First-time buyers get a boost in Federal Budget 2022

I hear it all the time: How can first-time buyers possibly get into the homeownership market with prices the way they are? In fact, first-time purchasers continue to find ways – and the recent Federal Budget 2022 has kicked in some perks to help make it even more possible. Potential purchasers now have a Tax-Free First Homes Savings account that enables them to save up to $40,000 toward a down payment. That’s on top of the government of Canada’s Home Buyers’ Plan, which allows them to use up to $35,000 from their RRSPs.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit has now been doubled to $10,000, which means qualified buyers who purchased homes after Jan. 1 of this year can claim that amount on their tax returns. This will bring a rebate of up to $1,500, instead of the previous $750. In addition, Canada Mortgage and Housing Corp.’s First-Time Home Buyer Incentive has been extended to 2025. This offers a great opportunity to take advantage of a shared-equity mortgage with the government of Canada, making the down payment more attainable and lowering monthly costs. Those who buy a new home may also qualify for a GST/HST New Housing Rebate to recover some of the GST, or the federal part of the HST paid on their primary place of residence. In Ontario, first-time buyers can also look into receiving a rebate on portions of their land transfer tax.

All of this adds up. If, however, buying a first home is still a financial challenge, there are other options to consider, especially while mortgage interest rates are still low. First, get yourself pre-approved for a mortgage at a financial institution. Then if you need to find more to make your down payment, you might be able to turn to what’s often referred to as “the bank of mom and pop.” This form of gifting is becoming more common. According to a report by CIBC, about 30 per cent of first-time homebuyers receive this form of financial help in 2020. We also see an increasing number of parents co-signing for their children’s mortgages. Having gone through the skyrocketing interest rates during the late 1980s and early 1990s, these parents realize how important it is to get into the market now before interest rates jump more.

Creative thinking and planning

There is also the option of multiple ownership to help afford the down payment and monthly costs. This may involve family members co-purchasing or friends going in together to own a home or condominium. These buyers can be roommates until they decide to sell someday and split the profits.

My main advice is do whatever you can to get yourself into the market. Buying new is ideal, as you avoid moving in and having all kinds of renovation headaches to deal with. Just ask anyone who has bought an older residence. The new budget definitely helps, but you can also do some creative thinking and planning to make your dream of owning a home come true.