A small expansion of the First Time Homebuyers incentive
To make homeownership more affordable, the government launched the $1.25 billion First-Time Home Buyer Incentive in September 2019. The incentive is a shared equity mortgage that allows eligible first-time home buyers to lower their mortgage payments by sharing the cost of buying a home with the government. In exchange, the government shares in the equity growth.
The government is expanding eligibility in Toronto, Vancouver and Victoria, Canada’s highest priced housing markets. With the expansion, eligible buyers in those cities will be able to purchase a home up to 4.5 times their household income, an increase from the current limit of 4 times household income. In addition, the eligible buyer’s income maximum is being raised from $120,000 to $150,000 for Toronto, Vancouver and Victoria. These changes will come into effect in Spring 2021. With a minimum down payment, this targeted expansion will raise the maximum house price eligible for the program in those cities from about $505,000—the current program limit—to about $722,000.
That program change may lead to a small decrease in rental demand in Toronto, Vancouver and Victoria. Such a decrease in demand will not be welcome to rental housing providers, given the decrease in market rents in the downtowns of those cities. However, many of the households who use the expanded program may already live in the suburban areas, where rental demand has held up well until now.