I think it's more the latter. The application process hasn't been outlined; it will follow. The idea is that applying for the insured mortgage should take into account that the availability of the incentive, if the borrower qualifies for it, would be able to reduce the size of the insured mortgage. That insured mortgage size would be the basis on which they would qualify.
One other point of clarification of the incentive is that because the borrower has to qualify under existing mortgage insurance rules, the incentive would not decrease the down payment required for an insured mortgage. There are minimum down payment requirements, and the incentive would not change that.