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Cost Savings Programs for First-Time Homebuyers

Jackson Middleton • Nov 20, 2017

The real estate market is at its prime across the country, and there has never been a better time to be a first-time homebuyer in Canada

With both federal and provincial governments offering a number of resources, grants, and rebates to the first-time homebuyer, now may be the time to purchase your dream home. Here are five programs that can help you afford to purchase your own home without breaking the bank.

Homebuyer’s Plan

First-time homebuyers have an opportunity to use their RRSP contribution towards a down payment, thanks to the Canadian Revenue Agency’s Homebuyer’s Plan. First-time homebuyers can withdraw up to $25,000 from an RRSP account so long as the contribution was made more than 90 days prior, and will only have to pay it back over a 15-year period. This means that couples can withdraw a total of $50,000 combined from their RRSP accounts, which can make a huge contribution towards a down payment. To make a Homebuyer’s Plan withdrawal from an RRSP simply follow these stepson the Canadian Revenue Agency’s website.

GST/HST New Housing Rebate

First-time homebuyers residing in provinces that have combined provincial and federal sales tax into HST, including Nova Scotia, New Brunswick, Newfoundland, Ontario, and B.C., are eligible for an HST tax rebate through the federal government. While rebates and conditions vary from province to province, the program is designed to help with the federal portion of the HST new homebuyers have to pay. You can find out if you’re eligible for an HST New Housing Rebate, as well as all necessary application forms on Service Canada’s website.

First-Time Homebuyer’s Tax Credit

Homebuyers who have not owned a home within the last four years may be eligible for the first-time homebuyers tax credit through the Government of Canada’s Economic Action plan. The credit is based on $5,000 multiplied by the lowest federal income tax rate for that year. For example, the lowest federal income tax rate for 2014 is 15 per cent, so the value of the credit would be $750. You can learn more about the first time homebuyer’s tax credit on the Economic Action Plan website.

Energy Efficient Housing

Canada is a beautiful country filled with flowing rivers, flourishing wildlife, and vast landscapes, which is why we fight so hard to protect our environment. There are many ways homeowners can benefit from buying or building energy efficient homes. Along with a variety of national energy efficient building programs, there are also a variety of province-specific rebates and cost-saving programs to help build a more sustainable home. Be sure to consult Genworth Canada’s comprehensive list of consumer benefits, loans, refunds, and federal and provincial energy efficient home programsto explore ways you can save by going green, as well as their guide to what to look for when purchasing an energy efficient home.


This article was originally written by Genworth Canada. It was originally published here.

RECENT POSTS 

RRSP As A Downpayment

By DLC Canadian Mortgage Experts • 28 Dec, 2022
Did you know there’s a program that allows you to use your RRSP to help come up with your downpayment to buy a home? It’s called the Home Buyer’s Plan (or HBP for short), and it’s made possible by the government of Canada. While the program is pretty straightforward, there are a few things you need to know. Your first home (with some exceptions) To qualify, you need to be buying your first home. However, when you look into the fine print, you find that technically, you must not have owned a home in the last four years or have lived in a house that your spouse owned in the previous four years. Another exception is for those with a disability or those helping someone with a disability. In this case, you can withdraw from an RRSP for a home purchase at any time. You have to pay back the RRSP You have 15 years to pay back the RRSP, and you start the second year after the withdrawal. While you won’t pay any tax on this particular withdrawal, it does come with some conditions. You’ll have to pay back the total amount you withdrew over 15 years. The CRA will send you an HBP Statement of Account every year to advise how much you owe the RRSP that year. Your repayments will not count as contributions as you’ve already received the tax break from those funds. Access to funds The funds you withdraw from the RRSP must have been there for at least 90 days. You can still technically withdraw the money from your RRSP and use it for your down-payment, but it won’t be tax-deductible and won’t be part of the HBP. You can access up to $35,000 individually or $70,00 per couple through the HBP. Please connect anytime if you’d like to know more about the HBP and how it could work for you as you plan your downpayment. It would be a pleasure to work with you.

Is There A Difference Between A Deposit And Downpayment

By DLC Canadian Mortgage Experts • 21 Dec, 2022
If you’re new to the home buying process, it’s easy to get confused by some of the terms used. The purpose of this article is to clear up any confusion between the deposit and downpayment. What is a deposit? The deposit is the money included with a purchase contract as a sign of good faith when you offer to purchase a property. It’s the “consideration” that helps make up the contract and binds you to the agreement. Typically, you include a certified cheque or a bank draft that your real estate brokerage holds while negotiations are finalized when you offer to purchase a property. If your offer is accepted, your deposit is held in your Realtor’s trust account. If your offer is accepted and you commit to buying the property, your deposit is transferred to the lawyer’s trust account and included in your downpayment. If you aren’t able to reach an agreement, the deposit is refunded to you. However, if you commit to buying the property and don’t complete the transaction, your deposit could be forfeit to the seller. Your deposit goes ahead of the downpayment but makes up part of the downpayment. The amount you put forward as a deposit when negotiating the terms of a purchase contract is arbitrary, meaning there is no predefined or standard amount. Instead, it’s best to discuss this with your real estate professional as your deposit can be a negotiating factor in and of itself. A larger deposit may give you a better chance of having your offer accepted in a competitive situation. It also puts you on the hook for more if something changes down the line and you cannot complete the purchase. What is a downpayment? Your downpayment refers to the initial payment you make when buying a property through mortgage financing. In Canada, the minimum downpayment amount is 5%, as lenders can only lend up to 95% of the property’s value. Securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. You can source your downpayment from your resources, the sale of a property, an RRSP, a gift from a family member, or borrowed funds. Example scenario Let’s say that you are looking to purchase a property worth $400k. You’re planning on making a downpayment of 10% or $40k. When you make the initial offer to buy the property, you put forward $10k as a deposit your real estate brokerage holds in their trust account. If everything checks out with the home inspection and you’re satisfied with financing, you can remove all conditions. Your $10k deposit is transferred to the lawyer’s trust account, where will add the remaining $30k for the downpayment. With your $40k downpayment made, once you sign the mortgage documents and cover the legal and closing costs, the lender will forward the remaining 90% in the form of a mortgage registered to your title, and you have officially purchased the property! If you have any questions about the difference between the deposit and the downpayment or any other mortgage terms, please connect anytime. It would be a pleasure to work with you.
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