Buying your first home is one of the largest investments of your life. Canada’s Economic Action
Plan introduces the First-Time Home Buyers’ (FTHB) Tax Credit and the expansion of the
Home Buyers’ Plan (HBP) to provide you with additional benefits and help you realize your
dream of homeownership.



Saving for your home purchase costs​​

Too often people focus only on saving for their down payment and overlook the other costs
associated with purchasing a home. You'll want to make sure you budget for costs like:

Closing adjustments: Expenses that have been prepaid by the seller and have to be reimbursed by
the buyer (municipal property taxes and utilities for example.)

Land Transfer Tax: A fee to the buyer when the property changes ownership; it can range from
0.5% to 2.0% of the purchase price of the property (the amount varies across Canada)

Legal/notary fees and disbursements (out-of-pocket expenses)

Home inspection fees (if applicable)

 

Land surveyor's fees if needed

Home insurance: Usually required by lenders of borrowers. It should be in effect before the
closing date and the advancement of mortgage funds



First-Time Home Buyers' (FTHB) Tax Credit



The costs associated with purchasing a home, such as legal fees, disbursements and land transfer
taxes, can be a particular burden for first-time homebuyers who must pay these costs, as well as
save money for a down payment. To assist first-time homebuyers with the costs associated with
the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 — a
$5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27,
2009. For an eligible individual, the credit will provide up to $750 in federal tax relief starting in
2009.



Expansion of the Home Buyers' Plan (HBP)



To provide first-time homebuyers with greater access to their RRSP savings to purchase or build
a home, the Government of Canada has increased the Home Buyers’ Plan withdrawal limit to
$25,000 from $20,000 per person for withdrawals made after January 27, 2009.

To obtain more information on the First-Time Home Buyers’ Tax Credit and the Home Buyers’
Plan, call 1-800-O-Canada or visit the Canada Revenue Agency website at www.cra.gc.ca.



New Build Rebate



The GST/HST New Housing Rebate program provides a rebate on part of the GST or the federal part
of the HST paid on the construction or purchase of most newly constructed or substantially renovated
houses used as a primary place of residence.

The rebate is available for any of the following:

building a home or contracting someone to build one

buying a newly constructed or substantially renovated home from a builder

buying a newly constructed house from a builder, where you lease the land from the builder
under the same agreement to buy the house

substantially renovating a home or building a major addition to one

rebuilding a home destroyed by fire

buying a share of the capital stock in a newly constructed cooperative housing project



CMHC



Mortgage loan insurance (CMHC or Genworth): Applies if your down payment is less than
20 per cent. To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium.
Typically, your lender will pass these costs on to you. Your lender will give you the exact price
when you apply for a mortgage.

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is
based on the size of your down payment. The higher the percentage of the total house price/value
that you borrow, the higher percentage you will pay in insurance premiums.

Remember: without mortgage insurance you may avoid the insurance premium but you’ll
typically pay much higher interest rates and additional administrative fees. At the end of the day,
for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than
fully offset by the savings achieved.