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The Government of Canada has 2 home purchase programs that help a first time buyer to purchase his or her first homes. You should find out if you are eligible to take advantage of these 2 programs, namely:
a) Property Transfer Tax Exemption ( BC program)
b) Home Buyer's Plan - using your RRSP for down payment
As a first time buyer, you need to find out if you can be approved for a home mortgage. Do you have a credit problem that will affect your loan application? For home buyers who are interested in buying an eco-friendly and energy efficient home, CMHC has a "green home incentive" on their high ratio mortgage financing.
1). How much mortgage?
Before you get started, you need to know how much you can afford. Are you prepared and committed to the long term financial responsibility of owing your own home? In addition to the initial costs of buying your home, you have to budget for expenditures on home furnishing, repairs, replacement of appliances, renovation, etc.
When you apply for a home mortgage, your bank has to be satisfied that you are qualified and have a stable income to afford the monthly mortgage payment. In addition, you must have established good credit standing to enjoy the best mortgage interest rates.
2). How much down payment do you have?
The more down payments you can provide, the less you need to borrow for your mortgage. The more money you need to borrow, the more interest you'll pay over the life of your mortgage. As described under the Home Buyers' Plan, a first time buyer can withdraw up to $20,000 (or $40,000 per couple) tax free from their RRSP accounts as down payment, closing costs or other expenses.
3). High ratio mortgages
A first time buyer in Canada can buy a home with as little as 5% down payments subject to income and credit qualification. If you have high income and good credit, you can buy a home with zero down payment. If your down payment is less than 20% of the purchase price, you are required to buy a mortgage insurance
If you are interested to find out more information on how to purchase a home as a first time home buyer, kindly contact me at 604-721-4817.
