Buying a home in the Greater Toronto Area just got easier for first time buyers. Changes to the federal First-Time Home Buyer Incentive (FTHBI) lift the maximum you can pay for your first ever home to $722,000.
New first time buyers who didn’t qualify in past can participate. And now the FTHBI cap has gone up, condos, resale homes outside Toronto proper, and new build co-op housing shares are even more within your reach.
What First Time Home Buyers Can Expect
If you’re new to owning a home, the FTHBI gives you a helping hand with a mortgage down payment. You get an interest-free, federal shared equity mortgage of 5% to 10% of your home’s value, without any repayment required until you sell your home. No monthly payments or extra fees are added on.
First time buyers can borrow:
- 5% for resale homes
- 5% or 10% for new builds
- or 5% for new or resale mobile or manufactured homes.
Your new home can be single family or semi-detached, a duplex, triplex or four-plex, townhouse, condo, mobile, or manufactured home.
All you need to do as a first time buyer is to contribute a qualifying down payment. The minimum deposit for first time buyers is 5% to 10% for high ratio, insured mortgages from CMHC, Sagen, or Canada Guaranty. The shared equity mortgage contributes the rest.
What First Time Buyers (Ontario) Get
What you get for your investment is mortgage interest savings by using someone else’s money to top up your down payment. Plus, you can put more down, making you more attractive to mortgage lenders, who prefer first time buyers with more equity.
In return, you can either pay back the loan in full after 25 years, or never make a payment until you sell your home, buy out a co-owner, or port your mortgage to a new property.
If your home goes up in value, the amount you owe increases. For example, if you borrowed 5% but your home increases by 10%, you owe the FTHBI more based on your home’s new market value. If property values dip, your indebtedness goes down with it.
You borrow 5% or $24,000 to buy a $480,000 home
Your home goes up in value by 10% to $576,000
You owe 5% of the new value of $576,000 ($28,800)
Instead of 5% of $480,000 ($24,000)
Increase in amount owed = $4,800
What’s Changed for First Time Buyers
New to the incentive is an expanded ceiling for first time buyers who qualify. Singles or families with household incomes of up to $150,000 annually can now borrow from FTHBI. That’s a leap of $30,000 from the previous ceiling of $120,000.
Maximum home prices are 4.5 times annual income, an increase from 4 times in past. And, first time buyers can now buy a home worth up to $722,000 (including down payments), compared to $505,000 in past.
With the extra down payment, first time buyers can borrow more for a new home. As the amount owed decreases, interest payments also go down.
Who Qualifies as a First Time Home Buyer in Canada
Check it out before you sign an agreement of purchase and sale in Ontario. If you:
- have never purchased a home before
- or have not occupied a home you or your spouse or common law partner owned for the past four or more years
- or you have had a recent marriage or common law relationship breakdown
- are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada
- have the minimum down payment from savings, a RRSP or a non-repayable financial gift from a relative or immediate family member
you may qualify. Ask us if you have questions about closing a home purchase. We have a real estate lawyer (Toronto area or Ottawa) who can liaise with your lender to organize your mortgages.
Confirm if you’re eligible for the FTHBI.
Best Mortgages for First Time Home Buyers
Which mortgage is best for first time buyers depends on your financial situation.
When you can manage a sizable down payment from your own resources or family gifts, a low-ratio, conventional mortgage can save you money. Your lender advances up to 80% of the fair market value of your home, and you contribute the balance.
High ratio insured mortgages are perfect for low- or modest-income first time buyers with 5% to 19.99% down, but you will pay an obligatory, one-time mortgage insurance premium. Read about CMHC high ratio mortgages.
More Financial Aid for First Time Buyers
That’s not the only incentive for first time buyers.
- Withdraw a down payment from your RRSP and defer taxes for up to 15 years. Canada’s Home Buyers’ Plan lets you use RRSP savings to make a down payment of up to $35,000. You and your spouse can each withdraw the maximum to buy or build a principal residence. You can even get a self-directed RRSP mortgage.
- Get a non-refundable income tax credit of up to $750 through the first time home buyer tax credit for Ontario. The credit covers legal fees, disbursements and land transfer taxes.
- Ontario and Toronto offer first time home buyer land transfer tax rebates (some exceptions apply), up to $4,000 for the provincial rebate and $4,475 in Toronto.
- Buying or building a new home could make you eligible for a federal HST rebate or provincial rebate (for homes valued over $450,000). New home purchasers pay 13% tax when they buy from builders or build or renovate their own home.
Besides conventional homes, mobile or floating homes (but not houseboats), homes on leased land, or shares in newly built co-ops all qualify for rebates.
A tip for first time home buyers: costs involved in buying or building a home are subject to HST. You’ll owe HST for real estate commissions, survey costs, home inspections, mortgage appraisals, legal fees, and disbursements.
See if you qualify for the GST/HST new housing rebate.
Why You Need a Real Estate Lawyer
When you find the home you’re looking for, Axess Law helps you finalize your first home buyer purchase. We close real estate transactions for first time buyers quickly, and for a lot less than you’d expect.
An Axess Law real estate lawyer in Ontario can search the title to your new property for liens, easements, and land surveys. We register your home with the local land titles office and prep all your legal documents.
Our lawyers arrange signatures for mortgage insurance and mortgage documents with your bank, credit union, or private lender. We answer your questions, like if a real estate deal falls through who gets the deposit and what is title insurance.
When the deal is done, you receive a final statement of adjustments so you can be satisfied your real estate purchase is complete. Only a lawyer licensed with the Law Society of Ontario can prepare closing documents. Axess Law makes it easy and affordable.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Book an Appointment Online or By Phone
Dial 647-479-0118 for a free quote on closing first time home purchases or book appointments online. It’s fast and convenient. Axess Law has real estate lawyers at any of our locations in Greater Toronto Area and Ottawa. Can’t meet in person? We can video conference online with you 7 days a week, day or evenings. Toll free calls are accepted at 1-877-402-4207. Try our onsite parking or take the transit to our nearest location.