“Dead On Arrival”: CMHC Ends First-Time Home Buyer Incentive

After years of lacklustre uptake, Canada Mortgage and Housing Corporation (CMHC) is putting an end to its First-Time Home Buyer Incentive. The program was launched just over four years ago to help qualified first-time homebuyers reduce their monthly mortgage payments.

An update provided on CMHC’s website confirms that the incentive is being “discontinued,” and notes that the deadline for new or updated submissions is March 21, 2024, at midnight Eastern Time.

The program — which has enabled Canadians to tap into an interest-free loan from the federal government for up to 10% of their first home’s purchase price — was introduced with the expectation that it would help as many as 100,000 families. By March 2021, however, data showed that the program had reached only 9,804 buyers.

In the thick of interest rate hikes, in June 2022, Canada’s housing agency opted to shake up the rules for the incentive, placing (retroactive) caps of 8% per year on both the upside and downside returns it would receive on its share in homes participating in the program. Needless to say, the change wasn’t particularly well-received.

“I’d say it’s beyond time for the government to pull the plug on the First-Time Home Buyer Incentive, but that would imply that it had been alive in the first place,” said NerdWallet Canada spokesperson and real estate expert, Clay Jarvis, in a statement provided to STOREYS.

Jarvis also underlined the program’s dismal uptake, pointing out that the program received less than 16,000 applications between the time of its launch and March 2022.

“In that same period, only $285M of the $1.25B set aside for the program — about 23% — had been committed to eligible borrowers,” he said.

“The incentive was dead on arrival. A shared equity agreement with the federal government was never going to appeal to many people, and the program’s income limits were probably too low. The government tried to make it more appealing by limiting the amount of equity it was entitled to, but no one cared.”