Canada’s First-Time Home Buyers Credit isn’t helping people in big cities

As national home prices continue to hit record highs, many young Canadians are still trying to break into the market.

While the often Boomer-run bank of mom and dad is an option for some Canadian young people, this isn’t a viable route for everyone. This is the problem Canada’s First-Time Home Buyer program created by the Canada Mortgage and Housing Corporation (CMHC) is supposed to solve, but it seems to be falling short.

The First-Time Home Buyer program allows eligible buyers to receive an interest-free loan from the federal government for as much as 10 percent of a home’s purchase cost, helping Canadians with the downpayment on their first home and reducing their monthly mortgage payment. The government then takes a stake in the home valued at that loan and expects to be paid back when it’s sold or in 25 years.

However, according to figures revealed by Parliament last week and reported by iPolitics, the program has only helped 9,804 buyers with a total of $178 million in loans, a number well behind its goal of 100,000 families. Storeys says that the program was primarily used for mortgages between $150,000 and $350,000, an amount well under the current value of a home across most major cities in Canada.

For example, just five homebuyers qualified for the program in Victoria, nine in B.C. and a total of 39 in Toronto. That said, the program is more successful outside of the country’s largest cities: Edmonton (1,288), Calgary (636), Winnipeg (446), Quebec City (419), Montreal (274), Halifax (259), and Saskatoon (200).

Buyers were previously limited to having an annual household income of $120,000 or less and could only borrow four times their income from a mortgage lender. As of May 3rd, buyers in Toronto, Vancouver and Victoria can qualify with an annual income of $150,000 and borrow 4.5 times their income.

With the average cost of a home in these regions well exceeding that amount — for example, the average price of a home in the Greater Toronto Area now sits at just over $1 million — it’s unlikely that these changes will help many Canadians looking to get into the housing market. 

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