Understanding the End of the First-Time Homebuyer Incentive

People hold in their hands a sign for sale after first-time homebuyer incentive was scrapped by CMHC

Canada’s federal housing authority has announced the discontinuation of the First-Time Home Buyer Incentive (FTHBI), a shared-equity initiative aimed at assisting newcomers to the housing market. This program, which sought to ease the financial burden on first-time buyers, will not accept new applications after March 31. Those interested in the program have until midnight EST on March 21 to submit or adjust their applications.

CMHC Scraps First-Time Homebuyer Incentive

Details on the FTHBI Closure

Introduced in September 2019, it was part of the Liberals’ National Housing Strategy. This loan helped first-time buyers reduce their mortgage size. The FTHBI provided an interest-free loan of five to ten percent of a home’s price. It aimed to make buying homes more affordable.

The scheme allowed the government to hold an equity stake in the purchased property, capped annually at 8% on both gains and losses. This was designed to lower monthly mortgage payments and provide financial relief to homebuyers. However, repayment of the loan, along with a share of any equity gains, was required either upon selling the property or at the 25-year mark, with an option for early repayment without penalties.

Despite its well-meaning intentions, the program faced challenges, particularly in markets where home prices are significantly high. Official figures reveal that by April 30, 2022, out of 23,411 applications, only 15,925 were approved, falling short of the expected 100,000 in its initial three years. Additionally, the program only disbursed $269 million, a fraction of the anticipated funding.

Critique and Future Directions

Critics argue that the FTHBI’s structure, including shared-equity terms and income limits, limited its appeal and effectiveness. Clay Jarvis from NerdWallet highlighted the program’s struggles from inception, pointing to its limited attractiveness to prospective homeowners.

Despite the program’s shortcomings, there is a continued call for innovative solutions to support first-time homebuyers. As the demand for housing outpaces supply, finding ways to make homes more affordable remains crucial.

James Laird of Ratehub.ca suggests that extending the mortgage amortization period to 30 years could be a more effective measure in supporting first-time buyers, offering an alternative to the now-discontinued incentive.


The discontinuation of the First-Time Homebuyer Incentive marks the end of an ambitious attempt to make homeownership more accessible for Canadians. The program’s limited impact highlights the need for ongoing innovation and support in housing. It shows efforts to help buyers must continue. As Canada moves forward, the focus remains on finding viable, impactful ways to assist first-time homebuyers.

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