Special Programs for First Time Home Buyers

Buy Your Home With 5% Down

At Mortgage For Less we have assisted many First Time Home Buyers purchase their first home with only 5% down. Since the 5% down program was started by Canadian Mortgage and Housing Corporation it has given people right across Canada an easier opportunity to own their own home. It was changed recently to allow anybody to buy with 5% down so you no longer have to be a FTHB. This could be your 2nd or 3rd home. CMHC insurance fees of 2.75% of the mortgage amount will be added to the mortgage in this case. i.e. a $250,000 mortgage = a $6875 insurance premium added to the mortgage to make the total mortgage $256,875.

Using Your RRSPs for Down Payment of a Home!

The federal government offers a tax-free withdrawal from a Registered Retirement Savings Plan (RRSP) as a down payment for first-home buyers. It's actually a great way to buy your first home. Say you opened an RSP for $7000.00 and then later withdrew it along with your refund of $3000. If you added another $5,000 of your own savings and purchased a $300,000 home – you could be looking at a monthly carrying cost of approximately $1335.00 per month.( 35 Year Amortization / 4.25% 5 yr fixed  )  You would need a gross income of $65,000 to qualify for the mortgage. To qualify to remove your RRSP funds you would have to have had the RSPs established for at least 90 days. A great way to buy your first home tax free with the government chipping in at the same time.
There are specific guidelines for the buyer(s) to follow to qualify for this program:

• Meet Canada Mortgage and Housing Corporation (CMHC) First-Home Buyer Program Definitions.
• Each buyer may use up to $25,000 from their RRSP for down payment. That's $50,000 per couple.
• Revenue Canada defines this withdrawal as a loan to the buyer to be repaid in equal amounts within 15 years.
• The new property must be located in Canada and be the buyer's principal residence.
• A T1036 application is required to be completed and taken to the institution that holds the buyer's RRSP This Program may be used with the CMHC's First-Home Buyer's Program (5% down payment). The RSP must be established for at least 90 days before closing the housing transaction.

The Cash Back Mortgage / Zero Down payment Mortgage:

We can arrange a mortgage that will provide you up to 5% of the mortgage amount back to you on the closing date of your transaction. So in this case the lender provides the 95% financing and a further 5%-- therefore you only need your closing costs- so you have now bought your home with NO MONEY DOWN.

Well of course there is a catch..... for this situation you can expect your mortgage rate to be higher—so not always the best option.. but in many cases the extra $100 per month in mortgage payments is not an issue... and it gets you in your home sooner!!

ONTARIO Land Transfer Tax Refund for First-Time Home Buyers

Land Transfer Tax applies to all transfers of land in Ontario.

First-time homebuyers may be eligible for a refund of all or part of the tax.

How much is the Refund?

The maximum amount of the refund is $2,000. If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Revenue. No interest is paid on this refund.

Who Qualifies?

To claim a refund, you:

• must be at least 18 years of age;
• must occupy the home as your principal residence within 9 months of after the date of transfer; and cannot have owned a home, or an interest in a home, anywhere in the world.

First-Time Home Buyers’ Tax Credit – Up to $750

To assist First-Time Home Buyers with the closing costs related to purchasing your FIRST HOME.

Receive up to 15% of up to $5000 of your closing costs back as a tax credit at the end of the tax year. Maximum claim is up to $750.

An individual will be considered a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

For more information contact Service Canada at 1-800-662-6232
or visit www.fin.gc.ca