Programs that help first-time home buyers in Canada

First-time home buyers have had a tricky experience in the housing market over the last couple of years. Skyrocketing housing prices and low supply have put the pressure on buyers, and new buyers have been fairly overwhelmed by the process and competition. If you’re a new buyer in the market, it’s worth familiarizing yourself with programs in Canada that can help you enter the market. Your buying experience will still be competitive, and likely a bit stressful, but it’s good to know how you may be able to benefit from programs to give you a leg up. Here are some options to keep in mind!

First-Time Home Buyer Incentive

The most well-known program for first-time home buyers is the First-Time Home Buyer Incentive. This federal program is a shared-equity mortgage with the Government of Canada. What does this mean? It means the government has a shared ownership and responsibility with you in purchasing the property. To achieve this, the government offers either a down payment of five or 10 per cent for the purchase of a newly built home, five per cent for an existing home, and five per cent for the purchase of a mobile home. 

When the government provides part of the down payment, this allows buyers to have a smaller mortgage and lower monthly payments as a result. The buyer has to repay the amount either within 25 years, or when they sell the property, whatever comes first. When they repay, the amount must be at present-day value. For example, if the government covered five per cent in 2022, they must repay the dollar value of that five per cent in whatever year they make their repayment. Most likely, this will mean a larger repayment.

First Time Home Buyers’ Tax Credit

This program was created to help new Canadian buyers cover the expenses of closing costs. Closing costs like legal fees and land transfer taxes add a lot of extra money on top of a home purchase. Eligible buyers whose home purchase meets the requirements can claim a non-refundable tax credit of $10,000. This rebate is equivalent to $1,500. To be eligible, the home must be in Canada, the buyer must move into it within the next year, and they must not have owned a home within the last four years. There are more detailed rules regarding spouses and registering the home as well. This return is accessible when filing personal tax returns for that year.

Nova Scotia First-Time Home Buyers Rebate

Specifically for Nova Scotia housing purchases is the Nova Scotia First-Time Home Buyers Rebate. This program is for newly built homes, not pre-existing homes. It’s important to remember this, as you cannot qualify if you purchase an existing house. This program offers a rebate up to $3,000 on newly built homes for new buyers, if the home is going to become their main residence. Participants do not qualify if they’ve owned a home in Canada in the last five years. Buyers must be new to the market.

Nova Scotia Down Payment Assistance Program

Finally, this program also helps Nova Scotia first-time home buyers. Similar to the Government of Canada’s incentive, this program also offers a five per cent down payment for buyers to put towards their home’s purchase. This loan is interest-free, and it just needs to be repaid within 10 years. However, this program is a bit restrictive with its qualifications. Household income must be below $75,000. The home’s purchase price must be below $300,000 within the Halifax Regional Municipality (HRM), and below $200,000 within the rest of the province. Those prices are increasingly hard to find in today’s market, so this program may not be helpful at the present time. However, it’s still worth knowing about in case you’re able to benefit from it.

Other things to remember as a new buyer

Your down payment size

As a first-time home buyer, you will need to consider how big your down payment will be. You must provide at least five per cent for the down payment, and 20 per cent if your home’s purchase price is over one million dollars. Now, if you provide a down payment below 20 per cent, you will need to pay a premium for mortgage default insurance, also called CMHC insurance. This insurance premium is meant to protect the lender in case you default on your mortgage payments. Since your mortgage amount is bigger with a smaller down payment, there is more risk for a lender to provide this much extra financing. This is something to consider when saving for your down payment. You can either save longer for a larger down payment and avoid the insurance costs, or perhaps buy a home sooner with this extra premium.

Your budget

It’s tempting to go over budget when buying a home, and this isn’t just true for first-time home buyers. Many buyers feel like it won’t cause too much harm to go past their budget, but it’s easy to get into financial trouble in these cases. Mortgage payments and other expenses can catch up to you and cause you to become house poor, or worse, default on your mortgage. We highly recommend calculating an accurate budget and sticking to it to avoid these issues. Know what you can afford, and stay in that range.

Your mortgage options

Finally, you’ll need to examine your actual mortgage options, which of course a broker can help you with. You will have to decide on whether you want a fixed or variable rate mortgage, and brokers can help you learn what rates you may qualify for. In general, the better your credit, employment, and income, the better rates you can receive from a lender, but a broker will help you secure the best rate for your situation. Mortgages can be confusing, but we’re here to help make them simple. We can find the mortgage path that works best for you, taking your finances, budget, and your credit history into consideration.

We know buying a home isn’t always easy, especially for first-time home buyers. These programs can offer some assistance, and so can a mortgage broker! We love helping first-time home buyers achieve their homeownership goals. We can help you find the right lender and product for your needs. You don’t have to go through the journey alone — we’re happy to help.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.