal does not reflect true market value, you can submit supporting documentation (such as recent comparable sales in your strata) to the Program Administrator. However, the administrator has final authority to approve or reject the valuation.

Does the 8% cap run from the date of approval or the date of closing?

The cap runs from the date the funds were advanced (closing day), which is the date the shared-equity mortgage was registered on your title, not the date your application was approved.

Is there any way to lower my repayment if I have done major renovations?

If you have completed significant home improvements, they may have artificially inflated your home's value. The program rules do not automatically deduct renovation costs from the valuation. This is why we advise owners to repay the incentive before commencing major renovations.

If I repay after 10.5 years, how is the decimal calculated?

The Program Administrator calculates the exact time elapsed to the day. For example, 10 years and 183 days is calculated as 10 + (183 / 365) = 10.501 years for the per annum cap formula.

Does the 8% cap mean the government charges 8% interest?

No. The 8% figure is not interest charged on the loan balance. It is a mathematical limit on the growth of the government's share. If your property values do not change, or if they change by less than 8% per year, the cap has no effect, and you pay the standard percentage.

What happens if I sell my home to a family member below market value?

A sale to a family member is not considered an arm's-length transaction. In this case, the Program Administrator will reject the contract price and require a professional appraisal to determine the fair market value for the repayment calculation.

Does the 8% cap protect me if the market crashes?

Yes, but only if you signed your agreement on or after June 1, 2022. For those agreements, the loss cap ensures you never repay less than the original incentive minus 8% simple interest per year. If your agreement was signed before June 1, 2022, there is no loss floor, and you simply repay the lower percentage of the depreciated market value.

Who calculates the final payout amount?

The Program Administrator (CMHC) calculates the final payout figure based on the sale contract or approved appraisal. They will issue a official payout statement to your lawyer or notary prior to completion.

Sources & Reference Documents

• CMHC FTHBI Repayment Hub Integrated program guidelines, calculations, and operational policies.