Purchasing your first home can be both exciting and overwhelming given the vast array of information and choices available. Thorough research is essential to ensure securing the best mortgage deal for your new home.
Considerations for first-time homebuyers
Down Payment: First-time buyers can opt for as little as a 5% down payment. However, those providing less than a 20% down payment are required to obtain mortgage default insurance, commonly known as CMHC Insurance, available from providers like The Canadian Mortgage and Housing Corporation, Sagen, and Canada Guaranty. Higher down payments result in lower CMHC insurance payments and may help secure lower mortgage rates.
RRSP Home Buyers’ Plan: Eligible individuals with retirement savings accounts may withdraw up to $35,000 from their RRSP tax-free to aid in financing their first home purchase.
First-Time Home Buyers’ Tax Credit: This credit offers first-time buyers an opportunity to recoup some of the costs incurred during the purchase, particularly closing costs such as legal fees and inspections.
Land Transfer Tax Rebate: In select provinces like Ontario, British Columbia, and Prince Edward Island, first-time homebuyers may qualify for a rebate on a portion of the Land Transfer Tax paid. Additionally, Torontonians may be eligible for an additional rebate on top of the provincial allowance if they are first-time homebuyers.
Eligibility Requirements For The RRSP Home Buyers’ Plan (HBP)
- RRSP funds must be in a registered savings account for a minimum of 90 days before withdrawal.
- The buyer must not have owned a home within the past four years.
- If purchasing with a spouse who isn’t a first-time homebuyer, the borrower cannot have resided in the spouse’s home within the previous four years.
- The buyer must have a written agreement to buy or build a qualifying home.
- The Intention to reside in the home within one year of purchase and use it as the primary residence is required.
- Previous users of the Home Buyers’ Plan must have no outstanding balance.
- Withdrawal from the RRSP must occur within 30 days of taking title to the home.
- The applicant must be a Canadian resident.
