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Mortgage Pre-Qualification vs Mortgage Pre-Approval vs Mortgage Approval

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Buying & Selling Tips

Mortgage Pre-Qualification vs Mortgage Pre-Approval vs Mortgage Approval

What are the differences between each stage of the mortgage process?
By Kara Kuryllowicz September 18, 2019

In early 2019, several Canadian banks launched digital apps that offer home buyers easy, hassle-free mortgage pre-qualification in 60 seconds or less. Sounds great, right?  The problem is many consumers believe a mortgage pre-qualification is a lot like a mortgage pre-approval or mortgage approval. As a result, prospective home buyers and sellers are left expecting the financial institution associated with the app to lend them hundreds of thousands of dollars, despite the fact they simply keyed their names, addresses, contact information and gross income into various online fields.

Getting Mortgage Approval

“Every week, as many as 40% of my new clients come to me because they’ve just bought a home and discovered that mortgage pre-qualification is meaningless and that they do not have the financing required for the purchase,” says Tracy Valko, owner and principal broker of Dominion Lending Centres Valko Financial Ltd., and a director at Mortgage Professionals of Canada.

Let’s get real: A mortgage pre-qualification gives the financial institution warm leads (names, contact information, purchasing timeline) and tells consumers how much money a financial institution might loan them. There is no way any financial institution will actually lend consumers hundreds of thousands of dollars just because they spent 45 seconds with the company’s mortgage pre-qualification tool.

Lenders do everything they can to ensure the borrower will repay the loan. A mortgage pre-approval looks at how an individual manages his/her money to determine that person’s creditworthiness. The next step is the mortgage approval which assesses that specific person’s ability to repay a loan of a certain amount at a set interest rate on a particular home.

“Always get a mortgage pre-approval before you start searching for a home and have a mortgage approval in place before you waive your financing condition on the offer – back out of a deal after it’s firm and you could be sued by the seller.” says Valko. “A mortgage pre-approval will tell consumers and their realtors what they can realistically afford to buy.”

Let’s further define the terms consumers need to fully understand before they commit to a real estate agent and start shopping for a home.

What is Mortgage Pre-Qualification?

It takes less than 60 seconds because it requests only the most basic information, whether it’s submitted to an online app or a financial representative. Mortgage pre-qualification never requires supporting documentation that proves the consumer actually has a full-time job, is paid a weekly salary and has earned a good credit score. At best, a mortgage pre-qualification can provide a very loose, broad estimate of a consumer’s home-buying power based on the consumer’s unverified data. Because the consumer typically inputs the information into an online tool, it takes just seconds for the software, not an experienced, professional underwriter, to pre-qualify a consumer for a mortgage.

If consumers notice and bother to read the apps’ fine print or legal disclaimers, they’ll likely see a statement like this one: “This is not a mortgage approval or pre-approval. You must submit a separate application for a mortgage approval or a mortgage pre-approval and a full credit report.”

In other words, they’re not actually promising you a dime, let alone enough the hundreds of thousands of dollars you’ll likely need to buy a home anywhere in Canada.

What is Mortgage Pre-Approval?

In general, it will take two to five business days to investigate an individual’s financial circumstances and the risk that a person might represent to the lender. The underwriter will need the basics, such as name, address and contact information in addition to detailed data on their income, assets (e.g. stocks, RRSPs, property, vehicles, savings), liabilities (e.g. debt, loans, mortgages) and their credit rating and report as well as the available down payment. Supporting documentation may be required to prove any or all of the above.

Unlike a pre-qualifying app, lenders’ underwriters may request a letter of employment, a Notice of Assessment, pay stubs, or T4 for the two most recent years as well as documentation indicating the down payment is available. The lender or mortgage broker will also require the consumers’ permission to pull credit scores and credit reports from organizations such as Equifax.

Your credit score, typically 300 to 800+, is based on feedback from lenders who confirm that you do or don’t pay your bills in full and on time every month. The credit report includes your name, address, social insurance number and date of birth as well as your credit history, for example, your debts and assets and whether you’ve ever been sent to collection or declared bankruptcy.

“Lenders want to know how well or how poorly you manage your money and will be looking for patterns of insufficient, late and missed payments,” says Valko.

A mortgage pre-approval is generally valid for up to 120 days at a specific interest rate unless the consumers’ circumstances change, for example, employment status, down payment, or income. For example, a consumer may not realize it, but their probationary status with a new employer, whether it’s three, six or 12 months, does matter to lenders. Likewise, a move from a salaried to a contract or self-employed position will also be seen as a higher risk.

“I’ve had clients believe they were full time, salaried employees, then discover they’re still on probation when we start underwriting,” says Valko. “An electrician client left his full-time salaried position to work independently and didn’t realize it negated his mortgage pre-approval, which was based on the guaranteed weekly paycheck versus the sporadic earnings associated with self-employment.”

What is Mortgage Approval?

This is the big one. Once consumers have identified the homes they want to purchase, they need mortgage approval to buy that specific home. Lenders assess the age and condition of the homes and consider comparable homes to confirm the price being paid is fair and market value. The mortgage approval is valid until the closing date unless the buyers’ circumstances change.

