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1st Time Buyer

As a First Time home buyer you have a lot to think about. The most important step is for you to figure out your budget and determine how much you can afford. A good way to start is by getting pre-qualified for a mortgage to give you a little perspective on how much financing the bank will give you in order to purchase your dream home.

Financial institutions will use a ratio calculation to determine the maximum amount you could afford. This calculation is based on several key factors namely your income, monthly debts and your future property taxes (municipal & school). After the analysis and after taking into consideration your down-payment percentage you will be pre-approved for a certain amount. We can help you determine that amount.

The down-payment percentage is more important than the down-payment amount. In Canada, the maximum amount that an individual can get on the purchase of a property of 1-2 units is 95% of the value of the property. In this case the minimum down-payment is 5%. For example, imagine that you are planning to purchase a home for $300,000. You would need a down-payment of at least $15,000. If all you have is $10,000, you should wait until you get the balance, get a gift from an immediate family member for the difference or look for a property worth $200,000 instead. Otherwise you won’t have enough to close the deal at the notary. These are matters that need to be considered when looking for a home.

Although the pre-approval is a vital step before you begin house shopping you need to realize that although on paper you could afford the monthly mortgage payment on a house worth $300,000, only you know and understand your own spending habits and are better equipped to know if you should spend that much.

What we mean by this is that a house is the biggest investment a person will make in their lives and there are all kinds of responsibilities attached to it. If you are stretching your purse strings to make ends meet, the perhaps you are getting something more than you can comfortably afford.

A meeting with one of our licensed professional mortgage brokers will give you many considerations to think about and help you make the right choice for you and your family for both the short and long term.

You will find below some federal government programs for down payment and tax credits that you can get to help you get the most out of your first purchase.


1. What is the Home Buyers’ Plan?

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home for yourself or for a related person with a disability.

2. What is the current maximum amount that can be withdrawn under the HBP?

Currently, the maximum amount that an individual can withdraw in a calendar year from an RRSP to purchase or build a qualifying home without having to pay tax on the withdrawal is $25,000.


1. What is the home buyers’ tax credit (HBTC)?

Since 2009 and subsequent years, the HBTC is a non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home.

2. How is the new HBTC calculated?

The HBTC is calculated by multiplying the lowest personal income tax rate for the year. If for example the lowest tax bracket is 15%, your tax credit for the year will be $5000 x 15% = $750.