Your Guide to Becoming a First-Time Home Buyer

WHO IS CONSIDERED A FIRST-TIME HOME BUYER?

MYTH: Someone who has never owned a home in Ontario before.

FACT: Someone (or their spouse) who has not owned a home anywhere in the world, including any inherited properties, for at least 4 years prior to their property purchase.


DO YOU NEED MORTGAGE LOAN INSURANCE?

MYTH: As a first time home buyer you always need mortgage loan insurance.

FACT: You only need mortgage loan insurance if you are paying less than 20% down payment. It is purchased by the lender on the mortgage given, and the cost is passed on to the homeowner.


HOW MUCH DOWN PAYMENT DO YOU NEED?

MYTH: You need only 5% down payment as a first-time home buyer.

FACT: he down payment for first time home buyers is calculated as: 5% of the purchase price up to $500,000 + additional 10% of the purchase price between $500,000 and up to $999,999. Anything over $1,000,000 needs a 20% down payment.

INCENTIVES AND PROGRAMS FOR FIRST-TIME HOME BUYERS

1. Ontario Land Transfer Tax refund

  • Land transfer tax is usually 0.5-2% of the purchase price, and the largest portion of closing costs.
  • Can get a refund of up to $4,000.
  • Must live in the home as primary residence within 9 months of closing.
  • Can claim within 18 months of closing.

2. First-Time Purchaser Rebate (Toronto only)

  • Additional Tax relief...up to $4,475.
  • On a new build or resale property in Toronto only.
  • Must live in the home as primary residence within 9 months of closing.
  • Can claim within 18 months of closing with proof of residence,

3. First-Time Home Buyer Incentive

  • Shared equity program with Federal Govt.
  • Loan of 5-10% of the property's current value .
  • To be used towards the down payment.
  • Loan is interest-free but Govt. owns a share of your house.
  • The repayment is based % of the loan taken, NOT on $ value. For example, if you took a 5% loan in 2023, and are returning in 2026, you will need to return 5% of the current value of the home in 2026.
  • Must be paid back within 25 years.

4. Home Buyer’s Plan

  • Can withdraw $35,000 /person out of RRSP tax-free.
  • Money must be in RRSPs for at least 90 days prior to withdrawing.
  • Need to live in the house as primary residence within a year of buying it.
  • Funds withdrawn from RRSP must be repaid within 15 years.

5. First Home Savings Account (FHSA)

  • Contributions are tax-free.
  • Can contribute up to $8,000 tax-free to the account per year, up to a max. of $40,000 lifetime
  • Can withdraw for buying the first house without the need to repay.

6. First-Time Home Buyer Tax Credit

  • $10,000 non-refundable income tax credit against the new home to offset legal costs, inspection costs, and other similar closing costs.
  • Adds up to a max of $1500 tax rebate.

7. GST/HST new housing rebate

  • Only on new builds or properties that have been significantly renovated.
  • Needs to be a primary residence.
  • Can get back part of GST / HST paid.