Have you been scrolling through listings, dreaming about a place of your own?
Has the drama of saving for a down payment weighed you down, even though you’ve seen seven cuts in interest rates in the last 15 months?
The idea of buying a home in Canada can feel like a level-up in a video game – exciting but with a super tough final boss: that down payment.
Saving up for that can seem like it’s going to take forever.
The good news is that you’re not playing the game on your own.
Federal and provincial governments have created a set of “power-ups” to help you get over the finish line.
Let’s break down the key tools from down payments to tax credits:
Down payments – How much cash do you actually need? For homes under $500,000, the minimum is 5%.
Mid-market entry – If you are looking to spend up to seven figures, it breaks down this way: 5% on the first $500,000 and 10% on the remaining amount.
Big spenders – For homes over $1 million, the minimum is a flat 20%.
If your down payment is less than 20%, you’ll need what’s called a high-ratio mortgage. It’s an insurance policy that you purchase to protect the lender from the risk of you defaulting on the loan.
It adds a little extra to your total cost, and that expense is calculated when the lender assesses your application.
While this insurance sounds like an extra charge, it allows you to buy a home with a smaller down payment. So think of it as a tool, not a penalty.
Canada has a bunch of programs designed to give you a helping hand. Here are the critical ones:
The Home Buyers’ Plan (HBP):
This program allows you to borrow from your Registered Retirement Savings Plan (RRSP) to buy your first home.
You can withdraw up to $60,000 from your RRSP to use as a down payment. If you’re buying with a partner, that’s up to $120,000 combined.
The plan has been designed for first-time buyers and anyone who has not owned their principal residence in the last four calendar years. However, you must pay the money back over a maximum of 15 years.
First Home Savings Account (FHSA):
Using this account, you can contribute up to $8,000 a year with a lifetime maximum of $40,000. Your contributions are tax-deductible, lowering your taxable income – just like the RRSP. The money you earn on your investments inside the account is tax-free when you withdraw it to purchase your first home.
Dynamic Duo:
You can use the FHSA and the Home Buyers’ Plan together. That means a single buyer could potentially access up to $100,000 from these registered accounts – all with zero tax consequences. For a couple, that’s $200,000.
First-Time Home Buyers’ Tax Credit (HBTC):
This one is all about getting some cash back on your taxes. It’s a non-refundable tax credit that gives you a rebate of up to $1,500 on your income taxes after you’ve purchased your home.
This is incredibly useful because buying a home comes with all sorts of costs. This credit helps offset some of the legal fees and other expenses that pop up during the final stages of the process.
New Housing Rebate
If you’re buying a brand new home, this one is for you. You might be eligible for a rebate on the federal Goods and Services Tax (GST), or the federal portion of the Harmonized Sales Tax (HST), paid on your new home.
This rebate applies to new or “substantially renovated” homes with a fair-market value of $450,000 or less. If you qualify, you could get up to $6,300. See the Canada Revenue Agency (CRA) for any updated information.
Local Help
On top of the federal programs, many provinces and territories have their own initiatives. These can include:
- Provincial Land Transfer Tax Refunds (Ontario, British Columbia, etc.)
- Down Payment Assistance Programs (various provinces and territories)
- Tax Credits (Saskatchewan, Quebec, and others)