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blog Buying a Home

Last Updated on July 21, 2021

Buying a home for the first time isn’t always easy. New buyers often struggle with saving a downpayment, budgeting for mortgage payments, building a contingency fund, and handling extra costs such as buying furniture, making renovations, and moving.

Good news! There are many First Time Homebuyer benefits available in Alberta to help with these costs.

What First Time Home Buyer Benefits are Available in Edmonton?

Accessing and combining some of these benefits can help ease your financial load and make homeownership more attainable. Read on to learn about the benefits available for local buyers.

1. Home Buyers’ Plan

The Home Buyers’ Plan is a program that allows first-time homebuyers to borrow up to $35,000 from their Registered Retirement Savings Plans, tax-free, to buy or build a qualifying home. Since this is considered a loan, the amount must be repaid over a 15 year period. If you are purchasing a home with another first-time homebuyer, they may also use the Home Buyers’ Plan. This means that you may be able to withdraw a combined total of up to $70,000.00!

What are the benefits of the Home Buyers’ Plan?

One of the hardest parts of buying a home for the first time is saving up for a downpayment while still making ends meet during day-to-day life.

The Home Buyers’ plan can help cover your downpayment, reduce the mortgage amount that you pay interest on, and help give you a financial cushion against unexpected expenses that occur during the homebuying process.

This program is also a great option for those experiencing a marriage or common-law partnership breakdown. Separated parties can use this program to purchase individual homes or to buy out their partner’s share in a current home.

How do I qualify for the Home Buyers’ Plan?

You may qualify for the Home Buyers plan if you meet one of the following conditions:

  • Neither you nor your spouse/common law partner have owned a home that you lived in during the four years preceding your Home Buyers’ Plan withdrawal, and you have entered into a written agreement to buy or build a qualifying home

Or

  • You are buying or building a home for a related person with a disability

To access this program, you must also be a Canadian resident, intend to move into the home within one year, make the RRSP withdrawal within 30 days of taking title, and have no previous Home Buyers’ Plan balance outstanding.

Check out the Government of Canada’s website for full details and qualifications.

2. GST New Housing Rebate

When purchasing a new home, you will usually have to pay taxes above the purchase price. For homes under $450,000.00, you may qualify for a GST rebate of up to $6,300.00. The rebate amount equals 36% of the GST costs on homes up to $350,000.00, or a flat rate of $6,300.00 on homes between 350k and 450k.

What are the benefits of the GST New Housing Rebate?

The amount rebated may not be life-changing, but there are often unforeseen costs associated with buying a home that require a little extra cash on hand. The GST rebate can be used to upgrade furniture, make repairs, cover transitional costs, or provide a contingency float.

Additionally, the GST New Housing Rebate is often used by first-time homebuyers, but it is available to everyone. In some cases, homeowners can even receive this benefit after making substantial renovations to a home they have already purchased.

How do I qualify for the GST New Housing Rebate?

You may qualify for the GST New Housing Rebate if:

  • The home in question is your primary place of residence
  • You purchase a new or substantially renovated single family, duplex, condo, townhouse, mobile home, or modular home from a builder OR a share of interest in a co-operative home
Ask your builder if you can include the rebate in the price of your home to make it more affordable upright. As long as you qualify for the rebate, it shouldn’t be a problem.

There are certain other cases under which this rebate would be available for those who do not meet these conditions. Click Here to find more details.

Interested? Calculate your rebate with our New Home GST Rebate Calculator

3. First Time Home Buyer Incentive

Canada’s First Time Home Buyer Incentive is a shared-equity mortgage option with the Government of Canada. The Government will invest 5% or 10% in a newly constructed home or 5% for a resale or manufactured home to help first time buyers transition to ownership. This amount is to be paid off after 25 years or upon the sale of the home, whichever comes first. There is, however, no penalty for repaying early.

What are the benefits of the First Time Home Buyer Incentive?

Taking on a mortgage for the first time can be daunting and costly, especially if your downpayment is 5 per cent. The First Time Buyer’s Incentive can help buyers put down a larger sum upfront, thus reducing monthly mortgage payments. The result is a mortgage that is a bit more manageable for first time buyers.

