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Federal government discontinues First-Time Home Buyer Incentive

The Canada Mortgage and Housing Corporation (CMHC) has announced the discontinuation of the First-Time Home Buyer Incentive (FTHBI), marking the end of a program that aimed to assist Canadians in entering the housing market. The decision comes as the program faced criticism for its restrictions on income levels and property values, particularly in areas where the average purchase price exceeded the set thresholds.

Daniel Vyner, the principal broker at DV Capital, noted that the program's limitations, especially regarding income and property values, made it challenging for many Canadians, particularly amid uncertainties in real estate, interest rates, and the economy. The program's performance reportedly fell short of its targets, prompting the government to reevaluate its housing plans.

According to the federal government's National Housing Strategy website, the FTHBI had a budget of up to $1.25 billion, with around $408.92 million utilized. The initiative aimed to assist up to 100,000 homebuyers, but only about 22,826 participated in the program.

A CMHC spokesperson revealed that the program was initially expected to expire in the 2021-22 fiscal year but received an extension in the 2022 budget. However, after a comprehensive review of federal housing plans, the government concluded that the First Home Savings Account (FHSA) would be a more effective tool for helping first-time homebuyers.

Over 500,000 Canadians are currently using the FHSA account, and reallocating funds from the discontinued FTHBI will enable the government to refocus on other impactful policy areas, according to CMHC.

James Laird, co-CEO of and president of CanWise mortgage lender, criticized the FTHBI, highlighting significant flaws in its design. Laird suggested that allowing all consumers to amortize their mortgages over 30 years would have been a more effective way to support first-time homebuyers. He pointed out that a similar program in British Columbia had failed years prior, and attention to those lessons could have saved taxpayers millions.

The FTHBI, launched in September 2019, aimed to reduce monthly mortgage payments for new homeowners without increasing down payment costs. Qualifying home buyers were offered an interest-free loan of between five and 10 per cent in exchange for the government sharing in the home's equity.

Penelope Graham, director of content at, explained that the program struggled to gain traction in the Canadian real estate market, especially in larger cities, where home value caps were perceived as unrealistic. The income requirements and limitations on eligible mortgages further restricted its appeal.

Laird criticized the program for effectively involving the government in homeownership, stating that it did not make sense for prospective buyers. The shared equity agreement with the government raised concerns about appreciating home values benefiting the government, while homeowners were responsible for maintenance costs.

NerdWallet Canada spokesperson Clay Jarvis expressed hope that the discontinuation of the FTHBI would not discourage the government from exploring innovative ways to help first-time homebuyers. Jarvis emphasized the need for prioritizing initiatives to make homeownership more affordable, considering the ongoing challenges in meeting housing demand in Canada.



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