Grants, Loans, and Rebate Programs for First-Time Home Buyers in Ontario
With this week’s news that the Bank of Canada and major banks are slashing prime lending rate by 50 basis points (to 0.75% for the Bank of Canada, and to 2.95% for the major Canadian banks and financial institutions), some of you might be thinking of purchasing a home for the first time.
Although the low interest rates signal buying opportunity, buying a home is still not cheap – especially in a hot market such as Toronto. Luckily, there are various governmental grants, loans, and programs to help first-time home buyers. These include tax credits, incentives, the Home Buyers’ Plan, and GST/HST rebates. Without further ado, here are the programs that can help alleviate some of the financial hurdles faced by first-time home buyers:
Federal Grants, Loans, and Rebate Programs
First-Time Home Buyer’s Program (Tax Credit)
This federal program allows first-time home buyers to claim up to $5,000 on the purchase of their home on their personal tax year, in the year of purchase. This translates to approximately $750 saving on taxes for that year.
RRSP First-Time Home Buyer’s Plan
This program allows Canadians to withdraw up to $35,000 from their RRSP for the down payment of a new home. Couples can combine their amounts together for up to $70,000, if they are purchasing a home together. The amount can be withdrawn tax-free, but need to be repaid within 15 years.
Eligible home owners can get a rebate of up to $1,500 in GST or HST.
The Canadian Mortgage Housing Corporation (CMHC) is a Canadian crown corporation that issues mortgage default insurance. CMHC offers up to 25% rebate on their insurance premium for Canadians who build or renovate their homes with energy efficiency in mind (such as installing solar panels).
Genworth Canada’s Energy-Efficient Housing Program
Similar to CMHC, Genworth offers mortgage default insurance. Canadians can get up to 25% rebate on their mortgage default insurance if they build a home through one of Genworth’s energy-efficient building programs. Not only will this provide cost savings upfront, it may also save you a lot of money in energy costs over the long term.
Provincial Grants, Loans, and Rebate Programs
Ontario Land Transfer Rebate for First-Time Home Buyers
First-time home buyers could qualify for a rebate on the first $368,000 of their home purchase, for a maximum of $4,000. Note that if you’re purchasing a home as a couple, and one of the partners has previously owned a home before, the rebate amount will be reduced.
Ontario Energy and Property Tax Credit
This tax credit is part of the Ontario Trillium benefit. It offers a rebate of up to $1,187 to cover energy costs. Seniors are eligible for the maximum rebate amount, while non-seniors are eligible for up to $1,043.
Municipal Rebate Programs
Toronto Land Transfer Rebate
Canadian citizens and permanent residents residing in Toronto can get a rebate of up to $4,475, but it has to be used in conjunction with the provincial tax credit.