Are you exploring first-time home buyer mortgage options? There is something you should know: the housing market in Ontario is tough. The average home price is more than $800,000. Competition is fierce. And while the market has cooled slightly, listing prices and competition will remain for the foreseeable future. But we are here to help.
First-time home buyer mortgage tips
Getting the keys to your first home requires some financial and mental preparation — as well as knowledge of all the programs that you can tap into as a first-time home buyer to give you a leg up on the competition. Let’s take a look at what you need to know.
Who qualifies as a first-time home buyer in Ontario?
The first step is to make sure you qualify for first-time home buyer incentives. In Ontario, this is relatively simple. If you have never owned a home in Canada or anywhere in the world, you are considered a first-time home buyer and qualify for first-time home buyer mortgage assistance. If your first home was given as a gift or inherited, the Ontario government does not consider you a first-time buyer.
Recently, the government has relaxed some first-time home buyer requirements for separated and divorced individuals in relation to the Home Buyers’ Plan. You can now withdraw from your RRSP within 4 years of separation. However, the entirety of the amount must go towards purchasing a new home.
In Canada, there are mortgage lending rules that require buyers to provide a minimum 5% down payment on homes that cost less than $500,000. As home prices go up, so does the minimum down payment. Ensuring you have saved enough money is a critical step on your home-buying journey.
On top of making sure you have enough money saved up, it’s also a good idea to speak with a mortgage specialist early on in the process. They can help you calculate how much you can afford and provide a mortgage pre-approval, which locks in rates and can help you finalize your purchase more quickly.
First-time home buyer mortgage assistance in Canada
Thankfully, Canada offers programs that can help first-time home buyers land their dream house.
The Home Buyers’ Plan
Provided by the Government of Canada, the Home Buyers’ Plan (HBP) is designed to help first-time home buyers break into the market. It allows you to withdraw up to $35,000 from your RRSP and put it towards the down payment on your first home. If you are buying a home together with someone, you can each withdraw that same amount for a combined $70,000. The best part is that the withdrawal is tax-free as long as you repay it within 15 years.
To qualify for the HBP, you need to:
- Be a first-time home buyer
- Be a resident of Canada
- Utilize the home within a year of purchasing or building it
First-Time Home Buyers’ Tax Credit
As a first-time home buyer mortgage seeker, you may also be eligible for the First Time Home Buyers’ Tax Credit. This non-refundable tax credit can be up to $750, and all you have to do to qualify is be a first-time home buyer.
The Home Buyers’ Amount
Introduced in 2009 as part of Canada’s Economic Action Plan, the Home Buyers’ Amount can assist Canadians by helping recover the closing costs associated with home buying. Legal expenses, taxes and inspections can add up, and this program seeks to ease that burden by offering a rebate of $1,500.
To qualify for the Home Buyers’ Amount, you:
- Must be an eligible home
- Be a resident of Canada
- Must include your home purchase on your personal tax return
- Must intend to live in the property within a year of purchase
The First-time Home Buyer Incentive
The First-Time Home Buyer Incentive is designed to help Canadians struggling to save for a down payment. If you are eligible, you can apply for a loan of 5% or 10% of the price of your new home. However, you must eventually repay the loan, which will be 5% or 10% of your home’s current value.
GST/HST Housing Rebate
To qualify for the GST/HST New Housing Rebate, you must be building a new home, rebuilding a destroyed home or significantly renovating an existing home. The rebate allows you to recoup some of the taxes that you paid towards your new home.
HW Advantage: your first-time home buyer mortgage experts
At HW Advantage, you can rest easy as a first-time home buyer. We pride ourselves on providing flexible options for our Burlington-area community. With us, you will gain access to the best rates from over 35 qualified lenders. We work with you to secure the best possible mortgage rates that fit your goals and budget. Ready to see how we can help you achieve your dreams? Contact us today or apply directly for a mortgage online.