Seeking out competitive mortgage rates is a great way to save on your first home. There are some additional factors that can impact your mortgage cost as well, including special incentives for first-time buyers, down payment requirements and where you source your mortgage.
Down payment requirements
Canada’s federal government sets standards for the minimum down payment required based on your home’s purchase price.
- For a home costing $500,000 or less, your down payment must be at least 5% of the purchase price
- For a home costing $500,000 to $999,999, your down payment must be at least 5% of the first $500,000 of the purchase price, plus at least 10% for the share of the purchase price above $500,000
- For a home costing $1 million or more, your down payment must be at least 20% of the purchase price
If you plan to make a down payment that is less than 20% of your home’s cost, be sure to leave room in your budget for mandatory mortgage default insurance. This coverage adds to the overall cost of your mortgage. It will also earn you a lower interest rate from your lender, since the insurance coverage makes you a safer bet as a borrower.
Incentives for first-time homebuyers
The government offers tax incentives and other forms of assistance to ease the financial burden of buying your first home. Qualifying first-time buyers in Orangeville can take advantage of these programs:
Home Buyers’ Amount: Formerly the First-Time Home Buyers' Tax Credit, this federal, non-refundable tax credit of up to $5,000 is available to assist first-time homebuyers across Canada.
GST/HST New Housing Rebate: If your home is brand new or considered “substantially renovated,” you may qualify for reimbursement of some of the goods and services tax (GST) or the federal share of the harmonized sales tax (HST) that usually applies to these properties.
Federal Home Accessibility Tax (HATC) for Seniors and Persons with Disabilities: Homebuyers who are 65+ or have a disability may qualify for this federal non-refundable tax credit of up to $10,000, to cover renovations improving accessibility.
Provincial Land Transfer Tax Refunds for First-Time Homebuyers: Ontario offers this refund for the provincial land transfer tax to first-time homebuyers. The exemption applies to the first $368,000 of your home’s purchase price, with a maximum refund of $4,000 on homes valued beyond $368,000.
Dufferin County Homeownership Program: If you are a first-time homebuyer in Orangeville with a gross household income of $114,500 or less, you may qualify for down payment assistance from Dufferin County. The county provides up to 10% of the purchase price (capped at $60,911) for homes worth $609,118 or less. This program creates a second mortgage on your home, but there is no interest and no monthly payments. If you sell your home within 20 years, you must repay the second mortgage at that time. Otherwise, after 20 years, the second mortgage is forgiven.
Lenders vs. brokers: There are two types of sources for a mortgage: lenders and brokers. A lender is a financial institution like a bank or credit union that can provide you with a home loan directly. A mortgage broker works with numerous financial institutions and can help you shop the market and find the right lender and mortgage product for your needs. Broker mortgage rates in Orangeville offer more variety, potentially making comparison shopping easier and more efficient.
Bank mortgage rates for your Orangeville home purchase are limited to just what an individual institution offers, so you will have to do the comparison shopping yourself.
LowestRates.ca offers a convenient way to shop all of Canada’s top lenders and brokers and compare rates in a snap. We work with banks and brokers nationwide, easing the process for first-time homebuyers, and those looking to refinance or renew their mortgage, too. Just scroll to the top of the page, give us a few details about your mortgage needs and click the “Get Started” to begin your custom quotes.