Because the government is investing in a percentage of your home’s market value, they also absorb a share of the market risk. If the fair market value of your home were to decrease, so would the amount you had to repay. Inversely, if the value of your home were to increase, so would your repayment portion.

How do I qualify for the First Time Home Buyer’s Incentive?

To access this program, you must be considered a First Time Home Buyer  You are eligible if:

  • You have never purchased a home
  • Your current spouse/common law partner has not owned a home you have lived in during the 4 year period prior to using the incentive
  • You have recently experienced a marriage or common law partnership breakdown

There are other guidelines that you must fall within to access this program, such as having an annual income of less than $120,000.00, purchasing a home no more than 4 times your qualifying income, and meeting minimum downpayment requirements. For a full breakdown of rules and eligibility, Click Here.

See if your qualify today with our First Time Home Buyer Incentive Eligibility Calculator.

4. Home Buyers’ Tax Credit

The Home Buyers’ Tax Credit, also called the Home Buyers’ Amount, allows first-time purchasers to claim up to $5,000.00 in the year when they purchase a home.

What are the benefits of the Home Buyers’ Tax Credit?

In most cases, the Home Buyers’ Tax Credit will result in a tax reduction of $750.00, because the non-refundable tax credit rate is equal to 15%. You may split the return between yourself and your spouse or common law partner, but the total claimed must not be more than $5,000.00. This one-time payment may not seem like much, but it is an added bonus during the dreaded tax season.

How do I qualify for the Home Buyer’s’ Tax Credit?

Almost any type of home qualifies for this credit, as long as it is located in Canada and registered in your or your spouse/common law partner’s name. You must be considered a First Time Home Buyer, meaning that you have not lived in a home that you or your spouse/common law partner owned in the four years leading up to the purchase of your new home.

Visit the Government of Canada’s website for full details.

5. CMHC Green Home Incentive

The CMHC Green Home program rewards those who buy or renovate high performing sustainable homes with a financial incentive. When you buy or build an energy-efficient home, you could have up to 25% of your CMHC Mortgage Insurance premium refunded!

What are the benefits of the CMHC Green Home Incentive?

Many first time homeowners will be required to have mortgage insurance at an extra cost, especially if they have a minimal downpayment. This incentive helps buyers recoup some of those extra funds. Buyers of green homes will also save money on energy bills as an added bonus of energy efficiency.

Asking about this incentive is also a good way to make sure you are getting a high-performance builder for your new home. A good builder should be aware of the requirements for this rebate and have options to help your home perform as efficiently as possible.

Related: Things To Know Before Building a Home

How do I qualify for the CMHC Green Home Incentive?

There are many eligible building standard guidelines that builders can use to qualify, but one of the most common in Edmonton is the Energuide Rating. This rating system can be done after completion of construction on both new and renovated homes.

Under this rating system, newly-built homes that perform at least 15% better than standard code-built homes will receive an insurance premium refund of 15%, and homes that perform at least 40% better will receive a 25% insurance refund.

Renovated homes will receive refunds based on the difference between ratings before and after renovations. It is important that the home is assessed prior to changes being made.

Click Here to read full requirements and details.

Which First-Time Home Buyer Incentive Is Right For You?

If you meet the basic First Time Home Buyer requirements, many of these incentives could be good options for you. In some cases, you can even combine certain programs to maximize your financial benefit!

The best way to understand how these incentives might help you is to talk with a certified mortgage or financial professional. They can help you break down technical jargon and requirements to find your best fit. Not sure where to start? Contact us for a list of our preferred professionals in the Edmonton area!

We also offer several online financial tools to help you explore your options!

Ready to start looking for your new home?

Great to hear! We recommend taking a look into the types of homes we offer to find your perfect starter home.

Many people gravitate towards Duplex, or semi-detached homes, as a great first home. A shared wall makes these homes more affordable, but still gives you the benefit of a yard and attached garage.

Rear-laned homes are also wonderful options for first time buyers. They are fully separate single-family homes, but have detached garages, making them less expensive than front-attached garage homes.

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