There’s nothing like the feeling of getting ready to buy your first home – the excitement and joy is something you won’t soon forget. There are so many details, it may feel a bit overwhelming. Fortunately, you aren’t on your own here; there are plenty resources available for first-time home buyers just like you.
To purchase a home in Canada, you need to have a minimum of five percent of the home’s overall purchase price. While five percent may seem like a reasonably low number, for first-time home buyers, coming up with thousands of dollars for a down payment can be a pretty daunting task.
But there is good news.
The list of resources below will help you plan for and maximize your ability to get your first home.
1. The Home Buyers’ Plan
The Home Buyers’ Plan is a government program that allows you to withdraw funds from your RRSPs to put towards a down payment. If you’re eligible, you can withdraw up to $25,000 on your own or a maximum total of $50,000 with a partner. Note: the funds have to be in your RRSPs for longer than 90 days in order to make a withdrawal for a down payment.
In addition to the 90-day rule, other requirements state you must either be purchasing your first home or haven’t owned a home in the last four years. You also have to be a current resident of Canada and the home you are buying is also in Canada.
While you do need to pay this money back, you have 15 years to do so and you don’t need to pay either taxes or interest on the amount you withdraw.
2. First Time Home Buyer’s Tax Credit
First Time Home Buyer’s Tax Credit is a tax rebate you’re eligible for simply because you’re a first-time buyer! With the same requirements as the Home Buyer’s Plan, you can claim up to $750 on your taxes to help recoup closing costs. However, you must occupy your new home within the first year.
3. Percentage Calculator
If you are just starting to save for a down payment, you can use a down payment calculator to give you an idea as to how much you’ll need to save depending on the percentage (i.e.: 5% versus 10% versus 20%). This tool will also give you an idea as to how much you can expect to pay in mortgage insurance over the lifetime of your loan.
4. Mortgage Rate Comparisons
Other helpful online resources for first-time buyers include sites that offer details on Calgary’s current mortgage rates. With this information, you’ll be able to compare different lender rates, both fixed and variable. Working with a builder’s preferred lender also has many benefits, including an expedited loan process.
5. Mortgage Payment Calculator
Do you know how much you’ll be paying for your monthly mortgage? The Canadian Mortgage and Housing Corporation’s mortgage payment calculator will help you determine what you can afford each month. By factoring in your loan amount, interest rate, amortization period, and payment frequency this handy tool will tell you exactly how much to expect.
While online tools, tax credits, and loans are all useful resources in helping you get into your first home, you still want to save as much as possible up front. The more you manage to put away, the better position you’ll be in when it comes to getting and maintaining a mortgage loan. Make a budget and start saving today – you’ll reach your down payment goals faster than you think.