They did give incentives. In fact, it was only through incentives that the wars were fought at all! The monarchies of both kingdoms relied on private financing for all the campaigns of reconquest as they had little money in their treasuries and they did not have standing armies (no European king did at the time).

In order to raise armies, the king licensed individuals to recruit, pay, and lead soldiers. Those licenses typoically stipulated certain benefits for successful completion of a campaign. They could be monetary (tax prerogatives), or social (noble title), political (posts in government), or some combination of the three. Many of the leaders were given noble titles that had economic and political components. In fact during the last two centuries of the Reconquista the bestowal of new titles expanded the nobility in castile by 3 or 4 times its previous number.

The other side to this is that there were still Christians in the lands being conquered, even at the very end in Granada there were Christians. In general, there were no massive resettlement campaigns because the lands were already settled.