First time home buyer programs are offered by the Government of Canada as well as provincial governments and even private organizations to help first time home buyers with the cost of buying a home. On an individual scale this is great news for anyone wishing to buy their first home, and, on a larger scale it’s good news for the entire real estate market.
First Time Home Buyers Are Crucial to the Market
The success of the real estate market depends on there being plenty of first time home buyers, but why is this? Well, without these buyers the entire real estate market can’t move along as effectively. If you think about it, usually first time home buyers would be buying the more affordable, perhaps smaller homes that are listed for sale. Then, after several years they’re ready to move up to something a little larger. This is the same for most buyers – we move up the property ladder as we get older, have families, and acquire more stuff, so we need larger homes. If there’s nobody buying the homes at the bottom of the ladder this has a knock-on effect, all the way up, because without sales at the bottom, there will be no buyers to buy the larger homes either.
Programs to Help
This is where first time home buyer programs come in. The government has recognised the need to get first timers buying their own homes, but they’ve also recognised that this can be difficult. It’s a huge financial obligation after all, and not just the mortgage. Closing costs amount to thousands of dollars, and it’s expensive getting yourself set up in your first home as well, what with buying furniture, electronics and appliances.
So, there are several programs you can make use of, and it’s worth looking into these in greater detail because they can really help.
The RRSP Home Buyers Plan is the first one to look into as this can help you with your down payment. Zero down mortgages are not being given anymore so that means you’ll have to save more money for a down payment. If you have money in your Registered Retirement Savings Plan you can withdraw this (up to $25,000 in one calendar year) to put towards your down payment, and then pay it back – interest-free – over the next 15 years. If you’re buying with a spouse or friend you can both tap into your RRSPs, making a potential combined down payment of $50,000, or even more depending on how many people are buying together.
Once you’ve sorted your down payment and you’re ready to buy there are a couple more first time home buyer programs to use. Buying in Ontario you can get a refund of the Land Transfer Tax. This is a tax that has to be paid each time a home changes hands so although you’ll have to pay it you can the apply for a refund of up to $2,000.
The last of the first time home buyer programs currently being offered is the First Time Home Buyers Tax Credit. This is a nationwide program that doesn’t pay money back as such but gives you a credit off your personal tax bill. Basically this helps to offset some of the costs of buying a home so when it comes time to pay your tax bill you can get up to $750 off what you’d have to pay the government.
It’s important to keep up-to-date with the latest incentives and first time home buyer programs because they can and do change. More may have been added by the time you buy your first home, so look around to see what’s available.
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