First Time Home Buyer Incentives

We are now well in to 2021, and this year’s real estate market is on fire! With many people frantically searching for a home, and First-Time Home Buyer’s left thinking what options are available to them, it’s a good time to recap what incentives are available. Although making that transition into homeownership may still be daunting, there are some government incentives in place help alleviate some of the stress by taking some of the burden out of the initial costs of homeownership.

Land Transfer Rebates

One of the most overlooked expenses when it comes to purchasing a home is closing costs. A large contributor to these closing costs is the land transfer tax required to be paid. Prior to purchasing your home, take a look at what rebates might be available in your province as well as your municipality. Continuing into 2021, the First-Time Home Buyers Land Transfer Rebates are available in the provinces of Ontario, British Columbia, Quebec, and Prince Edward Island, with municipal top-ups available in cities like Toronto. Each province follows specific guidelines for these rebates, and British Columbia is no exception. When determining if you qualify for a Land Transfer Tax Exemption in BC, and how to apply, visit gov.bc.ca, and speak with your Mortgage Broker and legal professional.

The Government of Canada’s First Time Home Buyer Incentive Program

The Government of Canada’s First Time Home Buyer Incentive Program is an incentive that contributes 5% or 10% of the homes’ value toward your downpayment. This incentive is a shared equity mortgage, meaning the government ultimately owns that 5% or 10% of the home value, and shares in the upside and downside of the property value as markets fluctuate. This 5% or 10% ownership is due back to the government upon the sale of the home, or following 25 years of ownership, whichever comes first. Eligibility for this program is based on a handful of factors listed below:

• The maximum annual qualifying income must not exceed $120,000

• You must be considered a First-Time Home Buyer

• You may receive 5% if purchasing an existing resale home or mobile/manufactured home

• You may receive 10% if purchasing a newly constructed home

RRSP Home Buyers’ Plan

Another incentive program that has been around for quite some time now is the RRSP Home Buyers’ Plan. This incentive allows First-Time Home Buyers to withdraw up to $35,000, tax-free, from their RRSP to buy or build a home. The amount withdrawn must be repaid over a period of 15 years, which can be done simply by making deposits back into your RRSP. Keep an eye on this incentive as it has increased over the years due to its popularity, and will likely increase again.

The Government of Canada is always introducing and updating incentives to help First-Time Home Buyers enter the housing market. When beginning to search for your first home, ensure you do your research to see which incentives are available in your province or municipality; as new incentives are introduced, others may be phased out, or funding may be depleted. If you're thinking about purchasing your first home, or are looking for some mortgage advice, contact me, Karen Canning at TMG The Mortgage Group. I would be happy to review your financial situation and recommend a mortgage solution or incentive that is right for you!