Last Updated on March 14, 2024 by CREW Editorial
On February 29th, 2024, the CMHC announced the First-Time Home Buyer Incentive has been discontinued. The deadline for new or updated submissions for the First-Time Home Buyer Incentive is midnight ET on March 21st, 2024.
All new applications and resubmissions for previously cancelled or declined applications must reach the Program Administrator by the deadline.
If an application is submitted on or before March 21st, and it’s rejected due to an application error, the mortgage loan insurer is responsible for correction and resubmission. Applications fixed after that date will need manual review, with requests submitted by March 25th. The Program Administrator will handle applications before the deadlines. No new approvals will be given after March 31st. Post-approval changes will still be considered per the Operational Policy Manual.
First-Time Home Buyer Incentive Program
Launched in 2019, the government’s plan aimed to assist first-time homebuyers in reducing their monthly mortgage payments by sharing ownership of the property. As of 2022, over 18,000 home buyers were approved for the incentive program.
The First-Time Home Buyer Incentive program provided 5% or 10% of the home’s purchase price to use for a down payment, reducing mortgage costs and making owning a home more feasible. It was a shared-equity mortgage with the Government of Canada, available for newly constructed homes, resale homes, and mobile/manufactured homes. By taking advantage of the Incentive, borrowers could afford lower monthly payments due to a smaller mortgage resulting from a larger down payment. Repayment of the Incentive was based on the home’s market value at the time of repayment, with a maximum gain or loss of 8% per annum. Repayment was required after 25 years or upon the sale of the property, with no penalty for early repayment.
Reasons for Cancelling the First-Time Home Buyer Incentive Program
The program faced various obstacles, such as the strict eligibility criteria for household income limits, cash savings, and mortgage size restrictions. These restrictions and stringent qualifications limited its accessibility, making participation in the program challenging for many applicants. Additionally, potential homebuyers were hesitant about entering a co-ownership agreement with the government, further limiting the program’s appeal. Moreover, administration of the program was complex and time-consuming.
Potential new buyers can still benefit from the First Home Savings Account Program, a registered plan which allows you, if you are a first-time home buyer, to save to buy or build a qualifying first home tax-free (up to certain limits). They can also still benefit from the The Home Buyers’ Plan, which permits individuals to withdraw up to $35,000 from their registered retirement savings plans (RRSPs) for the purchase or construction of a qualifying home, either for themselves or for a specified disabled individual.
