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What Are My First Time Home Buyer Benefits?



It is a common myth that your FTHB status impacts the minimum down payment requirements to purchase a property. The following breakdown is how the minimum down payment works for any owner occupied purchase in Canada:




Am I a FTHB? What seems like an obvious answer is actually a little more complex than it may appear. You are considered a first time home buyer if you meet any of the following criteria:

  • You have never purchased a home before

  • You did not occupy a home that you or your current spouse or common-law partner owned in the last 4 years (the 4-year period begins on January 1 of the fourth year before the Incentive is funded and ends 31 days before the date the Incentive is funded)

  • You have recently experienced the breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time home buyer requirements)

Now, what are my incentives if I’m considered a FTHB?


Federal Incentives:


  1. Home Buyers Program (HBP): As a FTHB you are eligible to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to use as a down payment to buy your home.

  2. Place to Call Home: Under this incentive you are eligible to receive up to 10% of the purchase price of your new home as an equity mortgage from the government. In order to qualify for this incentive, in addition being a FTHB you must meet the following criteria:

  • Your total annual qualifying income doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria)

  • Your total borrowing is no more than 4 times your qualifying income (4.5 times if the home you are purchasing is in Toronto, Vancouver or Victoria )

  • You or your partner are a first-time homebuyer

  • You are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada

  • You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)

If you utilize this incentive you must be aware that the government is getting an equity share of your new home proportionate to the down payment they supply. If you purchase a newly built home for $400,000 and the government gives you $20,000(or 5%) to contribute to your down payment and you then sell the property 8 years down the line at $500,000 you owe them 5% of the sales price ($25,000).

BC Provincial Incentive:


In British Columbia, the FTHBI is designed to save you money on the Property Transfer Tax (PTT). PTT generally works out to be 1.5% of the purchase price, however, each situation varies. In order to qualify for a full exemption at the time the property is registered you must:


  • Be a Canadian citizen or permanent resident

  • Have either:

  • Lived in B.C. for at least a year immediately before the date you register the property

  • Filed at least 2 income tax returns as a B.C. resident in the last 6 taxation years immediately before the registration date

  • Have never owned a registered interest in a property that was your principal residence anywhere in the world at any time

  • Have never received a first time home buyers' exemption or refund

and the property must:

  • Only be used as your principal residence

  • Have a fair market value (FMV) of $500,000 or less

  • Be 0.5 hectares (1.24 acres) or smaller



As you can see there are a variety of incentives available to you as a FTHB. It is important to know your options. These incentives can be very beneficial given the right situation.


Call (250) 889-1686 to find out more about your options as a first time home buyer!





Sources:


https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html

https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers


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The short answer is: All kinds! The type of income used for qualifying will be based on several factors. Mainly it is based on specific regulations/requirements set by the Lender. As a mortgage profes