First Time Home Buyers Info
3 main reasons to own your home
- Mortgages Made Easy: You can get a mortgage starting from 5% down and you can even use your RRSP investment towards the down payment on your mortgage, Tax-Free!
- Lower Interest Rates: Factors such as lower interest rates, and average incomes increasing means the idea of owning a home is becoming more affordable than ever before when compared to renting.
- Owning vs. Renting: When renting, every month you pay someone else to live in your home. However, that monthly rent cheque could essentially be your monthly mortgage payment, building towards an investment in a home.
First Time Home Buyer Plans
The 5% Down Payment Plan
For a down payment of as low as 5% of the purchase price, home buyers can now have mortgage insurance with the condition that they can manage the costs of ownership.
- Both first time and repeat home buyers are able to get 95% mortgage insurance.
- Total debt load cannot exceed 40 per cent of family income, and Buyers using a Program may consume up to 32 per cent of their gross family income for payments of principle, interest, property taxes and heating.
- Homes purchased in the Greater Toronto Area have a $250,000 ceiling as a price restriction.
- The maximum amortization period is 25 years.
- Insurance premiums on loans above 90 per cent of the lending value of the house will be 3.75 per cent of the mortgage loan (this premium can be added to the mortgage).
- Borrowers are required to demonstrate their ability to cover closing costs equal to at least 1.5% of the purchase price at the time of application.
- The funds must be in possession of the borrower 15 days before making an offer to purchase if the minimum equity requirement is being met by way of a financial gift.
The Home Buyers' Plan
Allows the buyer to withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home. Your RRSP issuer will not withhold tax on these amounts and withdrawals that meet all applicable Home Buyer Plans conditions do not have to be included in your income. However, before you can withdraw funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home.
- Up to $20,000 can be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples, including common-law, will be able to withdraw up to $40,000.
- You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days before your withdrawal is the rule adopted.
- The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal.
- Home buyers withdrawing funds from RRSP’s do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.
- To get the normal tax break for a contribution and to use those funds under the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made.
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