It can be difficult for new home buyers to afford a home in major cities, and that is why there are specially designed incentives to help first-time home buyers afford their house in areas like Toronto and Vancouver. All provinces provide some form of financial support for new homeowners as well, such as property tax or land transfer tax exemptions and refunds for first time home buyers, or down payment assistance programs. These incentives occur at all levels of government as well, from federal, provincial, to municipal. Local financial institutions may even have incentives for certain first-time home buyers as well. Certain provinces may have certain incentives that are more attractive for you.
Property and Land Transfer Tax Refunds
Ontario, British Columbia, Manitoba, and Prince Edward Island all offer some form of property or land transfer tax refunds for first-time home buyers. Some municipalities, such as Toronto, Montreal, and Edmonton, also offer refunds.
The Province of Ontario provides a land transfer tax refund of up to $4,000. This refund covers the entire land transfer tax up for a home with a purchase price up to $368,000. The City of Toronto provides a municipal land transfer tax rebate of up to $4,475.
The Province of British Columbia also provides incentives for first time home buyers in BC. For example, land transfer tax rebates of up to $8,000, which means that no transfer tax is payable on properties with a market value of less than $500,000. You can also receive a $570 annual property tax grant if you live in Victoria, Vancouver, or the Fraser Valley, and $770 if you live elsewhere in the province.
Manitoba’s Rural Homeownership Program is only applicable for select properties in rural communities, and fully covers any land transfer taxes. The program also provides a $1,500 grant to cover legal fees and moving costs. Prince Edward Island fully waives property transfer tax for first-time home buyers if you have resided in PEI for 183 consecutive days.
The City of Montreal provides financial assistance in the form of lump-sum payments and tax refunds, depending on the property type and your household size. Real estate transfer taxes are fully refunded for households with children for specific property purchase prices.
Edmonton’s First Place Program provides a five-year deferral on land costs, but only on specific properties. Currently, new developments that the program covers include Belle Rive, Kirkness, and Michaels Park.
These property and land transfer tax refunds help make it more affordable to own a home after purchase, but if you are having trouble finding funds to purchase a home, then other first-time home buyers incentives may be more attractive for you.
Down Payment Assistance
Some provinces and municipalities provide support by giving interest-free loans that can partially or fully cover your mortgage’s down payment.
Alberta’s Public Essential and Key (PEAK) Program provides low-income earners with a second mortgage for the down payment of their home, up to 5% of the home’s purchase price. This loan is interest-free for five years, with no repayment needed until the home is sold. The City of Calgary has a similar Attainable Homes Calgary program, that allows home buyers to purchase a home with an upfront down payment of only $2,000. The program then loans out the rest of the down payment required, with the loan being interest-free.
Quebec City’s Access Famille program provides a 5.5% loan to cover the home’s down payment, with the loan being interest-free. Nova Scotia’s Down Payment Assistance Program (DPAP) provides a down payment loan of up to 5% of the home’s purchase price, interest-free, and to be repaid over ten years. The maximum loan amount is $14,000 in Halifax, and $7,500 for the rest of the province.
Louis Riel Capital Corporation in Manitoba provides Metis citizens with a 5% grant to cover a home’s down payment, up to $15,000, and up to an additional grant of $2,500. Manitoba’s Rural Homeownership Program also provides down payment loans up to 25% of the home’s purchase price, to be forgiven in full after five and 15 years.
The City of Saskatoon’s Mortgage Flexibilities Support Program gives a 5% down payment grant for select entry-level properties. Newfoundland and Labrador’s First-Time Homebuyers Program provides a 5% down payment loan, with $2,000 being a grant. Prince Edward Island’s DPAP also provides an interest-free loan for a 5% down payment.
New Brunswick gives loans of up to $75,000 for first-time home buyers, up to 40% of the purchase price of the home. This loan is interest-free for households with income below $30,000.
Tax Credits and Financial Support
Some governments also offer tax credits that you claim on your income tax return, which may be refundable or non-refundable tax credits depending on the program.
Quebec’s Home Buyers’ Tax Credit gives a tax credit of up to $750. Montreal’s Home Ownership Program provides lump-sum payments of up to $6,250 depending on your household and property type.
Nova Scotia gives a rebate of up to $3,000 on newly built homes. Saskatachewan gives a non-refundable tax credit of up to $1,050. Newfoundland and Labrador gives a $3,000 grant for newly constructed homes.
Knowing the best type of incentive for you would depend on your financial situation. For some, property tax refunds may help you as you settle into your new home. For others, down payment loans can help you on the path to home ownership. While down payment loan assistance is usually interest-free, mortgage rates are another factor to consider when deciding if you can afford your home. Tax credits and other grants can also make it easier to afford your home. While incentives are a nice sweetener, interest is a large cost for homebuyers. Comparing mortgage interest rates ahead of time can make the homebuying process much easier for first-time home buyers.