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Impact of the Cancellation of the First-Time Home Buyers Incentive

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The Canada Mortgage and Housing Corporation (CMHC) discontinued the first-time homebuyer incentive. 

Launched in 2019, the plan was meant to help reduce monthly mortgage payments for first-time buyers by having the federal government take on partial ownership of a property. The government offered a loan of up to 10 per cent of the purchase price that would go toward a larger down payment and thereby reduce monthly payments. Homeowners have to repay the incentive after 25 years or when the property is sold, with the amount owing adjusted to reflect how the property’s value has changed. 

Marilyn Magtoto, a mortgage agent, explains other challenges first-time home buyers face in Canada. 

Common challenges for first-time homebuyers in Canada include: 

  1. Affordability: Rising housing prices in many Canadian cities make it difficult for first-time buyers to afford a home, particularly in urban centers where demand is high. 
  2. Saving for a Down Payment: Saving for a down payment can be challenging, especially with high housing costs and other financial obligations such as student loans and rent. 
  3. Qualifying for a Mortgage: Meeting the criteria to qualify for a mortgage, including having a good credit score, stable income, and manageable debt levels, can be challenging for first-time buyers with limited credit history or irregular income. 
  4. Competition in the Market: First-time buyers often face stiff competition from investors and other buyers, particularly in hot housing markets where bidding wars are common. 
  5. Limited Inventory: A limited inventory of affordable housing options, especially for entry-level homes, can make it difficult for first-time buyers to find suitable properties within their budget. 
  6. Rising Interest Rates: Increasing interest rates can make homeownership more expensive by raising mortgage payments, which may stretch the budgets of first-time buyers. 
  7. Additional Costs: Beyond the purchase price, first-time buyers need to budget for additional costs such as closing costs, home inspections, property taxes, and maintenance expenses. 
  8. Understanding the Process: Navigating the homebuying process can be complex and overwhelming for first-time buyers who may be unfamiliar with the steps involved, including mortgage options, legal requirements, and negotiations. 
  9. Location Considerations: Finding a desirable location that meets their needs in terms of commute, amenities, and community can be challenging within their budget constraints. 
  10. Market Volatility: Economic factors and market conditions can impact housing prices and affordability, making it difficult for first-time buyers to predict future trends and make informed decisions. 

Addressing these challenges may require financial planning, education, assistance programs, and support from professionals such as real estate agents and mortgage brokers. Additionally, government policies and initiatives aimed at improving housing affordability and accessibility can help alleviate some of these challenges for first-time buyers. 

– Lourdes Federis, U Multicultural

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