First-time homebuyer incentive is discontinued, says federal housing agency

The first-time homebuyer incentive has been discon‐ tinued by the Canada Mort‐ gage and Housing Corpora‐ tion (CMHC), the federal agency announced on Thursday.

The deadline for new or resubmitted applications to the program is midnight ET on March 21, 2024, according to the CMHC's website.

Launched in 2019, the plan was meant to help re‐ duce monthly mortgage pay‐ ments for first-time buyers by having the government take on partial ownership of a property.

The government offered a loan up to 10 per cent of the purchase price that would go toward a larger down pay‐ ment and thereby reduce monthly payments.

Homeowners have to repay the incentive after 25 years or when the property is sold, with the amount owing adjusted to reflect how the value of the property has changed.

The program was ham‐ pered in part by eligibility is‐ sues, including limits to household income and the size of a mortgage the buyer could take on.

Apoorva Pande, a firsttime homebuyer in Toronto, said he and his wife wouldn't be eligible for the incentive because their combined in‐ come is too high to qualify. The maximum allowed is $150,000.

"Ideally, they should have increased that limit, but [it's] unfortunate that it's actually getting scrapped," he said.

Pande said he and his wife have been househunting for two years.

"There's just basically chronic shortage of supply," said Pande. "Therefore, when so many people are looking to buy houses ... you can ex‐ pect multiple offers on the same house. And then you don't want to get into a bid‐ ding war and pay beyond your means."

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Restrictions made only a small pool of applicants eli‐ gible

"We had a lot of young Canadians asking about this program," said Leah Zlatkin, a mortgage broker in Toron‐ to.

However, applicants were required to meet specific cri‐ teria - including qualifications related to annual income and cash savings - that made the program restrictive. Only two of Zlatkin's clients qualified for it in the entire time that program was running, she said.

Other clients bowed out when they understood that they'd be entering a co-own‐ ership agreement with the government.

"When they understood it was a shared equity pro‐ gram, many people weren't

as interested," said Zlatkin. They ended up financing elsewhere, because they did‐ n't want to share the equity as it appreciated, she added.

While Zlatkin thought the program was a good idea, it was "an administrative night‐ mare," with the cost of the administration involved far outweighing the number of successful applicants, she said.

"If so few people are actu‐ ally utilizing the program, why run it?"