Program would offer 20-year forgivable loans to first-time buyers earning under $115,000
As monthly mortgage payments continue to climb across Canada, London city officials are pushing to revive a forgivable loan program that could offer crucial support to first-time buyers struggling to break into the housing market.
A report presented to the city’s community and protective services committee recommends relaunching a homeownership assistance plan that would offer 20-year interest-free loans of up to $25,000 for first-time homebuyers in London and Middlesex County. The program, which originally ran from 2008 to 2013, helped 270 households secure homes before it was shuttered due to limited funding.
This time, city staff say $3.1 million is available, enough to potentially support 124 households, with no impact on London’s multi-year budget. The funding is sourced from a revolving loan pool built on repayments and interest from the earlier program.
“The purpose of the fund is to ensure that repayments from previous loans are reinvested to provide new loans, which creates a sustainable mechanism to support ongoing homeownership opportunities in the City of London and Middlesex County,” said Scott Mathers, deputy manager of housing and community growth, in a statement first reported by CBC.
To qualify, applicants must be first-time buyers earning no more than $95,000 for individuals or $115,000 for families. Eligible properties must be owner-occupied, not exceed $500,000, and require an approved mortgage and home inspection. If a home is sold before the 20-year term ends, the loan and five percent of any capital gains must be repaid.
Mounting mortgage payments nationwide
Calls for the program’s revival comes as many Canadians grapple with a steep rise in monthly housing costs. A recent Zoocasa analysis of 22 cities found that average mortgage payments have jumped more than $1,000 since 2015, with some cities like Toronto and Windsor-Essex seeing increases of over 150% in a decade.
Meanwhile, TD Economics reports a rare decline in total mortgage payments, down 1.7% in late 2024, due to fewer high-balance mortgages entering the market. But that’s small comfort to first-time buyers still facing historically high entry costs and limited affordable inventory.
Many young Canadians are also struggling to save for future home purchases.
Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodig has proposed a tax break that would exempt Canadians under 30 from paying federal income tax on the first $75,000 in annual income, provided they save at least $15,000 in designated accounts.
Read more: CIBC chief calls for big tax break to help younger Canadians building savings
“They’ll save for a home so that when it’s time to buy 10 years from now, they’ll have saved up to $150,000, $250,000 and have money for the down payment,” Dodig said.
Currently, Canada’s federal tax system does not adjust for age, and the lowest tax rate of 15% applies to income up to $57,375.
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