First-Time Buyers represent the largest group of purchasers in today’s real estate market.
Recognizing this, Lenders and Insurers have developed progressive ways to allow for many Canadians to purchase their first home, which would otherwise not have been possible under traditional programs. The most common program utilized today by First-Time Buyers is the 95% high-ratio financing program through both the Canadian Mortgage and Housing Corporation (CMHC), and Genworth Financial (formerly GE Mortgage Insurance). Learn more about High Ratio Mortgage Insurance.
There are other programs available for First-Time Buyers in order to assist them with the purchase of their first home. Applicants are often enticed by some lenders with 0% down by offering cash back programs for the down payment or for the purchase of appliances etc. Just be aware that these mortgages are offered at posted rates, (significantly higher than discounted rates), and the cash back is pro-rated in the case that you re-finance your mortgage. There are also programs available through Genworth Financial and secondary mortgage lenders through a self-insured program, that allow for 100% financing with higher premiums for the greater risk they take on these types of transactions. These can vary significantly and applicants should consult with a mortgage professional for details on how these programs work. CMHC also permits first-time buyers to borrow their 5% from any other source under certain conditions. For further assistance in understanding these programs and how they work, please feel free to contact me today.
The Home Buyer’s Plan is yet another way that First-Time Buyers can purchase a home much more easily. This plan enables the purchaser to utilize their RRSP by withdrawing up to $20,000 from their plan, as long as the plan has existed for at least 90 days. The RRSP account remains open, and must be replenished within a 15 year period. Should you utilize the full $20,000 for your down payment, the annual payment to replenish your RRSP would be as little as $1,333.33. If you decide not to deposit these annual payments to your RRSP, the $1,333.33 would be added to your annual income and you would only be taxed on this annual payment based on your tax bracket. Restrictions do apply, so please make sure you get full details by calling me today - I will be happy to assist you.
IMPORTANT NOTE: Don’t forget to ask about how you may qualify for FREE land transfer tax as a First-Time Home Buyer.