Could These Government Incentives Help You as A First Time Home Buyer?
posted in Mortgage News
An exciting prospect for many, buying your first home can also be a time of great uncertainty and stress, and as one of the biggest financial decisions you may ever be likely to make, it’s little wonder that it’s a big deal for so many.
Thankfully though, there are some government incentives and tax rebates in place to help Canadian citizens purchase their first home at affordable rates, and you’ll find some of them listed below:
The first time home buyer incentive
This flagship federal government housing initiative offers first time buyers an interest-free loan of 5% or 10% of a home’s purchase price that you can use as part of your down payment. After a period of 25 years, or when you come to sell your home, you’ll be required to pay back the same percentage in full.
Because the program is known as a ‘shared equity mortgage’, any gains or losses on the value of your home are shared by the government.
To qualify, you must be a first time home buyer, and have a qualifying household income of less than $120,000 (this amount may vary depending upon where you live). Depending on where you live in Canada, the total amount you can borrow is capped at 4 times the maximum qualifying income.
The home buyers plan
With this incentive, Canadian citizens buying a home for the first time can borrow up to $35,000 from their Registered Savings Plans (RRSOs) to put towards the purchase of a home. Tax-free, the amount can be repaid over a period of 15 years, that begins two years after you withdraw your funds.
The home buyers tax credit
This non-refundable income tax credit of $5,000 is available for first time buyers purchasing a home, and provides up to $750 in federal tax relief. While this amount may seem minimal, it can help home buyers to get back some of the closing costs that are typically associated with the purchase of a home, like land transfer taxes or pre-sale inspections. And, as they say, every little helps!
GST/HST new housing rebate
For first time buyers seeking to purchase a newly constructed home, this particular rebate can help them to recover part of the GST or HST on the cost of the property, provided you plan to use it as your primary place of residence. The rebate is also available should you plan to construct a home on land that you already own.
Provincial land transfer tax rebates
Some provinces charge a land transfer tax on home purchases, and if you live in such a province, there are a number of rebate programs that may be applicable. If you’re a first time buyer living in Ontario, for example, you may be eligible for a refund of up to $4,000.
Buying your first home is made a lot less stressful with the help of programs such as these, and by combining government incentives with the help of a professional mortgage broker, you can simplify the whole home buying process, and even lower your costs.