Everything You Need to Know About First-Time Home Buyer Incentives in Ontario
If you’re a first-time home buyer in Ontario, you may feel a mix of excitement and anxiety about buying your first home. We know that it can be a stressful experience, especially if you’re unsure what to expect or have concerns regarding affordability.
However, with some preparation, guidance, and financial assistance, you’ll be able to navigate the process with more confidence. This article will discuss what you can expect as a first-time home buyer in Ontario and several incentive programs to be aware of.
Knowing What to Expect as a First-Time Home Buyer
As a first-time home buyer in Ontario, you can expect the process to involve several steps and to take some time to complete. Let’s discuss some of the common steps involved.
The first step is to get your finances in order. This involves examining your income, savings, and debts to determine how much you can afford to spend, in addition to exploring the several first-time home buyer incentives available (which we will explore shortly).
It’s also important to get pre-approved for a mortgage. Doing so will give you a better idea of the price range of homes you can afford and will help make you a more competitive buyer when you’re ready to make an offer.
Once you have a sense of your budget, you can start looking for homes that fulfil your needs.
When you find a home that meets your criteria, you can make an offer to the seller. As many Ontario markets are currently experiencing extreme competition among home buyers, it’s essential to exercise patience during this stage and not feel discouraged if you don’t get the first property you place an offer on.
After receiving an acceptance, you will enter into a contract to purchase the home. This contract will outline the terms of the sale, including the closing date along with any conditions that must be met before the sale can be completed. You will also need a home inspection to ensure the property is in good condition. If any issues are discovered during the inspection, you can negotiate with the seller to have them addressed before closing.
Once all of the conditions of the contract have been met, you will be ready to close on the purchase of your new property. This typically involves signing a mortgage agreement, paying any remaining balance on the purchase price, and transferring the ownership of the home to you.
Incentives for First-Time Home Buyers
First-time home buyers in Ontario have a number of incentives available to them to help make homeownership more affordable.
These incentives can reduce the upfront costs of purchasing a home and provide support for ongoing expenses such as mortgage payments and property taxes. Keep reading to learn about these programs.
Incentive #1: The Home Buyers’ Plan
The Home Buyers’ Plan (HBP) is a program that allows first-time home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use as a down payment on their first home.
To be eligible for the HBP, the buyer must not have owned a home in the previous four years, and the RRSP funds must exist in the account for at least 90 days to be withdrawn. The money withdrawn under the HBP must be repaid to the RRSP over a period of 15 years, with the first payment due in the second year after the withdrawal is made.
Incentive #2: The First-Time Home Buyer Incentive Program
The Canada Mortgage and Housing Corporation’s (CMHC) First-Time Home Buyer Incentive Program (FTHBI) allows first-time home buyers to reduce their monthly mortgage payments without increasing their down payment. The amount of the incentive depends on the buyer’s household income and the location of their home.
The incentive is a shared equity mortgage, which means that the CMHC will provide a portion of the financing for the purchase of the home and will share in any increases or decreases in the value of the property. The buyer must also have a minimum down payment of 5% of the purchase price.
Incentive #3: Land Transfer Tax Refunds for First-Time Home Buyers
The Land Transfer Tax Refund program in Ontario offers a refund of up to $4,000 on the land transfer tax for first-time home buyers, and is available for homes valued up to $368,333. The amount of the refund decreases as the value of the home increases, so the maximum refund is only available for homes valued at or below the maximum eligible value.
To be eligible for the program, the home must be the buyer’s principal residence, and the buyer must not have owned a home in the previous four years. The deadline to apply for the refund is 18 months after the date of the transfer of the property.
Incentive #4: The First-Time Home Buyer Tax Credit
The First-Time Home Buyer Tax Credit (HBTC) is a non-refundable tax credit that can be claimed on the tax return for the year in which the home was purchased. The amount of the credit is equal to a percentage of the purchase price of the home, up to a maximum of $5,000.
To be eligible for the credit, the home must be the buyer’s principal residence, and the buyer must not have owned a home in the previous four years.
Turn Your Dream of Homeownership Into a Reality
If you are looking to buy your first home in Ontario, then look no further. Serving Ontario and the GTA for almost 20 years, Canadalend.com has become one of the largest and most preferred brokerages in the province.
To learn more about our mortgage plans and financing solutions in Toronto, call Canadalend.com at 1-866-I CAN LEND or contact us here.