There's a first-time for everything

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And buying your first home is one of the most special life steps you can take!

With house and condominium prices the way they are today, however, it may seem impossible for first-time buyers to realize their dream of homeownership.

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And yet, first-time purchasers are showing up at sales offices after exploring, and taking advantage of, the many forms of government and private sector financial help available to them.

For example, with Canada’s recent federal election, first-time home buyers are now exempt from paying GST on any home priced at under $1 million. This represents a huge savings benefit. Then there are other government programs that can help eligible first-time buyers.

Again from the federal government, the Home Buyers’ Plan (HBP) allows Canadians to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a specified disabled person. Currently the HBP withdrawal limit is $60,000.

The Home Buyers’ Plan allows first time home buyers to use a portion of the money they’ve contributed toward their RRSP for a down payment on a home – the withdrawn money will need to be paid back over 15 years into an RRSP account. In 2024, the withdrawal limit was increased to $60,000 per individual from $35,000.

This means that, where both spouses have an RRSP, a couple can withdraw up to $120,000 with this plan. Recent changes to the HBP also extend the amount of time first-time home buyers must start repaying their RRSP from two, to five years, for those who make withdrawals between January 1, 2022 and December 31, 2025.

There is also the First Home Savings Account (FHSA), a registered savings plan in Canada that helps first-time homebuyers save for their first home purchase. It combines features of both a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP). Contributions are tax-deductible, and any investment returns are tax-free, provided the money is used towards the purchase of a qualifying first home.

The best thing to do is start with the Canada Mortgage and Housing Corporation (CMHC) booklet “Homebuying Step by Step” (https://www.cmhc-schl.gc.ca/consumers/home-buying/buying-guides/home-buying). This handy booklet begins well before any purchase, with deciding whether homeownership is right for you. It takes you all the way through maintaining your home and protecting your investment.

Then consult CMHC’s “Buying a Home” (https://www.cmhc-schl.gc.ca/consumers/home-buying) for handy tools such as homebuying calculators and other buying guides.

When you shop for a new home or condominium suite, chat with the sales representatives about potential incentives that will make your choice more affordable. Trust me, builders and developers WANT to help you get into homeownership.

Think of other things as well. Can your family help with the down payment? And one strategy that many of us used in the past was sacrificing everything but the necessities to save. When shopping for a new home of any kind, I say use all the tools available to you to make the best decision for your needs and budget.

Barbara Lawlor is CEO and Partner at Baker Real Estate Incorporated. Keep current with The Baker Blog at blog.bakerrealestate.com.