There are all sorts of programs and incentives out there to help make the dream of homeownership a reality for first time buyers.
But with so many options, it can be tough to figure out where to start. Here at Integrum Mortgage, we put together 6 steps and programs for you to look into and get you on the journey of owning your first home.
Step 1: Create a personal savings strategy
The first step to becoming a first-time home buyer is creating a personal savings strategy. This means figuring out how much you need to save for a down payment, as well as any other associated costs like legal fees, land transfer taxes, and moving expenses. Once you have an idea of how much you need to save, set up a budget and start putting away as much money as you can each month.
Step 2: Take a look at your down payment alternatives.
There are a few ways to come up with the money for a down payment on your first home. You can use your own savings, borrow from family or friends and even borrowing from the home buyers plan from an RRSP.
Step 3: Understanding The Home Buyer’s Plan
One First Time Home Buyer Incentives is The Home Buyer’s Plan is a great way for first-time home buyers to withdraw money from their RRSPs to use as a down payment. Under this plan, you can withdraw up to $25,000 from your RRSP without having to pay any taxes on the withdrawal. This money must be repaid within a period of 15 years.
Step 4: Understanding The First Time Home Buyer Incentive
The First Time Home Buyer Incentive is a new program that was introduced by the Canadian government in 2019. This program allows first-time home buyers to receive up to 10% of their home’s purchase price from the government, which can be used as a down payment. The incentive is interest-free and does not have to be repaid until the home is sold.
Step 5: Understanding The first home savings account
In an attempt to make home ownership more accessible in Canada, the federal government will launch a tax-free first home savings account (FHSA) in 2023.
A New First Time Home Buyer Incentives The FHSA is a new type of registered account that allows first-time house buyers who are at least 18 years old to save up to $8,000 per year towards the purchase of a home. The account combines the benefits of RRSPs and TFSAs: Contributions to an FHSA are tax-deductible (like as RRSPs), and the money, including any investment growth, is tax-free when withdrawn (like TFSAs). The funds in an FHSA must be utilized to acquire a home within 15 years of opening the account; otherwise, they must be transferred to an RRSP and taxed at the time of withdrawal.
Step 6: Start early and consult with professionals
The sooner you start saving for a down payment, the better. And, when it comes time to actually purchase your first home, be sure to consult with the professionals. Your real estate agent and mortgage broker from Integrum Mortgage will be able to help you navigate the home-buying process and find the best programs and incentives for you.