Purchasing your first home is a big deal and requires a large investment. That’s why you can use all the financial help you can get! There are numerous programs available to offset homebuying costs as well as help fund your down payment – which is often one of the biggest obstacles to homeownership.
Here are five key first-time homebuyer programs you should understand so that you can take full advantage of the savings.
#1 RRSP Home Buyers’ Plan (HBP)
This is a great program, as it allows first-time homebuyers to tap into existing resources. Offered by the federal government, the HBP enables you to withdraw funds from your RRSPs, tax- and interest-free, to use towards the purchase of your home. Both you and your spouse/partner can withdraw up to $35,000 for a maximum total of $70,000 per couple. Because this program is considered a loan, the funds must be repaid to your RRSPs within 15 years.
#2 First-Time Homebuyers’ Tax Credit (HBTC)
Offered to help offset closing costs associated with buying your home, the HBTC allows you to claim up to $5,000 on your personal tax return, resulting in up to $750 in your pocket. You must apply to receive the credit on the tax return in the same year you purchase a home.
#3 First-Time Home Buyer Incentive (FTHBI)
This program is designed to help ease mortgage costs for first-time homebuyers by decreasing monthly payments through shared-equity loans of up to 5% towards the down payment of a resale home and as much as 10% for newly-built homes. The idea is that, by boosting the size of your down payment, the FTHBI decreases monthly mortgage costs, making homeownership more affordable. When the FTHBI was first introduced in 2019, the maximum eligible home price eligible was four times household income, but it’s going up to 4.5 times household income in spring 2021 for three high-priced markets: Toronto; Vancouver; and Victoria. The buyer’s income threshold is being raised from $120,000 to $150,000. The changes mean the maximum home price for eligible first-time homebuyers in the three markets rises from $505,000 to about $722,000.
#4 Land Transfer Tax Refunds – Ontario & Toronto Rebates
These programs are designed to help first-time buyers offset the cost of land transfer tax, which is an unwanted, yet necessary, homebuying cost. As a first-time homebuyer in Ontario, you may be eligible to receive a rebate of up to $4,000. It’s important to note that any purchaser must never have previously owned a home or even an interest in a home. You can apply for the rebate through your real estate lawyer at the time of closing. And, if you’re a first-time buyer in Toronto, you can qualify for a land transfer tax rebate equal to the full amount of your municipal land transfer tax, up to a maximum of $4,475. Both new and existing homes qualify but, like the Ontario rebate, neither you nor your spouse are eligible if you previously owned a home.
#5 GST/HST New Housing Rebate
If you’re purchasing a newly-built home from a builder or custom-building your own home, you may qualify for a rebate of the provincial GST or the federal part of the HST you paid on the home. The new home rebate application must be filed within two years of the new home’s closing date.
Have questions about first-time homebuyer savings programs?
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