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Homebuyers Shun CMHC’s First-Time Home Buyer Incentive

The federal government’s  First-Time Home Buyers Incentive was meant to offer a path to homeownership for those unable to tap the ‘Bank of Mom and Dad’ for down payment assistance.

Buyers shun first-time home buyers incentive

The federal government’s First-Time Home Buyer Incentive (FTHBI) was meant to offer a path to homeownership for those unable to tap the “Bank of Mom and Dad” for down payment assistance.

But first-time buyers have largely rejected the equity-sharing program that was first unveiled in September 2019, according to data tabled in Parliament and published by iPolitics.

Now halfway through the $1.25-billion three-year program managed by the Canada Mortgage and Housing Corporation (CMHC), only 14% of funds ($178 million) have been doled out to support first-time buyers.

That translates to 9,804 buyers who have taken advantage of the program so far, well short of the 100,000 buyers the government expected to assist over the life of the FTHBI.

The program involves the federal government contributing between 5% and 10% of a first-time buyer’s down payment. In exchange, the government gets an equal stake in the home’s equity, sharing in future gains or losses in value until the loan is repaid after 25 years or when the home is sold.

Of those participating in the program, the most common mortgage value is between $150,000 and $350,000, according to iPolitics. Just four successful applications were for a mortgage valued between $450,000 and $500,000.

In May of this year, the government announced changes to the program that would allow first-time buyers in Toronto, Vancouver and Victoria to qualify under the program for purchases up to $722,000, up from the roughly $505,000 limit in place for buyers in the rest of the country. The data published by iPolitics only goes to March 31, and wouldn’t include any applications that came in after the qualification changes in May.

The figures showed that homebuyers in Edmonton participated in the program more than any other city by a long-shot, at 1,288 successful applications, with Calgary a distant second at 636 applications. Toronto had just 39 homebuyers qualify for the program to date, while Vancouver saw nine and Victoria had just five.

Here’s a breakdown of successful FTHBI applications by city:


Courtesy: iPolitics.ca

Overall, Quebec has seen the highest number of participants at nearly 3,800, followed by Alberta with about 2,800. Another 770 came from Ontario and 342 were from B.C.

FTHBI Has Been Criticized From the Start

From day one, the First-Time Home Buyer Incentive had its critics. They argued that the program was ill-conceived, due largely to the fact there was virtually no industry consultation, and that it’s largely a government subsidy for those who can already qualify for a house.

But one of the biggest knocks against the FTHBI is that most first-time buyers can qualify for a larger mortgage if they don’t participate in the program.

“All eligible participants would actually be able to borrow more using a traditional 5% down insured mortgage,” Mortgage Professionals Canada President and CEO Paul Taylor told CMT previously. That’s even after the government’s tweaks that took effect in May, allowing participants in Toronto, Vancouver and Victoria to borrow up to 4.5 times their household income, up from four times.

As a result, Taylor noted the program doesn’t really create any new market entrants. “It provides an option for those who already qualify, in very specific parameters, to reduce their monthly payments at the tradeoff of home equity,” he said.

And if the current participation numbers are any indication, it appears most first-time buyers are opting for alternative ways to achieve home ownership—despite the hurdles—rather than sharing their home equity with the government through the FTHBI.

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Last modified: June 26, 2021

Steve Huebl is a graduate of Ryerson University's School of Journalism and has been with Canadian Mortgage Trends and reporting on the mortgage industry since 2009. His past work experience includes The Toronto Star, The Calgary Herald, the Sarnia Observer and Canadian Economic Press. Born and raised in Toronto, he now calls Montreal home.