Important Note regarding The First-Time Home Buyer Incentive
First launched in 2019, the Canadian government was offering a helping hand through the First-Time Home Buyer Incentive (offered through CMHC). This program provided an interest-free down payment boost of 5% or 10% of the purchase price, depending on the type of property. Effective March 21, 2024, this program will be discontinued.
On April 1, 2023, the government launched a First Home Savings Account (FHSA), a registered account with tax deductibility benefits (similar to an RRSP), and tax-free growth (similar to a TFSA). A key difference between an RRSP and the FHSA is that a qualifying withdrawal on the FHSA does not need to be repaid.
Understanding Minimum Down Payments
Applicable to all Canadians, your down payment requirement will be based on the following:
Purchase Price is equal to, or less than $500,0000 = 5%
Purchase Price is greater than $500,000 but less than $999,999 = 5% of the first $500,000 and 10% for any portion above $500,000
Purchase price is equal to, or greater than $1,000,000 = 20%
Choosing the Right Mortgage
There are various mortgage options available, each with its own interest rates and terms. Fixed-rate mortgages offer stability, while variable-rate mortgages can fluctuate with market conditions, but often offer longer term savings. Within each of those rate choices, you can choose (most typically) between 1 and 5-year terms, and amortization as high as 25-30 years. Speak to a mortgage broker or lender to discuss your financial situation and find the best fit for you.
Beyond the Mortgage: Additional Resources
Getting a mortgage is just one step in the homebuying journey. Consider factors like closing costs, property taxes, moving costs and home insurance. The Government of Canada’s website offers valuable resources on buying a home, including the First-Time Home Buyer Incentive and the First Home Savings Account (FHSA) for saving towards your down payment.
Remember: Purchasing a home is a big decision, especially in 2024 as things continue to evolve. Take your time, do your research, and seek professional advice from a reputable local source to ensure a smooth and successful homebuying experience. Being in business for over 36 years, we’ve seen it all. Call us today for the best guidance and resources at (905) 455-5005.