“Only the mortgage approval accounts for property specifics, such as taxes or condo fees, so give your underwriter/lender time to ensure the numbers previously used are still valid and that the property is acceptable to the lender,” says Valko.

If you’re serious about the home search and purchase process, skip the mortgage pre-qualification apps. Instead, take the time and make the effort to get mortgage pre-approval, then find the home suits you best, then get mortgage approval to close the deal. Then? Enjoy your new keys.

Source: REW.ca –  Kara Kuryllowicz September 18, 2019

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First-Time Home-buyer Lessons

 

My husband and I bought our first home three years ago, and I’ll admit we made some mistakes along the way.

Here are 5 hard lessons we learned as first-time homebuyers.

1. We bought a very old house. Before we bought the home, we had it inspected by a reputable home inspector. In his report, he suggested that we have the house’s foundation assessed by an engineer. But we didn’t do that. Why? We were in too much of a rush to buy the house.

Lesson? Pay attention to the inspection report. After living in the home for about a year and a half, I called an engineer who told us a foundation wall had to be replaced–and soon. It wasn’t cheap.

2. Our agent told us that upping our offer by a few thousand dollars would only mean an extra $40, $50 or $60 a month on our mortgage. It doesn’t sound like much, but if interest rates go up spending thousands more on our home will hurt.

Lesson? Once you figure out your maximum price, stick to it. This is one thing we actually did well. In the end our offer was accepted at the price we were willing to pay, but upping our bid could’ve made paying the mortgage a lot tougher.

3. When you’ve been a renter for most of your life, it’s a shock to suddenly find yourself responsible for repairs. We hired a roofer who did a really bad job, and we had to pay another roofer to do the work a second time. Then I had to go to small claims court to try getting my money back from the first one.

Lesson? Shop around before hiring a contractor. I should have paid more attention to a couple of negative online reviews. You can also look up court decisions online to see if other customers have had problems.

4. We were able to put a 20% down payment on our home and had about $10,000 set aside for closing costs, taxes, home insurance and other expenses. It wasn’t enough.

Lesson? Set money aside, then set some more aside. You also need to budget for the unexpected. In the first year, we spent several hundred dollars on a new sump pump after our crawl space flooded. Last year, we spent a few hundred dollars on an exterminator for mice.

5. This past winter, while our foundation wall was being dug up and replaced, I called a real estate agent to talk about possibly putting our house up for sale. I was pretty fed up with the seemingly unending problems and stress. The good news was that our home had gone up in value and we could make a profit. Though we’ll stay put for now, at least we have an exit plan–as long as the housing market stays strong.

Lesson? Have an exit plan. Hopefully these hard-earned lessons can help you become homeowners. Or maybe decide to remain renters. Good luck!

 

Source: Tangerine.ca – by Dominique Jarry Shore Wednesday, July 3rd, 2019

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Fed unveils First-Time Home Buyer Incentive in Barrie

Fed unveils First-Time Home Buyer Incentive in Barrie 

A federal official unveiled Canada’s First-Time Home Buyer Incentive in Barrie, ON last week.

Adam Vaughan, the parliamentary secretary to the minister of families, children, and social development, said that $1.25 billion has been allocated for the program over the next three years. The program, which will begin on September 2, is expected to reduce monthly mortgage payments required for first-time buyers without increasing the amount they need to save for a down payment.

“Housing affordability is a major issue and a major concern for families,” said Vaughan. “This region has become one of the most expensive in the world and the prices of downtown Toronto are starting to echo up into communities like Barrie, and the success of Barrie itself is also having an impact on housing values and land costs.”

The program will be available to first-time home buyers with qualified annual household incomes of up to $120,000. Under the incentive, the Canada Mortgage and Housing Corporation (CMHC) will provide up to 10% on the purchase price of a new build and 5% on a resale.

Source: Mortgage Broker News – by Duffie Osental 31 Jul 2019

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When is a good time to get into the market?

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When it comes to real estate, one of the most common questions is: when is the best time to buy? The typical response is the best time to buy was yesterday and the second best time is today. That response is a bit clichéd as many homebuyers have heard it before and it doesn’t provide any practical advice.

Buying a home will likely be the largest purchase people make in their lives which is why they want to be as informed as possible when making their decisions. It’s impossible to predict where the markets are headed, but there are some scenarios where it makes sense to get into the market.

Early in the year

Historically, real estate sales slowdown at the start of the year. This happens because many people aren’t exactly excited to go out in the winter to search for a new home. Although there’s usually less inventory available during this season, there’s an opportunity for buyers since sellers may be more motivated to negotiate on price to complete the sale.

When interest rates are low

Over the last couple of years, interest rates in Canada have been at near record lows. In 2018, when the Canadian economy was doing well, the Bank of Canada increased interest rates three times from 1% to the current rate of 1.75%. The economy has since cooled and a recent poll found that many economists expect rates to remain flat until the end of 2020.

