First-Time Home Buyer Programs
August 29, 2018

If you’re buying a home for the first time, it is advisable that you make inquiries into the different programs available that can help you save money on the buying procedures. These programs can include applicable rebates, the minimum amount you need to pay as down payment, and the how to raise the down payment amount by paying the minimum of tax. Here are some other factors you need to be aware of.

Mortgage Default Insurance

The CMHC insurance is devised to make it easier for homeowners with low down payments to get a mortgage by offering some amount of assurance to the lenders.

  • You must purchase mortgage default insurance if you’re offering a down payment of less than 20% of the property value.
  • Mortgage insurance is equivalent to a percentage of the mortgage amount value. Here is the structure:
    • Down payment of 5% to 9.99%, the mortgage insurance amount is 3.6%.
    • Down payment of 10% to99%, the mortgage insurance amount is 2.40%.
    • Down payment of 15% to99%, the mortgage insurance amount is 1.80%.
  • If you’re buying a house of the value of $1 million and above, you need to raise the entire 20% down payment of the home value. CMHC insurance is not available on such purchases.

RRSP Home Buyer’s Plan

If you’ve been living in a home owned by your spouse for the past 4 years and haven’t bought a house in this time, you can avail of the Home Buyer’s Plan offered by the government. If you’ve had adequate funds in your RRSP for at least 90 days before the purchase of your home, you can borrow up to $25,000 from the RRSP to fund the down payment without incurring any taxes.

This factor can prove advantageous since, typically, any early borrowing against the RRSP incurs tax. While you don’t need to pay tax, you must begin making payments towards the loan amount two years after the property purchase and clear the loan within 15 years.

Land Transfer Tax Rebate

As a resident of Prince Edward Island, British Columbia, Ontario, or Toronto, you can qualify to receive a provincial rebate and rebate on the land transfer tax. The rebate amount is dependent on conditions such as location and whether or not you’re a first-time homebuyer.

First-Time Home Buyer’s Tax Credit

The non-refundable First-time Home Buyer’s Tax Credit was first announced in the 2009 federal budget and helps first-time homebuyers to recover purchase costs of inspections, legal fees, and other expenses to the amount of $750.

GST/HST New Housing Rebate

If you qualify for this rebate, you can get back the GST section of the cost of a new home or for renovation in the case of:

  • Purchase of a newly constructed home
  • Rebuilding of a home destroyed in a fire
  • Major renovations in an existing home


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