Pro Tips: First Time Home Buyer Aid

Buying your very first home is no small decision. There is much more involved than just “finding the house”. You may find there are more costs involved than you had imagined. It’s bigger than just saving enough money for your down payment. Things such as legal fees, inspections, taxes, insurance, and moving expenses should all be part of consideration when making your decision.

First-time home buyers in Canada are fortunate to have access to some programs available to help them in their venture. The following are four first-time home buyer programs you may qualify to apply for when you are ready to move forward.

The Home Buyers’ Plan (HBP)

This program is offered through the Canadian Revenue Agency (federal program) and allows a first-time buyer to withdraw up to $35,000 tax-free from their registered retirement savings plan (RRSP) to use as a loan to buy (or build) their first home. To qualify, you must be a first-time home buyer, have an agreement to buy or build, and you must plan to live in the qualifying home as your principal residence within one year after purchase. This money must be repaid within a 15 year period to avoid any penalties.

GST/HST New Housing Rebate

This program is specific to Canadians buying a newly constructed property (or substantial renovations to your existing home). The GST/HST new housing rebate allows you the opportunity to recoup some of yourtax expenses. The home you purchase (or your own home substantiallyrenovated) must have a fair market value under $450,000 and must be yourprimary residence.

The First-Time Home Buyer Incentive

This program is overseen by the Canada Mortgage and Housing Corporation (CMHC) , and its goal is to reduce monthly payments with a shared-equity mortgage with the federal government. New buyers can claim 5% or 10% of the property’s purchase price to put toward a down payment. Within a 25-year period, or when the home is sold, the same percentage value of the home is paid back. For example: you purchase a home worth $200,000 today and claim 5% from the program. 15 years from now you sell that home for $350,000 - you would then be paying back 5% of the $350,000 valuation. The homeowner can also pay back the incentive in full at any time. If buying a new construction home, purchasers can take 5% or 10%, and, if purchasing a resale property or a mobile home, buyers can take a 5% incentive. To be eligible for the First-Time Home Buyer Incentive , your household income must not exceed $120,000, your total borrowing cannot be more than four times your qualifying income, and you must meet minimum down payment requirements.

The Home Buyers’ Tax Credit (HBTC)

This program offers first-time buyers up to $5,000 of the purchase with a qualifying home purchase. This includes single family, semi-detached, condominium and townhouse properties that are fully completed or under construction. Once again, you must intend on using the property as your primary residence no later than one year after purchase. This rebate is simply entered on your tax return (line 31270). Note: The rebate can be split between spouses by applying on each return (combined amounts not to exceed the $5,000 total)

Things are constantly changing in real estate. If you are looking for the latest information and professional advice just give us a call! We will gladly share our experience and expertise. If we don’t have the answers, we are connected to a variety of professionals who will know them.

-Deb & Michelle