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First Time Home Buyer Programs & Benefits

First Time Home Buyer Programs & Benefits


David Doe

Published in

Real Estate

29 Nov 2021

Even a little bit of assistance can go a long way when it comes to taking advantage of first-time homebuyer programs and rebates, especially if you're looking to buy in some of Canada's most expensive cities. The average property price - Opens in a new window in Canada as of June 2021 is $688,000, but this figure can often be much higher in hot markets like Toronto and Vancouver. This makes it even more critical for first-time homebuyers to take advantage of tax credits, first-time buyer grants, rebates, and incentives that can help with the cost of a home purchase. So if you're thinking about buying your first home in Canada, the good news is that several programs can help you fulfill your dream of becoming a homeowner.

Benefits For First Time Home Buyers

Benefits For First Time Home Buyers

• There are three national home-buying programmes to assist Canadians in obtaining a mortgage. • There are also other programmes and incentives available, which vary by province. • Taking advantage of available grants, incentives, and rebates can assist you in realizing your dream of owning a home.

In this article !

  • Federal programs
  • Provincial programs
  • Municipal programs

Federal Programs

First-Time Home Buyer Incentive (FTHBI)

The programme, which began in the fall of 2019, contributes 5 or 10% of the purchase price to your down payment. This larger down payment reduces your monthly mortgage payments, making homeownership more accessible. The FBI is a shared-equity mortgage, which means the federal government has a stake in your home. This means they will benefit from the increase or decrease in the value of your home. When you sell the property, or after 25 years, whichever comes first, you must repay the FTHBI in full. If your annual income is under $120,000 ($150,000 for homes in Toronto, Vancouver, or Victoria), and you meet the government's definition of a "first-time buyer," you may be eligible for the FBI. Your eligibility will also be determined by factors such as the type of home you want to buy, the size of your mortgage, your Canadian residency status, and more.

First-Time Home Buyers Tax Credit (HBTC)

The HBTC allows first-time buyers to claim a $5,000 tax credit on their tax return if they are eligible. You could get a $750 tax refund if you claim this credit. This money can be used to pay for things like legal fees, moving costs, and closing costs. If you and your partner bought a home that meets the government's criteria and you haven't lived in another home for any of the four years before purchase, you may be eligible.

The Home Buyer's Plan (HBP)

First-time buyers may also be eligible for the HBP, a government programme that allows you to withdraw money from your RRSP to buy or build a home. You must meet the government's criteria to qualify for this home, which can be for yourself or a family member with a disability. If you are eligible, you can borrow up to $35,000 from your RRSP without paying interest. This is per person, so if you're buying a home with a partner, you might be able to borrow up to $70,000 as a couple. The HBP, unlike other early RRSP withdrawals, is not considered taxable income if reinvested within 15 years. However, any amount that is not repaid is regarded as taxable income for that year.

Provincial Programs

GST/HST New Housing Rebate (NHR)

You may be eligible for an HST/GST tax rebate if you purchase a newly constructed home or an existing property that has been substantially renovated.' This may be the case if you're buying a home directly from the builder or custom building your own home. While the specifics vary by province, you may be eligible for a refund of the provincial (HST) or federal (GST) taxes you paid on the purchase price. It's worth noting that this rebate is available to all homebuyers, not just first-time buyers. However, if your first property falls into an eligible category, you can combine this rebate with other programmes designed specifically for first-time buyers to maximize your savings.

Land Transfer Tax Rebate (LTTR)

When you buy a home in most provinces and cities, you'll have to pay a land transfer tax. The amount of tax you'll pay is calculated as a percentage of how much you paid for your home, which can add up to thousands of dollars in closing costs. Because land transfer tax is a one-time payment that cannot be rolled into your mortgage, it's essential to think about how this one-time payment will affect the total cost of your home. However, you may be able to get some or all of this money back, as most provinces offer a partial or complete tax rebate to help first-time buyers offset this cost.

Municipal Programs

In addition to what the federal government and provincial governments have to offer, your municipality may be able to assist you. This is especially important when purchasing in markets where property prices are higher than the national average. In Toronto, for example, buyers can receive a $4,475 land transfer tax rebate. As well, keep an eye out for affordable homeownership programmes, which, while not specific to first-time buyers, can assist buyers with a lower household income or, in some cases, allow people to purchase homes up to a particular limit of price. In addition, municipalities in Ontario such as Waterloo, Windsor, Simcoe, and many others offer specific programmes.

What's Next ?

Purchasing your first home can be thrilling, but it doesn't have to be stressful. You can find out which first-time homebuyer programs and rebates may be able to assist you with the financial side of owning your first home by doing some research ahead of time.

• A mortgage specialist can help you figure out how much you can afford and which local, provincial, and federal programmes might be able to assist you.

• If you're a first-time buyer, reading, researching, and staying current on housing market news in your area can also help you feel more confident.

• Consulting a financial advisor can help you better understand your options for taking advantage of first-time homebuyer programmes and incentives.

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