Six Incentives for First-Time Buyers

September 20, 2019 | Posted by: Ingrid Faisal

Six Incentives for First-Time Buyers

Before and after buying your first home, don’t leave money on the table! Be sure to take advantage of the programs and incentives offered that can best help you achieve your dreams for homeownership and financial security, which include:

  1. CMHC Shared Equity Program

The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home for first-time buyers with the minimum 5% down for an insured mortgage. With the maximum allowable household income of $120,000, the top purchase price would be approximately $505,000 with 5% down, and about $565,000 for a 15% downpayment.  You are required to pay the incentive back after 25 years or when you sell the home based on the property’s fair market value, whether it has increased or decreased in value.

                First-Time Buyer Incentive 

 

No Incentive

5% Incentive

10% Incentive

Purchase Price

$500,000

$500,000

$500,000

5% Down

$25,000

$25,000

$25,000

Incentive

$0

$25,000

$50,000

Mortgage

$475,000

$450,000

$425,000

Mortgage + Mortgage Insurance

  $494,000

  $463,950

 

  $436,900

Monthly Payment

$2,260

$2,122

$1,999

Monthly Savings

 

$138

$261

Yearly Savings

 

$1,656

$3,132

                         Assumes 25 yr am, 5 yrs, 2.69%

 

  1. RRSP Home Buyer’s Plan

First-time buyers can withdraw from their RRSPs up to $35,000 per person tax free to buy or build a qualifying home, which can be a big boost to your overall downpayment and may help you reach the 20% down needed to avoid mortgage default insurance premiums. You are required to repay the withdrawn funds on a 15-year repayment plan that begins the second calendar year after withdrawal.

  1. First-Time Home Buyer Tax Credit

Qualifying first-time buyers can claim a portion of their home purchase on their personal tax return for the year of purchase, which will help to offset your closings costs such as legal fees. The $5,000 non-refundable tax credit provides up to $750 in federal tax relief.

 

  1. GST New Housing Rebate

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

 

  1. Green House Program

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

  1. 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 BC, homes purchased for under $525,000 can receive a full or partial rebate of up to $8,000.

 

Have questions? Without a doubt the mortgage and homebuying world is a complex one! Getting expert advice early is a key part of the homebuying process. Get in touch at any time for a review of your situation and important money-saving advice!

 

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