Government Programs for Home Buyers

CMHC Purchase Plus Improvements

CMHC-insured loans can cover both the purchase price and the cost of immediate major improvements, so you get a single first mortgage, one payment and first-mortgage rates instead of separate financing.

The insured loan is based on the lower of the purchase price plus renovation cost, or the 'as-improved' market value. You'll need at least 5% down on the total (purchase plus renovations), cost estimates for the work, and qualification through an approved lender. Minimum down payment is 5% up to $500,000, 10% on the portion above $500,000; insurance isn't available above $1,500,000. For a traditional 5% down payment, the mortgage insurance premium is currently 4.00% of the mortgage amount and can generally be added to the mortgage. In Ontario, provincial sales tax applies to the insurance premium and cannot be added to the mortgage.

RRSP Home Buyers' Plan (HBP)

The HBP lets you withdraw up to $60,000 from your RRSPs in a calendar year to buy or build a qualifying home; couples can each withdraw up to $60,000.

You must be a first-time buyer (you may still qualify even if you previously owned, subject to the four-year rule), have a written agreement to buy or build, and intend to occupy the home as your principal residence within a year. You cannot withdraw more than $60,000 tax-free. Repayment starts the second year after withdrawal, over up to 15 years.

Down Payment Program

With as little as 5% down, buyers can qualify for a mortgage with mortgage loan insurance, provided they meet the lender's qualification requirements.

The minimum down payment is 5% on the first $500,000 of the purchase price and 10% on the portion above $500,000, for homes priced below $1.5 million.

Example: On a $750,000 home, the minimum down payment would be $50,000:

• 5% of the first $500,000 = $25,000
• 10% of the remaining $250,000 = $25,000

Homes priced at $1.5 million or more require a minimum 20% down payment and are not eligible for insured mortgage financing.

The program is available to both first-time and repeat homebuyers. Eligible down-payment sources can include personal savings, the sale of another property and certain non-repayable gifts from immediate family members.

For insured mortgages, housing costs can generally represent up to 39% of gross household income (GDS), while total debt payments can generally represent up to 44% (TDS).

The standard maximum amortization is 25 years, although 30-year amortization may be available to first-time buyers and buyers of new builds, subject to eligibility requirements.

Buyers should also budget approximately 1.5%–2.5% of the purchase price for closing costs, including items such as legal fees, land transfer tax and applicable adjustments.

Ontario's First-Time Home Buyers' HST Rebate

Ontario has also introduced a new first-time home buyers' rebate for the provincial portion of HST.

Eligible Ontario first-time buyers may receive:

• Up to $80,000 of the provincial 8% portion on qualifying homes valued at $1 million or less
• A reduced rebate on qualifying homes between $1 million and $1.5 million

These rebates are subject to specific eligibility and timing requirements.

Important: GST/HST rebate rules can depend on the purchase agreement date, construction dates, purchase price, occupancy and whether the buyer qualifies as a first-time home buyer.

Buyers should confirm their eligibility with the CRA or a qualified tax professional.

Land Transfer Tax (LTT) Rebate — first-time buyers

First-time buyers of an eligible Ontario home may qualify for a refund of all or part of the land transfer tax. Since January 1, 2017 the maximum refund is $4,000 — meaning no LTT on the first $368,000 of value for qualifying buyers.

To qualify you must be at least 18, occupy the home as your principal residence within nine months, and never have owned an eligible home anywhere in the world. Apply within 18 months of registration. The refund is reduced proportionally if a co-purchaser isn't a first-time buyer.

First-Time Home Buyer Tax Credit

The First-Time Home Buyers' Tax Credit allows eligible first-time buyers to claim up to $10,000 as a federal non-refundable tax credit, providing up to $1,500 in federal tax relief. To qualify, you (or your spouse/common-law partner) must have acquired a qualifying home and you must not have lived in another home that you or your spouse/common-law partner owned during the year of purchase or any of the four preceding calendar years.