Taking the leap into homeownership in Cambridge is an exciting goal, and thankfully, you don’t have to do it alone. A variety of government programs are available specifically to help first-time home buyers overcome the financial hurdles of purchasing their first property.
If you’re wondering what assistance is available and if you qualify, here is a clear explanation of the key programs for anyone looking to buy in Cambridge.
Am I a “First-Time Home Buyer”?
First, let’s clarify the definition. Generally, you are considered a first-time home buyer if:
- You have never owned a home before.
- You have not owned a home in the last four years.
- You have recently experienced a breakdown of a marriage or common-law partnership.
If you fit this description, you may be eligible for the following programs.
Key Programs for Cambridge Home Buyers
1. The Home Buyers’ Plan (HBP)
This federal program allows you to use your existing retirement savings as a down payment.
- What it is: A loan to yourself from your Registered Retirement Savings Plan (RRSP).
- How much? You can withdraw up to $60,000 per person ($120,000 for a couple).
- Eligibility: You must have the funds in your RRSP for at least 90 days before withdrawing. You must have a written agreement to buy or build a qualifying home.
- The Catch: You must repay the withdrawn amount to your RRSP over a 15-year period. Repayments start the second year after the withdrawal.
2. The First Home Savings Account (FHSA)
The newest and most powerful tool for saving for a home. The FHSA blends the benefits of an RRSP and a TFSA.
- What it is: A registered savings account designed for a down payment.
- How it Works: Your contributions are tax-deductible, meaning they lower your taxable income for the year. When you withdraw the funds (including any investment growth) to buy your home, the withdrawal is 100% tax-free.
- Contribution Limits: You can contribute up to $8,000 per year, for a lifetime total of $40,000.
- Eligibility: You must be a Canadian resident, at least 18 years old, and a first-time home buyer.
3. Ontario Land Transfer Tax (LTT) Refund
This provincial program provides a significant rebate on one of the largest closing costs.
- What it is: A refund on the Land Transfer Tax paid when you purchase a property in Ontario.
- How much? You can receive a maximum rebate of $4,000.
- How it applies in Cambridge: Based on current tax rates, this rebate completely covers the provincial LTT on homes purchased for up to $368,333. For homes priced above that, it reduces the total tax owed by $4,000.
- Eligibility: You must be a Canadian citizen or permanent resident, at least 18 years old, and you must occupy the home as your principal residence within nine months of purchase.
4. The First-Time Home Buyers’ Tax Credit (HBTC)
This federal tax credit provides a little extra help to cover the various expenses that come with buying a home.
- What it is: A non-refundable tax credit that reduces the amount of income tax you owe.
- How much? The program provides a tax rebate of $1,500.
- How to claim: You claim the “Home Buyers’ Amount” on your personal income tax return for the year you purchased your home.
- Eligibility: You must be a first-time home buyer who has acquired a qualifying home.
Your Next Steps in Cambridge
Understanding these programs is the first step. The next is to put them into action. By combining savings in an FHSA with a withdrawal from your RRSP via the HBP, you can significantly boost your down payment. The LTT refund and HBTC then help to soften the blow of closing costs.
For a full walkthrough of the home buying journey, from financial prep to closing day, make sure to read our Ultimate Guide to Buying a Home in KWC.
The best way to navigate this process is with a team of experts. A knowledgeable mortgage broker can help you get pre-approved and maximize your savings, while a dedicated real estate agent can help you find the perfect Cambridge home that fits your budget. Ready to see if you’re eligible? Contact us today!