First Time Home Buyer

Buying Your First Home Is Easy With Clover Mortgage!

Being a first time home buyer is exciting, but can also be intimidating because of all of the information and options available to choose from. It is important to do enough research before deciding what home to purchase so that as a first time home buyer, you get the best deal possible on a mortgage for your new home.

Here are a few important things that a first time home buyer should consider:

As a first time home buyer you are allowed to put as little as 5% for a down payment. However, any home buyer that is providing less than 20% as a down payment on their home is required to obtain mortgage default insurance which is also commonly known as CMHC Insurance , although this type of mortgage insurance is available from 3 providers, Canadian Mortgage and Housing Corporation, Sagen (formerly known as Gentworth Financial, and Canada Guaranty. This serves as insurance for the lender in the event that the borrower can no longer make their monthly payments. The higher your down payment, the less your CMHC insurance payments will be. Getting an insured mortgage or insurable mortgage can also help you get approved at the lowest mortgage rates available to you.

If you have a retirement savings account you might be eligible for the RRSP Home Buyers’ Plan . It allows you to take up to $35,000 out of your RRSP tax-free to help finance the purchase of your first home. Read our blog post on the Canadian First-Time Homebuyers Incentive for more information and detail about the program.

The First Time Home Buyers’ Tax Credit gives first time buyers that chance to regain some of the costs they paid in the purchase. It mostly applies to closing costs such as legal fees and inspections.

In certain provinces like Ontario, British Columbia, or Prince Edward Island, home buyers can qualify to get a rebate on some of the Land Transfer Tax they paid. Torontonians are eligible to get a rebate on top of the provincial allowance if they are a first time home buyer.

Let us take explore the RRSP Home Buyer's Plan (HBP) in more detail.

What's the RRSP Home Buyers' Plan all about?

The Canadian government's Home Buyers' Plan (HBP) allows first time home buyers to borrow up to $35,000 from their RRSP for a down payment, tax-free. If they are purchasing with someone who is also a first time home buyer, both can access $35,000 from each of their RRSP’s for a combined total of up to $70,000.

Since the HBP is considered a loan, it must be repaid within 15 years. Fortunately, this is an interest-free loan so the borrower will only be required to pay back into their RRSP the original amount withdrawn.

What are the eligibility requirement for the (HBP) RRSP Home Buyers' Plan?

  • RRSP funds borrowed must be in a registered savings account for at least 90 days prior to withdrawal
  • Buyer(s) cannot have owned a home within the previous four years
  • If buying with a spouse (or common law partner) who is not a first time home buyer, the first time home buyer borrower cannot have lived in the house the spouse owned in the previous 4 years
  • Has entered into a written agreement to buy or build a qualifying home
  • Must intend to live in the home within one year of purchase and use it as their primary residence
  • If they have used the Home Buyers' Plan before, they cannot have any outstanding balance due
  • Must make the withdrawal from their RRSP within 30 days of taking title on the home
  • Have to be a Canadian resident

How does the HBP work?

In order to participate in the Home Buyers' Plan, borrowers must print off a copy of the Form T1036 . This form is available on the Canada Revenue Agency's website (www.cra-arc.gc.ca). The borrower must fill out Section 1 and take it to the institution that holds their RRSP so that the institution can fill out section 2.

The financial institution will send the customer a T4RSP form which will confirm how much they withdrew from their RRSP as a part of the Home Buyers' Plan. This form must be referenced on their income tax return for the year they made the withdrawal.

Home Equity Calculator

Our Home Equity Calculator Canada will help to determine the amount of equity available in your home and how much you might be eligible to borrow. Simply input the current value of your home along with your current outstanding mortgage balance into the home equity calculator to get started.

USE OUR EASY HOME EQUITY CALCULATOR TO FIND OUT HOW MUCH YOU COULD QUALIFY FOR!

Do you have an Existing Second Mortgage or Home Line of Credit?
Total Mortgages / Liens

Receive Correspondence

AMOUNT OF EQUITY IN YOUR HOME
MAXIMUM LOAN TO VALUE (90%)

How does repaying the RRSP loan work with the Home Buyers' Plan?

