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First-time home buying: Programs to help make your dream a reality

Posted on Friday April 01, 2022

First-time home buying: Programs to help make your dream a reality

Your home-buying plans are still on the table, but you’re not sure about all the financial demands that come with acquiring real estate in today’s economy.

Not excited about living on dumpster-dive peanut butter sandwiches for a few years? Fortunately there are lots of programs to ease the financial burden of home ownership so you can make it happen without ravaging your lifestyle.

HBP: Use your RRSP for a down payment

A kind of steak sauce? Hudson’s Bay’s new offshore oil subsidiary? What is this HBP, as in “let’s HBP our RRSPs”?

HBP stands for Home Buyers’ Plan, a government program that lets you withdraw money from your RRSPs to buy or build a first home. Since it’s often (and increasingly) hard for young purchasers to come up with a big down payment, “HBPing” your RRSPs can help you get cash together and shrink your total mortgage, along with your monthly payments.

The HBP: How it works

The HBP is a Canadian government program for people buying their first home or who haven’t owned a home in the last five years that’s delivered in partnership with the financial institution or organization that manages your RRSPs. When you’re ready to buy a home, you contact the issuer of your investments and tell them you want to take advantage of the HBP. They’ll send you a form that specifies the amount you want to withdraw and spells out the terms of repayment. Then they’ll deposit up to $35,000 (the limit for withdrawals made after March 19, 2019) in your chequing account. The money will be non-taxable on withdrawal and ready to use as a down payment. You then have 15 years to repay the money you borrowed, interest-free. For a couple, the maximum is $70,000.

To find out more about the Home-Buyers’ Plan (HBP), see the Government of Canada website.

Home Buyer Incentive: A helping hand from all of Canada

Lower mortgage payments—the whole country wants to help out! Since September 2019, there’s been a new homebuyer support program to help Canadians who want to own their first home: the First-Time Home Buyer Incentive.

This federal government program loans you 5% (for a new or existing home) or 10% (for new construction) of the purchase price of your home for you to kick in to your down payment. It’s called a shared equity mortgage, meaning that the lender (i.e., Canada itself) has a stake in any appreciation or depreciation in the value of the home. When you sell your home, you pay back the same percentage of the current value of your property, whether the amount has gone up or down. If you hang on to the property, you have 25 years to repay the loan to the government.

The incentive: How it works

Once you’ve got your dream home and your preapproved mortgage, fill out the two Incentive application forms on the Government of Canada website. Give the completed forms to your mortgage provider, who will submit your application to the government.

To find out if you meet the program financial requirements for total qualifying income and the like, the National Housing Strategy has a handy eligibility calculator. Of if you’d rather watch a video, you can check out this helpful one.

The Home Ownership Program: For low-income New Brunswick families

Big plans on a modest income? To help out low-income families and individuals, the New Brunswick government has put together a home ownership program.

If your total household income is under $40,000 and you’re looking to buy a first home, you may be eligible for a government grant to make it happen. To purchase an existing home, the Government of New Brunswick provides a loan of up to 40% of the total price. For new construction, the government contribution can be up to 50% of the total cost, topping out at $75,000.

Either way, you have 25 years to pay back the loan at an interest rate adjusted to your income. The rate can be as low as 0% (if your income is under $30,000) and tops out at the province’s own borrowing rate.

The Home Ownership Program: How it works

To apply for the Home Ownership Program, contact your Social Development Regional Office.

The Green Home Program: Reduce your insurance premiums

A green home is good for your wallet and for the planet!  Green Home is a program from Canada Mortgage and Housing Corporation (CMHC) to lighten the financial burden of mortgage loan insurance.

If your down payment covers less than 20% of the purchase price of your home’s total value, your mortgage carrier may require you to get insurance to guarantee that your loan will be repaid. This program gives you 15% of those insurance premiums back when you buy your home.

To be eligible, your home needs to be Energy Star, LEED or Built Green certified. If it’s built to R-2000 standards, you get 25% back. Green homes that aren’t certified may also be eligible based on the assessment of a Natural Resource Canada–certified energy advisor.

Green Home: How it works

 Fill out the Green Home application form to apply and send it to CMHC within 24 months of the closing date of your mortgage.

Tax credits: Reduce your tax bill

Tax season will seem milder this year!  Both the provincial and federal governments have healthy tax credits for homeowners.

New Brunswick tax credits

New Brunswick homeowners can use two main programs to shave off some of their property taxes. They’re the Residential Property Tax Credit and the Property Tax Allowance for low-income homeowners, which shaves off another chunk. So don’t forget to mention your new homeowner status on your next tax return.

Canadian tax credits

Meet 31270, your new lucky number. That’s the line on your federal tax return where you get non-refundable tax credits of up to $5,000 the year you buy a first home. To get them, you need to own an eligible home and not have lived in a home you owned yourself in the last four years.

Now that you know about all the financial support you have available to help you buy a first home, you’re free to while away your waking hours in the thrilling hunt for the home of your dreams (currently online only). And to make sure you don’t miss any new listings, why not have a little party with peanut butter sandwiches and 3D virtual tours?

You might also like :

Buying a house in the spring: Don't forget the details!
Before you sell: Choose the renovations that add value to your property
How to make your home smart

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