Owning your first home can be a life-changing experience. But first, you need to understand what you’re getting yourself into. First-time home buyers can take advantage of various government programs that help make the purchase more affordable. You will also want to understand the taxes that must be paid and the down payment amounts.
Down payment required
If you’re new to Canada and are looking to buy your first home, you’ll need to understand the down payment requirements and the process for purchasing a mortgage. You can negotiate a better rate with a lender if you know how much you’ll need to put down upfront. Several major Canadian banks offer mortgage programs designed specifically for newcomers. Many of these programs require a down payment of 35 percent or less.
Depending on your area, you may need to put down a lower amount. For instance, if you are looking for Maple ridge houses for sale, you’ll need at least a 5% down payment, which is about $13,184. However, if you live in Vancouver or Calgary, you’ll need at least a 20% down payment.
Programs for first-time buyers
For buyers who are buying for the first time in Canada, there are many programs available that can help them purchase a home. While these programs are not considered home buying grants, they can help buyers significantly lower the cost of their new home.
To learn more about these programs, contact your local government. Some have specific funding quotas, so it’s important to check out the requirements of your program.
The First-Time Home Buyer Incentive (FTHBI) is a federal program that provides first-time homebuyers with a five to ten-percent down-payment loan. This reduces the monthly mortgage and carries costs. In return, the government takes an equity stake in the home, which is paid back on the sale of the home or after 25 years.
Taxes to pay
First-time buyers in Canada have to prepare for taxes that can be quite substantial. There are three main taxes that they must pay: property tax, sales tax, and income tax. Each one has different rates and amounts. To make things easier, your real estate agent should be able to tell you which taxes you should expect to pay. This will help you plan ahead for future expenses.
You may qualify for the First-Time Home Buyers’ Tax Credit, which is a rebate for paying taxes on the purchase of your first home. This credit is worth up to $750 for new buyers and is available on new homes sold in Canada. The federal government has proposed doubling the amount of the credit to $10,000 by 2022. If you are eligible, you can claim the credit on your federal income tax return.
Down payment amount
Saving for a down payment can be one of the biggest challenges to home ownership. Living in an expensive city can leave you with less money to put away in savings. It’s important to start saving as soon as possible. It’s also helpful to have a specific savings goal to work toward. This way, you’ll be more likely to adhere to it!
In Canada, the minimum down payment for a home that costs less than $500,000 is five percent. For homes that cost more than $500,000, you’ll likely need a higher down payment. A self-employed person or a person with a poor credit history may also need to set aside more money for their down payment.
So this is the perfect guide for the first-time home buyer in Canada. Make sure you choose the good one and make house hunting the best experience.