Congratulations! You’ve decided to take the exciting step towards homeownership in Canada. The process can seem daunting, but there are several resources available to help first-time homebuyers like yourself navigate the journey. This article will explore some key government programs and incentives designed to make buying your first home more affordable.
What it is: The HBP allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to use for a down payment on your first home.
Eligibility: You must be a first-time homebuyer (not lived in a home owned by you or your spouse in the last 4 years), and meet RRSP contribution requirements.
Amount: You can withdraw up to $35,000 per person, with a maximum combined amount of $70,000 for a couple.
Repayment: You have 15 years to repay the withdrawn funds back into your RRSP.
What it was: This discontinued program offered a shared-equity mortgage with the government. It provided an interest-free loan of 5% for an existing home or 10% for a newly constructed home to put towards a down payment.
Benefits: Reduced monthly mortgage payments and lowered overall purchasing costs.
Many provinces and territories offer additional first-time homebuyer programs. These can include grants, tax credits, and reduced land transfer tax rates. Research programs available in your specific province to see if you qualify for additional benefits. Here are some resources to get you started:
Canadian Home Builders’ Association: https://www.chba.ca/ (Look for your provincial chapter)
Canada Mortgage and Housing Corporation (CMHC): https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive
Save for a Down Payment: While the FTHBI is no longer available, saving a strong down payment is still crucial. Aim for at least 5% of the purchase price, but a higher down payment will reduce your mortgage amount and monthly payments.
Improve Your Credit Score: A good credit score qualifies you for better mortgage rates, saving you money in the long run.
Get Pre-Approved for a Mortgage: Pre-approval gives you a clear picture of your affordability range and strengthens your offer when making bids on houses.
Consulting with a mortgage agent can be a valuable step. They can guide you through the mortgage application process, help you compare rates from different lenders, and ensure you get the best possible financing options for your situation.
By understanding these resources and planning effectively, you can increase your chances of achieving your dream of homeownership in Canada.
*Note: This article is for informational purposes only and should not be considered financial advice. Always consult a qualified professional before making any financial decisions.
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