Owning a home is a major milestone, and for first-time buyers in Canada, there are a number of exciting benefits and new regulations that can make homeownership more accessible. If you’ve never owned a home or haven’t lived in one you or your spouse/common-law partner owned in the last four years, these incentives could be perfect for you. Let’s explore the key benefits and new rules designed to help you on your home-buying journey.
1. Using Your RRSPs for a Down Payment
The Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to use towards your down payment—tax-free, provided you repay it within 15 years. To qualify, you must meet one of the following criteria:
- You’ve never purchased a home before;
- You haven’t lived in a home you or your spouse/common-law partner owned in the last four years; or
- You’ve recently experienced the breakdown of a marriage or common-law partnership.
This program lets you tap into your retirement savings to ease the financial pressure of a down payment, helping make homeownership more achievable. Canada Home Buyers’ Plan
2. First Home Savings Account (FHSA)
Launched in April 2023, the First Home Savings Account (FHSA) combines the benefits of an RRSP and a Tax-Free Savings Account (TFSA). You can make tax-deductible contributions, and when you’re ready to buy your first home, you can withdraw the funds tax-free. To be eligible for an FHSA, neither you nor your spouse can own a home in which you’ve lived at any time during the year the account is opened or the past four calendar years. This savings tool is ideal for boosting your down payment while enjoying tax savings along the way. FHSA
3. Land Transfer Tax Rebates
Land transfer taxes can be a substantial part of your closing costs, but many provinces offer land transfer tax rebates to first-time home buyers. Eligibility typically depends on whether you’ve previously owned a home. If you qualify, this rebate can significantly reduce your upfront expenses, making homeownership more affordable. Be sure to check your provincial guidelines to see if you’re eligible for this rebate. BC Land Transfer Tax First Time Buyer Exception
4. Increased Price Cap for Insured Mortgages
Starting in December 2024, the price cap for insured mortgages will increase from $1 million to $1.5 million. This change is particularly beneficial for buyers in high-cost real estate markets. To qualify for these favorable financing terms, you must meet at least one of the following eligibility criteria:
- You’ve never purchased a home before;
- You haven’t lived in a home you or your spouse/common-law partner owned in the last four years; or
- You’ve recently gone through a marriage or common-law partnership breakdown.
This increased cap allows buyers to make smaller down payments on homes priced up to $1.5 million, giving you access to better financing options in more expensive markets. New Mortgage Rules for 2024
5. 30-Year Amortization for First-Time Buyers
Also effective December 2024, first-time buyers will have the option to extend their mortgage amortization period from 25 years to 30 years for insured mortgages. This will help lower your monthly payments, making homeownership more affordable. The longer amortization period can also help you qualify for a larger mortgage, enabling you to buy a home that may have been out of reach with the shorter amortization option. New Mortgage Rules for 2024 To qualify for this benefit, you must meet one of these eligibility requirements:
- You’ve never purchased a home before;
- You haven’t lived in a home you or your spouse/common-law partner owned in the last four years; or
- You’ve experienced the breakdown of a marriage or common-law partnership.
6. First-Time Home Buyers’ Tax Credit (HBTC)
The First-Time Home Buyers’ Tax Credit (HBTC), or Home Buyers’ Amount, offers a tax reduction of up to $1,500 when you purchase your first home. To qualify, neither you nor your spouse/common-law partner should have owned a home you’ve lived in within the past four years, unless you’re claiming a disability amount on your taxes. This non-refundable tax credit applies to a wide range of property types, including single-family homes, condos, and mobile homes, and helps reduce the taxes you owe in the year you purchase your home. HBTC
These incentives and upcoming changes are designed to make buying your first home in Canada easier and more affordable. From leveraging retirement savings to benefiting from extended mortgage terms and tax credits, these programs can help you navigate the path to homeownership. To ensure you’re maximizing these benefits, consult with a mortgage expert to see how these incentives can work for you and help you realize your dream of owning a home.
Hi, I’m Jill, your mortgage pro. I am here to make the world of mortgages less confusing so you can feel confident in your financial decisions. Through my blog, I aim to provide you with the knowledge and guidance you need to make informed decisions. Your financial peace of mind is my top priority.
