When it comes to home buying, the landscape of high prices for properties in Ontario seems to be the only option for you. But first time buyers are still successful in the Ontario housing market every day. In 2021, the annual average price rose by nearly 20% in Ontario and nearly half the buyer base had been first time buyers. Moving into your new home is not an easy task in Ontario. In some cases it requires an advantage from local, provincial and federal incentives. So what are these incentives and who qualifies for them?
So Who qualifies as first-time buyer in Ontario?
In order to qualify for the First Time Home Buyers Incentive, you must be a Canadian citizen or permanent resident over the age of 18. You must also be pre-approved for a mortgage and not have owned another home within the past four years. Additionally, you must plan to occupy the home as your primary residence and live in it for at least nine months of the year.
If you think you may qualify for this incentive, contact a mortgage broker today to find out.
Home Buyers’ Amount tax credit (HBA)
Home buyers’ amounts or HBA tax credits have been created to support home buyers in purchasing a property for the first time. The HBA is an annual nonrefundable $2,500 credit for qualified properties acquired after January 27, 2009. A person can have up to 750 credits. Your application for this award must meet the following qualifications.
1) If your spouse purchased the property.
2) in the same year as acquiring a property in a different place than you did in any previous year.
3) you can use the same amount of credits on both properties
4) you must live in the property for a period of at least one year.
The HBA is an additional incentive that could help you save money when buying your first home.
If you’re not sure how much you can afford, speak to one of our mortgage experts. They can help you create a budget and figure out how much you can realistically afford to spend on a home.
No matter how much money you have saved, it’s important to be smart about your purchase. Don’t stretch yourself too thin financially just to buy a particular home. It’s important to be comfortable with your monthly mortgage payments.
Once you know how much you can afford, you can start searching for homes in your price range. Be sure to work with a real estate agent who can help you find the perfect home for your needs.
The Home Buyers Plan Incentive (HBP) is a federal program designed to help first-time home buyers purchase their homes. It allows eligible individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) towards their down payment without incurring any tax penalties.
In order to be eligible, you must be a Canadian resident and have not owned another home in the past four years. You must also use the withdrawn funds to purchase or build your principal residence within one year of withdrawing the money from your RRSP.
The HBP can provide a significant financial boost for first-time home buyers who might otherwise struggle to come up with a down payment. However, it’s important to remember that you will have to pay back any amount withdrawn from your RRSP within 15 years or you will be faced with tax penalties.
Making the decision to purchase a home is an exciting yet daunting experience. Thankfully, there are several programs available that can help make the process easier, more affordable, and less stressful. If you’re a first-time buyer, it’s worth researching these programs to see if any of them can help make your homeownership dreams come true.
Other Incentives you may not of heard of
- Land Transfer Tax Refunds: The Land Transfer Tax Rebate Program offers a rebate of up to $4,000 on your land transfer tax if you are buying a home for the first time. To qualify for this program, you must be an Ontario resident and meet all the criteria for the FTHBI.
- Canada Mortgage and Housing Corporation (CMHC) Insured Mortgages: The CMHC offers insured mortgages to help reduce the costs associated with buying a home for first time buyers.
- The Homeownership Assistance Program provides financial assistance to eligible low-income households in Ontario who are looking to purchase their first home. To be eligible, you must meet all the criteria for the FTHBI as well as have an annual household income below a certain amount. In addition, you must also take certificates in budgeting and home maintenance that are offered through approved organizations.
Take advantage of these programs as you look for your dream home in Ontario, and make sure to explore all the options available to you. With the right information and support, you can be successful in buying a home in Ontario.
so now that we know about some of the incentives Canada offers to first time home buyers, lets talk about your down payment.
Second time home buyer Ontario
Unfortunately you cannot use the FTHB incentives to purchase a second property. However, there are a few programs available to you that may help with the purchase of your new home.
The Land Transfer Tax Rebate Program can also provide relief to eligible first-time home buyers who are purchasing an eligible home. This program provides a refund of up to $4,000 on the Land Transfer Tax for eligible transactions.
How the down payment affects the total cost of your mortgage?
The size of your down payment will affect the total cost of your mortgage. The larger your down payment, the lower the amount you will need to borrow and the less interest you will have to pay over the life of your loan. This can result in significant savings in both monthly payments and overall costs over time.
For example if you have a down payment of 5% for a $500,000 mortgage your payments would be higher than if you had a 10% down payment. This is because with the 5% down payment your loan amount would be $475,000 and with the 10% down payment it would be $450,000. The higher loan amount results in greater interest over the term of your mortgage as well as larger monthly payments.
It’s important to note that if you are purchasing a home under the First Time Home Buyer Incentive, your down payment must be at least 5% of the purchase price. If it is less than 5%, you will not qualify for the incentive and therefore won’t be able to benefit from any of its associated benefits.
Some other questions you may have:
Those who acquire qualifying homes will receive up to $700 in non-refundable taxes. This value can be computed by multiplying $5,000 by the lower tax rate (150% by 2020).
There are several ways you can get money for a down payments for the first time home buyer program. These include: savings, personal loans, Registered retirement savings plan (RRSP withdrawal), Gifts from family members and government grants.
You must save at least 5% or more on your purchase and borrow the remainder for your loans (the mortgage) from banks. The loan will be secured against a property up until you repay it.
Owner-Owned Homes: 5% on initial $500k, 10% on more than 500k. Total of two to reach a minimum. The 20% deposit will be the minimum payment required to avoid any CMHC deductible
Closing costs are fees and charges associated with a home purchase. These may include appraisal fees, title insurance, inspection fees, lawyer’s fees, taxes, and other miscellaneous costs related to the transfer of property between a buyer and seller. Closing costs can range from 1% to 5% of the sale price of a home.
It is important to consider how much you can afford before you start shopping for a house. The larger the down payment, the lower your monthly mortgage payments will be. You should also consider closing costs and other associated fees when budgeting for a home such as the home’s purchase price. Additionally, make sure to factor in ongoing expenses like insurance, property taxes and repairs/maintenance. With a plan in place and the right financial help, you can make homeownership an achievable goal.
Buying your first home with Integrum Mortgage
Integrum Mortgage is here to help you through the entire mortgaging process, from researching your options and discussing budgeting to helping you find the best mortgage option for your needs.
We understand that first-time homebuyers need personalized guidance and support. Our team of knowledgeable professionals can offer advice on all aspects of financing a home purchase and provide resources to make the process as smooth and stress-free as possible. So, don’t hesitate to reach out for help.