Where did The First-Time Home Buyer Incentive Go?

The federal loan program that assisted first-time homebuyers with down payments in exchange for equity in the property was discontinued on March 21, 2024. The reason given was that it was deemed to have an insignificant impact on addressing housing challenges. The program aimed to support first-time buyers by having the government acquire partial ownership of their homes.

Through this initiative, the government provided loans of either five or ten percent of the purchase price, intended to increase the down payment and ultimately decrease monthly payments. Participants were required to repay the incentive after 25 years or upon selling the property, with the repayment amount adjusted based on changes in the property's value.

However, the program faced various challenges such as eligibility criteria, including household income limits and restrictions on mortgage size. For example, in most areas of Canada, the total borrower income could not exceed $120,000, and the total borrowing was limited to four times the qualifying income. In major cities like Toronto, Vancouver, and Victoria, the maximum income allowed was $150,000, with borrowing capped at 4.5 times the qualifying income.

One criticism of the program was that it did not assist buyers in meeting the minimum down payment requirements, leading some borrowers to qualify for smaller loan amounts than they needed. Additionally, there were complaints about the decision-making process behind the program, with some considering it lacking industry expertise and impractical.

Furthermore, the program incurred extra legal expenses for participants. Launched in 2019 with a $1.25 billion commitment, the first-time homebuyer incentive had allocated $329 million by the end of 2022, representing approximately 18,500 applications.

The central question raised by the program's discontinuation was about individuals not willing to share homeownership with the government.