First-time home buyer mortgage loans are generally structured the same as mortgage loans made for people buying their second or more property. The 5% minimum down payment applies in both cases, as long as you are planning to live in the property. The difference is, there are a few mortgage products that are specifically targeted for first time buyers, such as the flex down program where you can borrow your down payment, or the Home Buyer’s Plan, where you can use your RRSP savings tax free as the down payment. A mortgage broker can help guide you through the process and come to decisions on what amount to put down for a down payment, configure a final budget, and get you the loan terms that you are looking for.
First-time home buyer mortgage loans in Canada can come with a few perks.
The first is the RRSP Home Buyer's Plan. If you are buying your first home or have not lived in a house purchased by a spouse or yourself for four years, you can borrow up to $25,000 from your retirement savings plan without any tax penalty, and then you have 15 years to RE-Contribute those funds back into your RRSP.
Sometimes it is hard to save significant amounts of money to put toward a down payment while you are paying rent, putting money into your retirement, and living the life that you wish. The Government of Canada understands, and thus has created the Home Buyer’s Plan. The catch is that you must start paying back the down payment by putting money back into your RRSP within two years of the home purchase, and you have 15 years to get it all put back into your RRSP.
As of 2019, for the year in which you purchase your first home, you are able to claim a $5000 expense on your Income Taxes, which will give you a tax credit. The tax credit was created to help cover legal expenses and closing costs on the purchase of your first home. The tax credit is up to $750. Please double check with your accountant.
If your first-time home buyer mortgage loan is for a new home or a home that has been renovated extensively, you can take the GST new housing rebate. The amount of the rebate depends on the cost to build or rebuild. Your Home Builder will include this information in your purchase contract.