First-Time Home Buyers’ Programs

So you’re a first-time home buyer? There is nothing to be ashamed of and there is little to fear, everyone has had to be a first-time buyer at some point. You’re not alone on this trip and you won’t be without help.

Here at Mortgage For Less we have assisted and serviced many first-time home buyers purchase their home.

Luckily in this beautiful country there are a variety of benefits to being a first-time home buyer. There are plenty of resources, like this website, and plenty of services to help guide you, like this brokerage and the people behind it.

Best of all you’ll benefit from Canada’s various first-time home buyer programs.

 

Use Your RRSP for Down Payment of Your Home

Traditionally any amount of money that you withdraw from your Registered Retirement Savings Plan (RRSP) is considered taxable income.

The RRSP Home Buyers’ Plan allows you, as a first-time home buyer, to make a  tax-free withdrawal (up to $25,000) from your RRSP to use towards the down payment on your home. If applicable, your spouse or common law partner may also withdraw up to $25,000 for a total combination of $50,000.

IMPORTANT NOTE: Any funds borrowed from your RRSP is required to be repaid. The repayment must begin 2 years after your purchase and must be repaid within 15 years.

This is a Canada wide program supported by the Canadian Government.

It offers an excellent advantage for you considering that you qualify for this program:

  • You must meet the Canada Mortgage and Housing Corporation (CMHC) First-Home Buyers’ Program definitions
  • Your 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 your RRSP.
  • Your RRSP must be established for at least 90 days before closing the housing transaction

Take advantage of the Land Transfer Tax Rebate for First-Time Home Buyers’

This refund is available to you if you’re buying a home in Ontario, British Columbia and Prince Edward Island.

The City of Toronto also has its own land transfer tax rebate that you may receive in combination with Ontario’s rebate.

Depending on where you live will determine how much you will recover from your Land Transfer Tax.

Here’s how the Land Transfer Tax Refund works in Toronto, Ontario and British Columbia:

Region Ontario Toronto British Columbia
Maximum rebate $4,000 $4,725 $8000
Rebate will cover Land Transfer Tax to a maximum home value of: $368,000 $400,000 $500,000
Partial refund available? 50% refund if spouse does not qualify 50% refund if spouse does not qualify 50% refund if spouse does not qualify

(For B.C. only) Partial refund for homes valued between $500,001 – $525,000, see following link for detailed chart.

Do you qualify?

In order to be eligible for the land transfer tax refund you must meet the following requirements:

  • Be at least 18 years or older;
  • Be a Canadian citizen or permanent resident of Canada.
  • Occupy the home within 9 months of the date of transfer.
  • Cannot have owned a home or had ownership interest in a home, anywhere in the world.
  • Your spouse cannot have owned a home or had ownership interest in a home, anywhere in the world, while being your spouse, but they may be a previous home owner. In the case that they were a previous homeowner, this may affect how much you receive.
  • you must apply for the refund within 18 months of purchase.
  • (For B.C. only) must have lived in B.C. for 12 consecutive months before the property is registered, or you have filed 2 income taxes in BC in the past six years.

For a legally detailed government definition of each province’s land transfer tax refund follow the appropriate links below:

 

Utilize the First-Time Home Buyers’ Tax Credit

A nearly decade old program implemented by the Federal government, it allows first-time home buying Canadians to receive a tax rebate. It helps recover the costs surrounding a home purchase such as:

  • Land Transfer Tax
  • Legal Fees
  • Home Inspection
  • Appraisal

The tax credit will currently help you recover 15% of your closing costs, up to a max of $750.

Do you qualify?

In order to be eligible for the tax credit you must meet the following requirements:

  • Be a first-time home buyer (obviously) or have not resided within an owned property within four-years, including your spouse’s home.
  • Be purchasing a new or existing home (of any type: detached, semi-detached, townhouse, condo, mobile or floating home) within Canada.
  • Have the intention to live in the home within one year of purchase.
  • The home must be registered in your name and, if applicable, your spouse’s name.
  • Have documented proof of your purchase.

This tax credit exists to assist first-time home buyers with the closing costs related to purchasing their first home.

With this credit, you can receive up to 15% of your closing costs (to a maximum of $750) as a tax credit.

For more information follow the link to the government website, First-Time Home Buyers’ Tax Credit (HBTC)

 

Buy Your Home With 5% Down-Payment

Through the Canadian Mortgage and Housing Corporation (CMHC) you can purchase a home with 5% down-payment.

The only requirements are:

  • your home purchase price be no more than $500,000
  • you insure your mortgage through CMHC

More than $500,000?

If your home purchase price is more than $500,000 you can purchase your home with a 5% down-payment on the first $500,000 combined with a 10% down-payment on the excess amount between $500,000 and $1,000,000.

CMHC insurance premiums are a follows:

  • 5% – 9.99% down-payment = 4.0% of the mortgage amount will be added to your mortgage principal
  • 10% – 14.99% down-payment = 3.1% of the mortgage amount will be added to your mortgage principal
  • 15% – 19.99% down-payment = 2.8% of the mortgage amount will be added to your mortgage principal

Any home over $1,000,000 requires a minimum 20% down. In this case no mortgage insurance is required.

For more information click the following link:

 

GST/HST New House Rebate

Though this is not a rebate exclusive to first-time homebuyers, we recommend that you take advantage of it if you’re purchasing a new home.

This rebate helps Canadian who paid GST or HST on their new home, renovating an existing home or rebuilding a home due to loss by fire.

To qualify for this rebate your home must be your primary residence.

Canadians who qualify can receive a rebate on the GST they paid on their new home. In Ontario you can receive a rebate on the HST you paid to renovate an existing home or the purchase of a new home.

For more information follow the link to the government website, GST/HST new housing rebate

 

A mortgage specialist from Mortgage for Less can help you figure out if your mortgage loan qualifies for these program and assist you with the process. Feel free to contact us!

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