Incentives For First Time Home Buyers

If you’re reading this in 2022, then you most likely know that the real estate market has been very hot for many months here in Metro Vancouver and Fraser Valley. We have seen buyers investing in secondary properties, renters wanting to convert to home ownership and many first time buyers that now work-from-home, in favour of moving Eastward to purchase their first home. Buying your first home is truly an exciting and defining life moment for many and there are support programs that new buyers should know about when having a goal of owning their very first home. In this blog, we will look at some of the popular incentives/programs that are available for first time home buyers in British Columbia.

CMHC Insurance – Canadian Mortgage and Housing Corporation

For many first time home buyers, a down payment of 20% could be a challenge. With the support of CHMC and their mortgage default insurance, a home can be purchased with as little as 5% down. Now, this is not a rebate like other items listed below but I wanted to highlight this coverage as it does provide the buyer with insurance protection that could help them purchase a home sooner. Ideally it would be best for all to have 20% down payment and not pay for this insurance but a buyer may see their home equity grow if they get into the market sooner and over the years, this insurance expense could be one that was worth the opportunity.

Home Buyers Plan (HBP) vs Registered Retirement Savings Plan (RRSP)

A first-time home buyer can withdraw up to $35,000 from their personal RRSP and use it as a down payment with a promise to pay it back. The good news is the repayment back to your own RRSP can be made over 15 years. This is a great support program for those that have been contributing into annual RRSP and now the funds can be borrowed to build up your down-payment without have to pay any of the standard RRSP withdraw fees. Your own money, going to work for you!

Land Transfer Tax Rebate

Here’s one that many new buyers I have talked to seem to learn about a little later than they should. The Province of BC charges a land transfer tax on property purchases for all buyers. However, for a first time home buyer, there is a portion that can be claimed as a rebate. In BC, this rebate is up to $8000 and something that a new buyer must look into and fully understand. For more details and how to calculate this tax, you can click this link.

Home Buyers Tax Credit

In the first year that you purchase your property, you can claim a First Time Home Buyers Tax Credit which will provide a $750 rebate if you are fully eligible. Now $750 may not sound like much but on a large home purchase but a first time home buyer will only be eligible for this once in their buying lifespan and a must do.

This is just a quick overview for those thinking of getting into their very first home purchase plan and matching mortgage. There are always hidden or surprise fees and is best to consult with your mortgage broker to build your own custom buyers plan. I fully support home ownership and as it’s one of the best and most important investments in a person’s lifetime. If you are interested in learning more about some of these home buying expenses, you can view my recent blog.

Or connect with me at anytime to build your personal plan.

All the best,

Sukh Sangha