Posted 21 Feb, 2020
Down Payment Assistance Programs To Help Buy Your Dream Home
Investing in a home is a life goal that most people fantasize about. Having a place to call your own is empowering and the highest level of adulting. Even though buying a home seems impossible, down payment assistance programs can help you achieve your dream.
There are multiple essential steps in the home buying process. A few highlights include an accepted offer, a down payment, and fulfilling mortgage payments until it's completely paid. Each stage is more exciting than the last because completing every level moves you closer to owning a home.
New buyer nerves come with the excitement of purchasing your first home. There’s lots to consider and plan for! One of the most daunting tasks in this process will be putting together funds for your down payment. Raising 5% or more of the purchase price can seem out of reach, but there’s assistance available to help make your experience less stressful.
In addition to saving money for a new home, here are a few resources that you can turn to for financial support.
Down payment assistance programs for first-time homebuyers
One way to gather funds for your down payment is by borrowing from your Registered Retirement Savings Plans (RRSPs) through Canada's Home Buyers' Plan (HBP).
Last year, a budget increase raised the HBP withdrawal limit to $35,000, which impacts withdrawals made after March 19, 2019.
To be eligible for the HBP, you must meet specific criteria. Among the standards are qualifying as a first-time homebuyer, and being a resident of Canada when you withdraw funds. Also, the home must be your principal place of residence within one year of buying or building it. Find the full list of HBP eligibility conditions here.
Another way you can save money is by taking advantage of Ontario’s land transfer tax refunds for first-time homebuyers. When you purchase a home, you must pay a land transfer tax when ownership moves from seller to buyer.
According to Ontario’s Ministry of Finance, “first‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.” Learn more about how you can receive a refund and the conditions you must satisfy here.
New property owners can also find help with Canada’s First-Time Home Buyer Incentive. This program offers Canadians 5% or 10% of the home’s purchase price to allocate towards a down payment.
The First-Time Home Buyer Incentive is a shared equity mortgage. This means that you borrow 5% or 10% of the purchase price and then repay the same percentage on the current value of your home. It’s important to note that you must repay when you sell or within a 25-year window.
Financial assistance programs for down payments
The Home Buyers’ Amount is a tax credit that you can use in the same year you purchase a new home. The Government of Canada explains that you can claim $5,000 if you, your spouse or common-law partner bought a qualifying home. And, for first-time buyers, “you did not live in another home owned by you, your spouse or common-law partner in the year of acquisition or in any of the four preceding years.”
Have a family and need extra help in purchasing a new place to live? An excellent option is applying for a Habitat for Humanity home, which gives you the chance to own a beautiful place for less.
Habitat for Humanity homes come together through a combination of volunteer efforts and donations. If you are accepted into the program, there is no down payment, and an affordable mortgage plan is created based on your income. You are also required to complete at least 500 volunteer hours with the organization.
Start by filling out their eligibility questionnaire to help you determine if you fit Habitat for Humanity’s criteria and wait for instructions from one of their representatives.
Personal borrowing for a down payment
Buyers can apply for a personal loan or line of credit to help with their down payment on a home. If you feel like you’re running out of time and you’re eager to buy into the housing market, personal borrowing might be a good option to help you buy a home.
A personal loan requires a strong credit score and financial history to be approved. A lender is unlikely to assign more debt to someone they do not believe is capable of handling it. However, if you have a fantastic financial record, this is a great option to explore.
A personal line of credit is often available at a lower interest rate compared to a personal loan. A benefit of this option is that you can use it again once you’ve paid it off. However, an outstanding balance may make it difficult for you to receive mortgage approval.
View Urban North’s amazing designs and easy deposit structure here. We hope that learning about these down payment assistance programs helps you on your road to buying a home. You can only buy your first home once. Cherish each moment on this exciting journey.