Struggling to Save for a Down Payment? These First-Time Buyer Programs Can Help

If you’ve been dreaming about buying your first home but can’t seem to come up with enough cash, these first-time buyer programs may be the answer.

Home Buyers’ Plan

The Home Buyer’s Plan (HBP) allows first-time buyers (or anyone who hasn’t purchased a home in the last four years) borrow up to $35,000 from their RRSPs to put towards a down payment. The same applies to partners and spouses (for a total of $70,000), with the same four-year clause.

Details:

• The qualifying home must be your primary residence
• When applying for the HBP, you must provide a written agreement to purchase (or build)
• RRSP funds must be available 90 days before purchase
• Withdrawals under the HBP are tax-free but must be paid back in full within 15 years

First-Time Home Buyer Incentive 

A federal program geared toward lowering mortgage costs for Canadians, the First-Time Home Buyer Incentive allows eligible applicants to receive an interest-free down payment loan – as provided by the Canada Mortgage and Housing Corporation (CMHC).

Details:

• The loan must be repaid within 25 years
• Down payment amounts include 5% for existing homes and 10% on new builds
• Minimum 5% down payment must be provided
• Household income cannot exceed $120,000
• Down payment amount cannot exceed 4x the applicant’s annual income or $480,000

First-Time Home Buyers’ Tax Credit 

The First-Time Home Buyers’ Tax Credit helps new home buyers recoup home-related costs through a $5000 non-refundable tax credit. For first-time owners, this amounts to an additional $750 in federal tax relief, which will be applied to your return the following year.

Details:

• Applies to single-family homes, townhomes, duplexes, semi-detached homes and condos
• Must be a first-time buyer (you have not owned a home or lived in a home owned by your partner within the last four years)
• The home must be occupied within one year of purchase

GST/HST New Housing Rebate

The GST/HST New Housing Rebate allows homeowners to recoup tax-related costs associated with building a new home, major renovations, home additions and/ or converting a non-residential property into a home. Rebate sums will vary depending based on the chosen property and project.

Details:

• The rebate must be claimed within two years of possession
• The fair market value of the newly constructed home must not exceed $450,000

The Peak Initiative Program (Alberta Only)

Geared towards middle-income families, the Peak Initiative Program provides down payment assistance to employed Albertans looking to purchase a home. To be eligible for the program, candidates must prove they can qualify for a mortgage as well as maintain their monthly payment. From here, PEAK will offer either a partial or full down payment (maximum 5%) in the form of a second mortgage.

Details:

• Must have minimum $1000 to put towards the overall down payment
• Household income must not exceed $80,000 (no children) or $90,000 a year (with children)
• Applicants must qualify for the PEAK equivalent of a five-year, fixed-rate mortgage

First-Place Program (Edmonton Only) 

Partnering with local banks and builders, Edmonton’s First-Place Program re-purposes surplus schoolboard land into new townhome developments. While the homes maintain fair-market value, the program offers a five-year deferral on the land-related portion of the mortgage.

Details:

• Must be a first-time homebuyer
• Must be employed with a household income of less than $117,00
• Applicants must qualify for a mortgage (25-year amortization) with a suggested 5% down payment
• Net worth must not exceed $25,000 (this does not include a down payment, RRSPs or vehicle assets)

Looking for more first-time buyer help? We’ve got you covered! Download your free copy of our Step by Step Guide For Buying Your First Home or get in touch with us, we’re always here to help.

Photo credits: freepik.com

Categorised in: First-Time Home Buyer, Mortgage & Financial

This post was written by Terry Paranych Real Estate Group