The first problem arose with the amount of restrictions required to qualify, including a maximum household income, limits to the size of the mortgage, and a minimum down payment. With so many people failing to qualify to apply, the program was deemed "undersubscribed." In the end, the federal government's forecast was met with roughly one-fifth of the estimated number of approved applicants.
From the CMHC:
The FTHBI has been undersubscribed and cannot provide significant impact to address housing challenges, as currently designed. This change ensures that the government continues to invest in areas focused on increasing housing supply and restoring affordability levels for Canadians.”
FTHBI offered qualifying first-time home buyers a unique approach to affording their home’s down payment, with an interest-free loan of 5 - 10% in exchange for the government sharing in the home’s equity. This meant the government would get a slice of any value appreciation in the property, as well as be impacted by any losses, up to a maximum of 8% per annum. [Source]
Many homebuyers who might have applied walked away once they realized they would be sharing ownership (and therefore any equity) with the federal government. It was also reported to be an administrative disaster due to the amount of work and cost it took to apply in relation to successful applications.
The official deadline for new or updated submissions is midnight EST on March 21, 2024.
