(Ottawa) The first-time home buyer incentive program, perceived by many as being of little use, has ended.
The Canada Mortgage and Housing Corporation (CMHC) made the announcement on its website. In a notice, it indicates that the deadline for new applications or updates to the program is March 21 at midnight Eastern time.
The initiative was intended to help first-time buyers by allowing the federal government to take partial ownership of their property.
The government offered a loan of 5 to 10% of the purchase price which made it possible to make a larger down payment in order to reduce monthly payments.
Homeowners must repay the incentive after 25 years or when the property is sold, with the amount owed adjusted to reflect changes in the value of the property.
The program was held back in part by eligibility issues, including limits on household income and the amount of mortgage a buyer could take out.
The borrower’s total income could not exceed $120,000, or $150,000 in Toronto, Vancouver or Victoria, while the total borrowing could not exceed four times the qualifying income, or 4.5 times in the three most expensive cities.
The program was of little use because it didn’t help buyers build a minimum down payment, according to James Laird, co-CEO of Ratehub.ca and president of mortgage brokerage CanWise.
Additionally, the restrictions meant some borrowers qualified for lower amounts than they otherwise would have gotten, he argues.
The government ownership component also added complications to a convoluted and poorly thought-out program, Mr. Laird says.
“It was literally like they were sitting alone in a room, with no one who understood the industry, and they were just making up a bunch of stuff that didn’t make any sense,” he says.
The federal government already helps first-time buyers by supporting uninsured mortgages, but if Ottawa wants to do more, it could allow amortizations to be spread over 30 years, he said.
“This reduces the monthly cost […] and there is no complicated co-ownership contract,” says Laird.
CMHC did not immediately respond to a request for comment.
The first-time home buyer incentive was launched in 2019 with a commitment of 1.25 billion.
By the end of 2022, CMHC had committed $329 million, which represents approximately 18,500 requests.