Six Incentives For First-Time Home Buyers

Purchasing your first home can be an exciting experience, but monetary constraints can force you to postpone your decision. After all, buying a house is a significant financial undertaking that takes years to repay. Fortunately, the Canadian Government offers a variety of grants and special programs for first-time homebuyers to help meet their housing needs. Taking advantage of these incentives will ease your financial burden and may even alleviate some of the stress. 

In this article, MassMortgageGroup.com has covered six incentives for first-time homebuyers to purchase the home of their dreams. Each one provides a unique benefit aimed to ease overall mortgage payments. Keep reading to take advantage of them.

1. CMHC Shared Equity Program.
Under this program, the Canada Mortgage and Housing Corporation (CMHC) provides 5% of the cost of an existing home or 10% of a new home for first-time buyers with a minimum of 5% downpayment for an insured mortgage. With the maximum allowable household income of $120,000, the top purchase price would be approximately $505,000 with a 5% downpayment and about $565,000 for a 15% downpayment. If you’re a first-time homebuyer and want to use this program, you are required to repay the incentive after twenty-five years or when you sell the home based on the property’s fair market value, whether it has increased or decreased in value.

2. RRSP Home Buyer’s Plan.
As a first-time buyer, you can withdraw from your RRSPs of up to $35,000 per person tax-free to buy or build a qualifying home. This can be a significant boost to your overall downpayment and may help you reach the 20% downpayment needed to avoid mortgage default insurance premiums. You are required to repay the withdrawn funds on a fifteen-year repayment plan that begins at the start of the second calendar year after withdrawal.

3. First-Time Home Buyer Tax Credit.
If you are a qualifying first-time buyer, you can claim a portion of your home purchase on your personal tax return for the year of purchase. This will help offset your closing costs, such as legal fees. The $5,000 non-refundable tax credit provides up to $750 in federal tax relief.

4. HST New Housing Rebate.
If you are purchasing a new construction home or performing substantial renovations to an existing house, you can recover some of the tax that you paid if all eligibility conditions are met. The Canada Revenue Agency’s Guide RC4028 – GST/HST New Housing Rebate – has all of the specifics. To obtain this incentive, you will need to submit the form applicable to you along with your personal income taxes within two years of the actual closing date.

5. Green House Program.
Homeowners purchasing a qualifying energy-efficient home with an insured mortgage are eligible for a mortgage insurance premium refund of up to 25%, which can be a substantial saving! If you buy a house and renovate it to make it more energy-efficient, you can also apply for this refund.

6. Land Transfer Tax Rebate.
Land transfer tax, which is a percentage of the purchase price, can be a big surprise to homebuyers because the amount can be substantial. In Ontario, homeowners can receive a full or partial rebate of up to $4,000. The City of Toronto offers an additional rebate of up to $4,475.

As you can see, there are many incentives available for first-time homebuyers to benefit from. Unfortunately, not many homebuyers are aware of them and end up paying more on their mortgages than they should. To avoid a similar fate, it’s vital to obtain expert advice early on.

At MassMortgageGroup.com, we are licensed and affiliated with Mortgage Intelligence. Our team consists of senior mortgage agents and brokers who bring decades of experience to the table. Together, we offer a range of mortgages to satisfy various financial needs, from first and second mortgages to commercial and construction financing for small and large projects. We also specialize in securing mortgages for those who have a hard time obtaining funds from major banks due to their credit issues or type of occupation.

To learn more about our services, please click here. If you want us to review your situation and offer important money-saving advice, get in touch with our mortgage experts by clicking here.