CVCU is here to help you save for your first home.
Who can be considered a first-time home buyer?
You are considered a first-time home buyer if, in the four-year period prior to your home purchase, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.
Saving for your down payment: What are your options?
- Your down payment can be as little as 5%.
- Cash: you must disclose the source of funds (accrued savings, sales of an asset, inheritance, etc.)
- Non-repayable financial gift
- Borrowed funds, such an as line of credit, may be considered.
- Home Buyers’ Plan (HBP) to withdraw funds from your RRSPs
- Withdraw money from your RRSP to buy or build a qualifying home for yourself or a related person with a disability.
- A maximum of $35,000 can be withdrawn.
- You must pay back the withdrawn funds within a 15-year period.
- To be eligible, you must be: a first-time home buyer; a Canadian resident; have a valid Social Insurance Number; 18 years or older
- First Home Savings Account (FHSA)
- Invest your money, grow it tax-free, withdraw when you buy your first home.
- Qualified withdrawals to buy a home are not taxed.
- Contributions to your FHSA can be used as deductions against your income, possibly lowering the amount of income tax you pay.
- Investment earnings are not taxed.
- Your FHSA can stay open for 15 years or until the end of the year you turn 71, or at the end of the year after your withdrawal – whatever comes first.
- If you don’t buy a home, the money can be transferred to an RRSP or RRIF without paying tax.
- Contribute up to $8,000 to your FHSA each year up to a lifetime contribution limit of $40,000.
- Once your FHSA is opened, you can carry forward up to $8,000 per year in unused contributions, subject to the lifetime limit.
- To be eligible, you must be: a Canadian resident; have a valid Social Insurance Number; 18 years or older; and you are planning to buy your first home
Your First Mortgage
- An open or closed mortgage refers to whether there would be a penalty for paying off the mortgage early.
- Length of term refers to how long the interest rate is locked in.
- Amortization refers to the number of years it will take to repay your mortgage.
- Insured vs conventional mortgage is determined by the amount of the down payment.
- Life, disability, critical illness and loss of employment insurance are available.
- Payments can be monthly, biweekly or weekly.
- A payment plan for property taxes should be set up for budgeting purposes.
- Heat and taxes are included in the qualifying calculation for your mortgage. Taxes vary whether the home is in Area A or within Town limits.
- Borrowers are required to obtain fire insurance. The insurance company may require upgrades that weren’t planned. Some areas outside of fire protection have higher insurance costs.
- It is possible to apply for renovation funds as a ‘purchase + improvements’ loan.
- Additional expenses to consider:
- Legal fees
- Prorated property taxes
- Property transfer tax (if you are not a first-time home buyer)
- Cost to transfer utilities
- Appraisal fees
- Possible inspection fee
CVCU is ready to help you.
If you’d like to learn more, if you are ready to start saving for a down payment, or if you are ready to apply for a mortgage, please contact one of our team members:
Tawnia Jobin firstname.lastname@example.org
Bonny MacLeod email@example.com