These Incentives for First-Time Homebuyers Could Save You Thousands at a Time When You Need it Most

It's fair to say that buyers could use a little help these days. 

Especially first-time homebuyers. 

If you are a first-time buyer feeling a bit overwhelmed by the financial responsibilities of home ownership, you’ve come to the right place! We compiled a list of 5 incentives for first-time homebuyers that could save you thousands of dollars at a time when you need it most.  

1. Land Transfer Tax Refund

When you purchase a property, the buyer is responsible for paying for the land transfer tax. This is typically part of the closing fees when you close on a property. However, eligible first-time home buyers may receive a refund of up to $4,000 from the Ontario government. Some eligibilities listed on the Ontario.ca website include the following:

• Participants in this incentive must be at least 18 years of age to be eligible.

• Neither you nor your spouse can have owned a home anywhere in the world (this would no longer qualify you as a first-time homeowner)

There are a few other limitations and steps to apply, which you can find here.

2. First-Time Homebuyer Incentive

The First-Time Homebuyer Incentive is also provided by the government and will help first-time homebuyers get into their first home.

With this incentive, eligible first-time home buyers can receive the following from the Government of Canada:

• 5%-10% of the purchase of a newly constructed home

• 5% for buyer's purchase of a resale home

• 5% for the buyer's purchase of a new or resale mobile or manufactured home

Who qualifies for these incentives? Here are some of the criteria: 

• The incentive is available to first-time homebuyers with a combined annual income of less than $120,000. 

• The participant must have an insured mortgage.

• The incentive amount cannot be greater than 4x the qualified annual income.

• The participant must meet minimum down payment requirements through traditional savings or a nonrepayable gift from a relative or immediate family member. 

Here's an example:

Heather, a first-time homebuyer, wants to buy a new home for the price of $400,000.

Under the First-Time Home Buyer Incentive, Heather can apply to receive $40,000 in a shared equity mortgage from the Government of Canada. This is 10% of the cost of a new home. This ultimately lowers the amount she needs to borrow, reducing her monthly expenses. As a result, Heather's mortgage is $228 less each month or $2,736 a year.

Want to learn more about this incentive? Ask your Professional, Loving, Local Realtor^® to find out if you can qualify!

3. The Home Buyer's Plan (HBP)

One of the most daunting tasks when it comes to buying a home (especially your first home) is saving for the down payment. The Home Buyers' Plan (sometimes called HBP) is a tool that is ideal for first-time home buyers to achieve this goal. 

If you are eligible for the Home Buyer's Plan, you can withdraw (tax-free) from your registered retirement savings account (RRSP) to buy a home or build one. If you meet the eligibility criteria, the Home Buyer's Plan permits you to withdraw up to $35,000 ($70,000 for a couple). Once you've withdrawn the amount needed for your home, you will have 15 years to repay what you've borrowed without paying interest, starting two years after you withdraw. 

4. CMHC's First-Time Home Buyer Incentive

Offered by the Canada Mortgage and Housing Corporation (CMHC), The First-Time Home Buyer Incentive helps first-time buyers increase their down payment.

How much is the First-Time Home Buyer Incentive?

This incentive for first-time homebuyers is 5% of the property's value for an existing home and 5% or 10% for a new home. Similar to the HBP, this home buyer incentive is also an interest-free loan. Once the property is sold, you must reimburse the loan. If the property has not been sold within 25 years from the purchase, this loan will need to be repaid. The amount for this incentive that will have to be repaid will depend on the property's value at the time of payment. 

Here's an example:

The couple Heather and Bryan want to buy a new condo for the amount of $400,000. They have saved up $20,000 for a 5% down payment and therefore received a $40,000 incentive. This is 10% of the condo's value. 

Their mortgage, therefore, will be $340,000, to be paid monthly for the amount of $1,745. 

Had Bryan and Heather not opted for this incentive, they would have needed to pay $1,973, which works out to an extra $228 each month. 

When it is time to repay the incentive, Heather and Bryan will have to pay 10% of the condo's current market value.

5. First-Time Home Buyer's Tax Credit

You can claim First Time Home Buyers' Tax Credit on your annual tax return in the year you buy a property. This is another great incentive to put more money back into your pocket after purchasing your first home. 

Until 2022, this rebate was for the amount of $750 for eligible first-time homebuyers. However, when the government passed the 2022 budget, the rebate amount for 2022 and subsequent taxation years increased to $1,500. To learn more about eligibility, click here. 

Professional Guidance

Our Professional, Loving, Local Realtors^® are ready to give you the Professional Guidance you need to help you every step of your journey to homeownership. We can help you make the most of your first property purchase by determining which home buyer incentives you qualify for so you can keep more of your hard-earned money in your pockets. As part of our commitment to give our clients the Best Experience, Guaranteed, we will go full out^® for your first home-buying experience. 

Are you ready to begin your Best Real Estate Experience?

Call us today at 1.888.918.6570, send us an email.

There’s absolutely NO OBLIGATION. Consultations with our team of experts are FREE.