It’s no secret that Canada’s housing market is defying all odds and making serious gains during the COVID-19 pandemic.
According to the Canadian Real Estate Association, by March of this year, the average home price had risen to $678,091, a 25% increase from the year prior. National home sales rose 5.2% between February and March, creating an all-time record.
In a market this expensive, prospective buyers can use all the help they can get. Luckily, the Government of Canada offers a number of homebuyer assistance programs that can make the financial pain of that big purchase a little easier to handle. Find out if you’re eligible for any of the following home ownership incentive programs in Canada.
One of the good things about being a first-time homebuyer? There are several programs designed to assist you, like the First-Time Home Buyer Incentive. This incentive offers 5% or 10% of the home’s purchase price toward a down payment. As a result, you have a lower carrying cost on your mortgage. You’re eligible for the incentive if, as the name suggests, you’re a first-time homebuyer in Canada. (You can also take advantage of it if you’ve recently ended a marriage or common-law partnership.)
You do have to pay the incentive back, however, when you sell your home, or within 25 years of purchasing it — whichever comes first.
As of this year, buyers in Toronto, Victoria or Vancouver Census Metropolitan Areas are eligible for an increased qualifying annual income of $150,000 instead of $120,000 and an increased borrowing amount of 4.5 times your qualifying income.
Once you’ve been approved for a mortgage and you’ve purchased your home, you fill out two application forms (here and here) that your lender will submit for you. If you’re approved, you call FNF Canada at least two weeks before your closing date to activate the incentive.
One of the benefits of being a first-time buyer is that when tax season rolls around, you can apply for a healthy deduction. The Home Buyers’ Amount — also referred to as the first-time homebuyers’ tax credit — allows first-time home buyers in Canada to claim a $5,000 tax credit for the purchase of a qualifying home, which includes existing homes and those under construction.
The amount you get back from the CRA is dependent on the lowest personal income tax rate for the year you bought your home. According to TurboTax, the current rate for 2021 is 15%, which would see you get a rebate of $750.
To claim this tax credit as a first-time homebuyer in Canada, fill out line 31270 on your yearly income tax return.
If you have a Registered Retirement Savings Plan (RRSP) and you are a first-time home buyer, you can dip into it tax-free to buy your home. In 2019, the federal government increased the withdrawal limit to $35,000. You have 15 years to pay back the withdrawn funds.
People buying a new build, or even building their own home in 2021, can take advantage of a GST/HST rebate. The rebate will cover some of the GST or the federal part of the HST you paid.
You can apply for the rebate by filling out a form found here, and filing it with Revenue Canada. Those living in Ontario also need to fill out the Ontario rebate form. If you are building your own home, you’ll also need to submit a construction summary worksheet. You don’t need to send supporting documents unless a vendor didn’t initially charge you HST or GST on your invoice.
An energy-efficient home doesn’t just save the environment — it also nets you some savings. If your newly purchased house or condo is built to certain energy standards, you can claim a rebate of up to 25% on your mortgage loan insurance premium. The rebate will also kick in if you’re renovating your existing home or building a new one with energy efficient upgrades and features that bring your dwelling under a 55 rating on EnerGuide, or decrease the gigajoules per year your home uses a certain amount.
To apply, fill out the application found here and send it to the Canada Mortgage and Housing Corporation.
Other down payment assistance programs
Maybe you don’t qualify for one or more of Canada’s homebuying programs because your income is too low. The good news is: there are still options. Most provinces, and even some municipalities, have some sort of down payment assistance in place.
In Prince Edward Island, for instance, eligible buyers can get a conditionally interest-free loan of 5% of the purchase price. And in Manitoba, the Rural Homeownership Program creates pathways that makes it easier to purchase a home outside of major cities.
First-time home owner grants
If you’re new to homebuying, you might be asking yourself: are there any grants available for first-time homebuyers in Canada?
While Canada’s homebuying programs aren’t technically considered home buying grants, per se, they can significantly help lower the amount you’ll pay for your home. Make sure to consider all homeownership assistance programs in your province to ensure you’re not leaving any money on the table when it comes time to buy a home.