Keep in mind that if your down payment is less than 20%, you will also need to purchase standard mortgage insurance, which protects the lender if you are unable to make your payments. On the plus side, paying for insurance means you’re likely to get a better interest rate because it’s the government, not the lender, who takes the risk of default.
Help for starters on the housing market
Federal and provincial governments recognize the challenges new homebuyers face and have introduced programs and tax credits to make buying a home easier. New measures were announced in April as part of the federal government’s efforts to make housing more affordable, especially for new buyers. As a new buyer in Ontario, you may qualify for:
The plan for home buyers
This program allows you to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to make a down payment; a pair can withdraw up to a total of $70,000. You have to pay yourself back annually over 15 years; otherwise the money is treated as taxable income.
Incentive for the first time home buyer
This program acts as a second, interest-free loan that covers 5% or 10% of the purchase price of your home. Instead of interest, you repay the same percentage of your home to the government when you sell it or after 25 years. Eligibility depends on your household income, mortgage amount and place of purchase. In April, the federal government announced it will extend the program until March 31, 2025. It also said it is “exploring options to make the program more flexible and responsive to the needs of first-time home buyers, including single-person households. †
Look: what is the incentive for the first-time home buyer?
Discount on the transfer tax
First-time home buyers may qualify for a discount of up to $4,000 for any real estate transfer taxes paid on the first $368,000 of eligible homes. To claim the refund, you must be an adult who has never owned a home or an interest in a home (not even one that you inherited or donated by a family member). New Toronto city buyers are eligible for an additional $4,475 discount.
The tax credit for home buyers
This tax credit is available to Canadians who have purchased a home after not owning a home for four years or more. Buyers who meet the eligibility criteria can claim up to $5,000 on their taxes (for a $750 discount). People who bought their homes after January 1, 2022, can claim twice that amount for 2022, according to the federal government’s budget — up to $10,000. The additional amount of credit allows home buyers to qualify for a discount of up to $1,500.
What’s on the horizon?
In addition to the above programs, which are already available, more help is coming next year.
This post What It’s Like to Buy a Home in Ontario for the First Time – Really
was original published at “https://www.moneysense.ca/spend/real-estate/first-time-home-buyer-in-ontario/”