First Time Buyer Plans & Programs [Read Before Buying]
I am not a mortgage broker and to properly understand what you'll be eligible for, it's a good idea to connect with a mortgage broker. They offer free consulations.
Let's start off by busting an important myth that's way to common amongst new buyers: It's that you need 20% down to buy a home. For the majority of first time buyers, you only need 5% down!
1. Down payment:
For first-time home buyers, the down payment is probably the main thing you'll need to think about for your first purchase. In Canada, you must put down a minimum of 5% as a down payment for homes less than $500,000. If the purchase price is between $500,000 and $1 million, you'll need 10% on the amount between $500,000 and $1 million. For houses over $1 million, the minimum down payment is 20%.
2. $5,000 non-refundable income tax credit for first time buyers:
To assist first-time homebuyers with home purchase costs, the Government of Canada offers a FTHP Tax Credit - a $5,000 non-refundable income tax credit amount on a qualifying home. The credit will provide up to $750 in federal tax relief for an eligible individual. Learn more from canada.ca here.
3. First-Time Home Buyer Incentive:
The First-Time Home Buyer Incentive helps people across Canada purchase their first home. The program offers 5 or 10% of the home’s purchase price to put toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making home ownership more affordable. Learn more here. Learn more from the programs website here.
4. RRSP Home Buyer’s Plan (HBP):
If you haven’t purchased a home within the last 4 years, you may qualify for the RRSP Home Buyer’s Plan. With this plan, you can borrow up to $25,000 tax-free from your RRSP to fund your down payment. The catch is that the money must be in your RRSP at least 90 days before the purchase of your home.
The First Time Home Buyer’s Plan is great for Canadians because generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt but you must start repaying the amount borrowed from the RRSP two years after you buy over a 15-year period. Learn more from Canada.ca here.
5. GST/HST New Housing Rebate:
The GST/HST New Housing Rebate offers money back to Canadians who buy a newly built home, substantially renovate an existing home, or rebuild a home that was destroyed due to fire. In all three cases, an individual will incur GST/HST on their purchase. Since there is no HST in Alberta, only GST applies here. Learn more on Canada.ca here.
If you'd like to get connected with quality mortgage brokers near you, text or call me at 780-257-2439 and I'll be glad to send you some referrals.
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