Updated: Feb 15
Buying your first home can feel like a daunting process – especially when it comes to saving the minimum 5% down payment. Fortunately, there are plenty of programs available to help first-time buyers, just like you, achieve their new home dreams:
1. RRSP Home Buyer’s Plan
The (RRSP) Home Buyer’s Plan allows home buyers to withdraw up to $35,000, tax-free, from their RRSPs to be used as a down payment. Even better, your spouse may also draw an additional $35,000 to put towards your new home. Keep in mind, RRSP funds must be available a minimum of 90 days before purchase and repaid within 15 years (starting at the two-year mark).
2. First-Time Home Buyer Incentive
Established in 2019, the First-Time Home Buyer Incentive offers first-time buyers a shared equity mortgage – in which borrowers are offered a 5 or 10% down payment, in exchange for a government-owned equity stake in their home. To qualify, applicants must have already saved the minimum 5% down and have a qualifying household income of less than $120,000 (while borrowing less than four times their income).
3. Home Buyer’s Amount
The Home Buyer’s Amount (often referred to as the First-Time Home Buyer’s Tax Credit), offsets the costs of homeownership by allowing first-time buyers to claim $5,000 on their new home purchase. Valued at $750, the one-time tax credit is beneficial for recouping costs associated with land transfer taxes, legal fees, disbursements, etc.
The following programs are also conducive to making homeownership more affordable for Canadian home buyers:
GST/HST New Housing Rebate
Intended for all home buyers, the GST/HST New Housing Rebate provides money-back on GST/HST paid on brand new builds, home renovations, major additions, and converting a non-residential property to a liveable home.
CMHC Mortgage Loan Insurance
CMHC Mortgage Loan Insurance (or mortgage default insurance) makes homeownership more affordable by allowing buyers to purchase a home with as little as 5% down. While this type of insurance will be added to your monthly mortgage costs, premiums are typically very affordable and will vary according to your down payment. For example:
Up to and including 95% = 4.00%
Up to and including 90% = 3.10%
Up to and including 85% = 2.80%
Up to and including 80% = 2.40%
Are you thinking of purchasing your first home? We can help! Our first-time buyer services are geared towards helping hopeful homeowners achieve their new home dreams. Start the process today by filling out our quick and easy pre-approval application!
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