TL;DR: most of these programs are just for first time buyers, and some of them are "use it or lose it" so you'll want to know what they are and how/when to use them. 

3 minute read

There are a variety of beneficial programs that first-time home buyers can take advantage of to make purchasing a property easier. These include rebates and tax credits that can help you save money. 

Here are some key things that first-time home buyers need to know:

CMHC insurance

This is also called mortgage default insurance. For those buyers who are putting less than 20 percent towards a down payment, having CMHC insurance is required. This is protection for the lender, not the borrower, and will come into effect if you default the loan. Essentially, it is an important part of making lenders comfortable lending money to those with a smaller down payment. 

It is calculated as a percent of the value of the mortgage total and depends on how much you are putting towards a down payment. For down payments of less than 10 percent, insurance will be 3.6 percent of the mortgage amount. If your down payments is 10-15 percent, you will pay 2.40 percent of the mortgage amount for insurance. Those who have a down payment between 15 and 20 percent pay 1.80 percent of the mortgage amount for insurance. 

However, for homes over $1 million, CMHC insurance isn’t available. Those looking to purchase an expensive property will need to have at least a 20 percent down payment, and sometimes more is required.

It is important to know that you will need at least 5 percent for a down payment in Canada if the property is under $500,000. For home purchases over the $500,000 mark, buyers will need to pay 5 percent on the first $500,000 and then 10 percent on the amount over that. 

RRSP home buyers’ plan (HBP)

If you and your spouse have not owned a home since January 1st of four years ago (i.e. if you read this in 2019, the four year period goes back to January 1, 2015), you may be eligible for the RRSP Home Buyers’ Plan. This plan allows you to take money out of your RRSP account to cover a down payment. You can take out up to $35,000. However, this amount must have been in your RRSP for at least 90 days before you withdraw it. You will not be taxed on this money but must pay it back into your RRSP over 15 years. If you do not make the required re-payment to your RRSP each year, you will then be taxed on the portion that was not repaid for that year.

Land transfer tax rebate

Depending on the province you live in, you may be able to get some money back for the land transfer tax you paid. Residents of BC, Ontario and PEI, as well as home buyers in Toronto, can apply for the rebate. 

First time home buyers tax credit

For those first-time home buyers, the federal government offers an opportunity to get a tax credit with their next tax return. This tax credit can help replenish some of the costs you’ve paid during the home purchase process including legal fees, inspections and other closing costs. The tax credit is $750.

GST/HST new housing rebate

For Canadians who have built a new home or have had to seriously renovate an existing home or rebuild one that was destroyed there is a rebate available to help finance the costs. You don’t have to be a first-time home buyer to benefit either, this applies to all home buyers that qualify. 

Did this answer your question?