6 FIRST TIME HOME BUYERS PROGRAMS FOR BUYERS IN HAMILTON

There are 6 great first time home buyers programs (Government programs) that first time home buyers can take advantage of. At Robert Floris’ Mortgage Architects in Hamilton, we try to teach as if we were learning for the first time. In today’s market, we have the addition of record low mortgage rates which certainly does not hurt if you are considering your first home. Each government program so please scrutinize and study each plan. Incidentally, these programs do help save money for your biggest purchase of your life.

1. FIVE PERCENT DOWN PAYMENT PROGRAM

For most people, saving for a down payment is not easy. Consequently, first-time home buyers can get in their first home with as little as 5% of the purchase price. Approval is based upon qualifying at the “benchmark rate” (otherwise known as the stress test rate). We consider this a Government program for first time homebuyers because a Government agency insures anything less than 20% down to protect the bank’s risk. Other stipulations include:

• Proof of savings for the closing costs of up to 1.5% of the purchase price
• The owner must occupy the home (cannot be a rental/investment property)
• If the purchase price of the home exceeds $500,000, the required down payment increases
• Amortizations cannot exceed 25 years.
• A great website to review for more details can be found at: www.genworth.ca/en/products/homebuyer-95-program.aspx

2. HBP (HOME BUYERS PLAN)

Also known as the RRSP Home Buyers Plan, individuals can withdraw up to $35,000 tax free to buy their first home. Couples can take up to $70,000. However, the one big catch is that you must repay the money back into your RRSP within 15 years. Under this program you could never have been a home owner in the previous 5 years.

More detailed information can be found at: www.cra-arc.gc.ca/hbp/

3. LAND TRANSFER TAX REBATES

Being a first time home buyer allows you to save on your land transfer tax. Generally speaking, home buyers in Ontario must pay the tax when they purchase a home. In fact, buyers in the (GTA) Toronto are to pay double the transfer tax. However, if you’re buying your first home, the provincial government will rebate up to $2000 back! Just let your solicitor know it’s your first home!

More information can be found at: https://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html

4. HST NEW HOUSING REBATE

Considering purchasing a newly constructed home? You may be eligible for a rebate of your HST!
Frequently, the vendor receives the Ontario HST rebate upon closing and consequently lowers the purchase price by the rebate amount. As a result, this allows the home builder/developer to advertise a lower price. It enables a buyer to qualify for a mortgage more easily. Please note however, only the buyer can apply for the rebate after closing and never the vendor.

Calculation of the rebate can be found at: www.moneysense.ca/property/new-home-gst-rebate/

5. DOWN PAYMENT ASSISTANCE PROGRAM

Unfortunately, the local Hamilton Municipal Government cancelled this program. But thankfully, a Federal program has replaced it! It entails an interest free loan applied towards the down payment of a home thereby helping the buyer qualify. First time home buyers may be eligible to receive up to 10% as an interest free loan from the Federal Government. Essentially, the Government will own that portion of your home which would need to be paid back either when you sell it, or sooner. However, the catch is that you will still need to come up with the initial 5% down. Therefore, the interest free loan will help to reduce your mortgage payments and presumably help you qualify.

For more information on this program, you can follow this link.

6. FIRST TIME HOME BUYERS TAX CREDIT (FTHB)

Something that a lot of first time home buyers (and even previous homeowners) forget about are closing costs. These include legal fees since lawyers need to be involved in every purchase. Thus, these tax credits offer some relief by helping to cover costs.

More information on the tax credit can be found here: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

Some Interesting Statistics Regarding First Time Home Buyers

Buying your first home is very exciting, but unless you do your homework, it can be a bitter and expensive experience. We reviewed the 2018 mortgage consumer survey to help our clients. However, you can always call or email Robert Floris at Mortgage Architects to get relevant information with no obligation.

We will simply present the information in bullet form:

• 49% of homebuyers are millennials (23 to 28 years old)
• 22% of first time home buyers are newcomers to Canada
• Major reason a first time home buyer is buying: they wanted to buy their first home and they felt financially ready
• Many first time home buyers would have appreciated more information on fees and closing fees
• 65% of first time home buyers were happy with their lender
• First time home buyers receive more down payment advice than repeat buyers (52% versus 36%)
• Most first time home buyers use their savings outside of their RRSPs to finance their first home
• 85% spent the most they could afford (this was somewhat troublesome to our office because one of our mandates is not to overstretch our clients – we are about qualify of life and family)
• 40% were not aware of the new mortgage rules (stress test)
• Most first time home buyers research online
• On average, they contact 2.11 brokers and 3.15 lenders to compare

Any further questions can be directed by contacting our Hamilton Mortgage Architects office.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

If you would like to apply for a mortgage online, please follow this link.

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