The federal government's First-Time Home Buyer Incentive (FTHBI) is winding down after a four-year run. Launched in 2019, this program aimed to ease the financial burden on first-time buyers by offering shared-equity mortgages. The government would contribute a portion (5% or 10%) of the down payment and then share in the future appreciation (or depreciation) of the home's value.
Program Impact: A Mixed Picture
Nationally, the FTHBI struggled to gain widespread adoption. Only 22,827 homebuyers were approved since its launch in 2019, far fewer than the initially projected 100,000. Eligibility limits, especially in high-cost markets like Toronto and Vancouver, hampered the program's reach.
Interestingly, Alberta showed the highest uptake of the FTHBI program across Canada, with 7,800 approvals. While the program provided assistance to some Albertan buyers, it ultimately faced limitations in addressing the broader challenges of housing affordability.
Reasons Behind the Program's End
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Limited Reach in High-Cost Markets: The program's income limits and restrictions on eligible purchase prices made it less impactful in cities with expensive real estate.
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Uncertain Repayment: The shared-equity model meant buyers were unsure how much they would ultimately have to repay the government upon selling their homes.
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Rising Housing Prices: The FTHBI's fixed contribution percentages became less significant as Canadian housing prices soared, further widening the affordability gap for buyers.
While the FTHBI is ending, that doesn't mean your homeownership dreams have to be put on hold! There are still excellent alternatives to consider, and depending on your situation, these options might even be a better fit:
National & Alberta-Specific Options
National Programs:
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RRSP Home Buyers Plan (HBP): This national program allows you to tap into your RRSP for a down payment, up to a maximum of $35,000 per person. Remember, withdrawn funds must be repaid within 15 years, so plan accordingly.
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First Home Savings Account (FHSA): Launched in 2023, this innovative program lets you save specifically for a down payment. Contributions are tax-free (up to the annual limits), and withdrawals for your first home purchase are not taxed. This program offers flexibility and tax benefits compared to traditional savings accounts.
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HBP vs. FHSA: A Quick Note: Both the HBP and FHSA offer tax advantages to help first-time buyers, utilizing registered account structures. The key difference is that the HBP requires repayment whereas the FHSA does not. Additionally, these programs can be used together to significantly boost your down payment potential! For more information (Scotiabank)
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First-Time Home Buyers' Tax Credit (HBTC): While not directly contributing to your down payment, this national tax credit offers a rebate of up to $1,500 to help ease the burden of closing costs associated with your first home purchase. Every bit helps!
Calgary-Specific Programs:
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Attainable Homes Calgary: This program offers interest-free down payment loans of up to 5% of the purchase price for eligible Calgary residents with household incomes below $131,424. Similar to the FTHBI, there's a shared-equity component, but here the program is specifically tailored to the Calgary market.
Navigating homeownership can be complex, but you don't have to do it alone. I'm here to offer clarity and support, answering your questions and connecting you with the best resources. Let's start the conversation – reach out to me anytime!
