Down Payment Options

How does a down payment work?

Exploring Your Down Payment Options: Making Homeownership Easier

Dreaming of owning your first home? One crucial aspect to consider is your down payment. Let’s dive into some options that might just help you unlock the doors to your dream home:

1. RRSP Home Buyers Plan:

The Canadian Government’s Home Buyer’s Plan (HBP) is your ally if you’re a first-time homebuyer. You can dip into your RRSP for up to $35,000 (or $70,000 if buying with another first-timer) for a tax-free down payment. Remember, this is a loan that needs to be repaid within 15 years. To be eligible, you must meet certain criteria like having the funds in your RRSP for at least 90 days, not having owned a home in the past four years and agreeing to live in the home as your primary residence.

2. First Home Savings Account (FHSA):

Imagine saving with tax benefits! FHSA allows you to deposit up to $8,000 annually and up to $40,000 in your lifetime. Your contributions are tax-deductible, and you can invest these funds in various avenues like mutual funds, stocks, and bonds. When you’re ready to buy your first home, you can make a tax-free withdrawal from your FHSA to fund your down payment or closing costs. Just ensure you meet the criteria for a qualifying withdrawal.

3. First Time Home Buyer Incentive:

The Government of Canada offers a shared-equity Mortgage through the First-Time Home Buyer Incentive. This incentive ranges from 5% to 10% of the property value for first-time buyers purchasing newly constructed, existing, or mobile/manufactured homes. This shared-investment arrangement means the government shares in the property’s ups and downs. Repayment is based on the property’s fair market value after 25 years or upon sale, with no pre-payment penalty. For further details, or to see if you qualify for this program head to this WEBSITE.

4. Self-Employed Income:

CMHC’s recent adjustments have offered more flexibility for self-employed borrowers, especially if you’ve been running a business for less than two years. If you’ve been profitable for a while, that’s even better. Documents such as T1 General tax packages, Notice of Assessments and company financials (if incorporated) can help validate your income.