Since the Home Buyers' Plan is considered a loan, you must repay the amount you withdrew from your RRSP within 15 years, with the first payment due two years after you first withdrew the money. The Canada Revenue Agency will send you a Notice of Assessment which will indicate the amount of the loan you have repaid, the balance left to be repaid, and the amount of your next payment.

To start repaying the loan you must make a contribution to your RRSP in the year the repayment is due or in the first 60 days of the following year.

Let's look at an example where a customer bought a home in 2020 and withdrew $35,000 from their RRSP to put towards their down payment. The first payment is due two years later, in 2022. They can start repaying anytime throughout the year 2022 and have until the first 60 days of 2023 to do so. This is as per RRSP contribution rules stating that a deposit can be made for the previous fiscal year up to 60 days in the year after.

Since this is an interest-free loan using their RRSP, the minimum yearly payment would be simply divide the amount withdrawn from your RRSP for the purposes of your down payment and divide that by 15 years.

Example:

$35000 / 15 = $2,333.33

In the example above, the borrower would have a minimum payment of $2,333.33 to pay back into their RRSP every year.

At Clover Mortgage, we know there are many great resources available to first time home buyers and we are determined to make sure you take advantage of them. Our trusted mortgage professionals will help you understand what you are eligible for and ensure that you get the most from your first home purchase.

Get Your Free Mortgage Consultation

Are you currently a homeowner? *
By submitting a Mortgage Consultation Request, you agree to receive correspondence from Clover Mortgages.

Receive Correspondence

Call Us Today at 416-674-6222 or Toll Free at 1-800-673-2230 for a Free No-Obligation Mortgage Consultation

Why Work With Us

Low Rates

*Rates start as low as 4.49%

Fast Service

We pride ourselves on quick, easy & honest service. Our clients always come first.

Bad Credit

We specialize in dealing with bad credit & bank declines. We turn a “no” into a “YES!”

Easy Application

*No credit checks. No complicated application and no income required!

Our Customers Love Us

Sandra F.
Sandra F.
I was in debt and needed help getting back on track. My mortgage agent at Clover Mortgage helped me get approved for a home equity loan to consolidate all of my debt in one small monthly payment. Now I’m saving over $1,000 a month in interest and am left with less debt and more money in my pocket at the end of each month. Thank you Clover!
David J.
David J.
I'm a self employed independent contractor. I earn a decent income, but when I went to the bank to refinance my home, they denied my application telling me that I didn't have enough "provable" income to qualify for refinancing my home. When I came to Clover I was almost out of hope. My Mortgage Agent at Clover was caring and professional, and help me get a great rate and flexible terms on full refinance. The whole process took less than 48 hours! I was impressed at how quickly and easily they were able to get me the money and home refinance I needed. Thank you Clover Mortgage, I'm recommending you to everyone I know!!
Andrea R.
Andrea R.
I had really bad credit, but really wanted to purchase a Condo. When I went to the bank they made me go through a lengthy application process that took weeks, and then they turned me down at the end of it all. When I found Clover Mortgage online, I called them and a friendly Mortgage Agent was able to help me get approved for a mortgage quickly and hassle-free. I got a good rate and now live in a home that I am comfortable in and am able to easily afford my monthly payments.
Ankur R.
Ankur R.
I definitely recommend Clover Mortgage to any new home buyer! They were very professional and helped my husband and I get mortgage for our new home at an even better rate than the bank was offering us. They also helped us get the mortgage with a smaller down-payment than the bank demanded from us. Since we did our mortgage with Clover, several of our friends and family members got their from them also, and Clover Mortgage has been able to help all of them, even the ones that were completely turned away and rejected by their banks.
Janet L.
Janet L.
My husband and I found ourselves in a tough situation. Luckily my expert mortgage broker at Clover Mortgage helped us get a fast and easy approval for an amazing rate for refinancing our home. Clover's service is the best I've ever experienced and I've been recommending them to all of my family members and friends ever since. Thanks for your help Clover!
Raj I.
Raj I.
I definitely recommend Clover Mortgage to any new home buyer! They were very professional and helped my wife and I get mortgage for our new home at an even better rate than the bank was offering us. They also helped us get the mortgage with a smaller down-payment than the bank demanded from us. Since we did our mortgage with Clover, several of our friends and family members got their from them also, and Clover Mortgage has been able to help all of them, even the ones that were completely turned away and rejected by their banks.