In the first half of 2020, we’ve seen mortgage rates fluctuate both up and down. In early 2019, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0%. However, right now, we’re seeing rates as low as 2.54% which can be very appealing to potential and current homeowners.

When your financial situation is optimal

Buying a home is a goal for many Canadians, but it’s easier to make that a reality if your financial situation is in good standing. Ideally, you should have a secure income, good credit score, no or limited debt, and a healthy down payment.

By having all of the above, lenders are more likely to approve you for a mortgage in the amount you’re looking for. That’s not to say that lenders will ignore potential homeowners who have debt or are on a single income, it just means that they may not be extended as much money.

When inventories are high

Real estate is cyclical and things can change fast. A seller’s market can quickly become a buyer’s market if a lot of homes are up for sale. Generally speaking, spring and summer are when listings are at their peak, but there’s also an increased amount of buyers so that doesn’t automatically mean buyers will get a deal.

The highest month for home-for-sale inventories is May, followed by April and June which lines up perfectly for potential homeowners who are looking to move in by Labour Day. If there are more homes for sale compared to buyers, then sellers will need to ensure their home is priced competitively so they can get it off the market.

When the economy is doing well

Although interest rates may rise when the economy is doing well, it may still be a good time to buy a home. Those looking to buy who have been pre-approved for a mortgage may not feel the effects of any increased rates and they may be able to take advantage of new market conditions.

With an increased economy, there may be more construction of new homes which means more inventory for potential homeowners to choose from. This scenario also helps current homeowners who are looking to move up on the property ladder since they’ll likely have an easier time selling their current home before buying a new one.

The pros and cons of buying real estate

The above factors are all good reasons to start looking for a home but note that homeownership isn’t for everyone. If you’re looking to enter the real estate market, it’s important to look at the pros and cons early so you know what you’re getting into.

Pros

  • As a homeowner, you can choose what to do with your home
  • Over time, you build equity in your home
  • You may be able to generate income from your home by renting it out (or a portion of it)
  • There are some tax benefits e.g. tax deductions on mortgage interest

Cons

  • As a homeowner, you’re responsible for all the maintenance and repairs
  • There’s limited flexibility if you need to relocate quickly
  • A huge part of your net worth is locked into your home which makes it difficult to diversify
  • There are additional expenses that renters don’t have such as property tax and repairs

As you can see, deciding on when is a good time to get into the real estate market depends on quite a few things. There’s never an ideal time, but you can look at the current market conditions as well as your own financial situation and then decide if you’re ready to become a homeowner.

 

Source: Equitable Bank – Joe Flor Director, National Sales


Equitable Bank is a major lender partner to the mortgage broker network and offers mortgage products to meet almost every client need. To find out more call us at 905-813-4354 or stop by our office for a chat.

 

 

 

 

 

 

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Everything you need to know about CMHC’s First-Time Home Buyer Incentive

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The federal government wants to make home ownership more affordable for young people and to do that it’s introducing the First-Time Home Buyer Incentive (FTHBI) this September. The $1.25 billion program, announced as part of the March federal budget, involves the government buying equity stakes in homes purchased by qualified home buyers, allowing for smaller mortgages that will keep monthly payments lower.

But how will the plan work? Below, we break down all the key details and take a look at who this new program is right for.

How the FTHBI works

The program will be administered by Canada’s housing agency, Canada Mortgage and Housing Corp. (CMHC), which will pay 5% of the purchase price for an existing home, and up to 10% for the value of a new home, in exchange for an equity stake. Once the homeowner sells, they’re obligated to repay the CMHC.

The fine print includes the following:

  • To qualify, you must be a first-time home buyer.
  • Buyers must have a down payment of at least 5% of the total purchase price, up to 20%.
  • The household’s income must be under $120,000, and the mortgage and incentive amount together can’t be more than four times the household income.
  • Only insured mortgages will be eligible, meaning this will be restricted to those with a down payment worth less than 20% of the purchase price.
  • Buyers will not be exempt from federal “stress test” regulations (a mandatory mortgage qualification using the five-year benchmark rate published by the Bank of Canada or the customer’s mortgage interest rate plus 2%)

Who is this for?

The program is for purchasers looking for a starter home but aren’t able to afford the monthly payments needed for a mortgage below $500,000. To qualify for mortgages in the $400,000 – $500,000 range, the household income would have to be close to six figures. Buyers would have to be willing to give up at least 5% of the value of their home to the federal government in exchange for lower monthly payments.

As an example, a couple earning up to the household income cap of $120,000 with a down payment of 5% on a new home would be entitled to an additional $48,000 provided by CMHC, as below:

Couple earning $120,000
$480,000 total purchase
-$24,000 down payment
-$48,000 matched by CMHC (10% for a new home)
= $408,000 mortgage

As both the household income and total purchase price are capped under the program, it’s worth noting that buyers with good credit and low debt might actually be able to borrow more money than the FTHBI would allow.

In this scenario, “the program forces you to buy less home than you otherwise would be able to. Whether consumers are disciplined enough to take part of that or not is the real question,” says Paul Taylor, president and CEO of Mortgage Professionals of Canada.

Buyers in the program will also want to consider the future value of their home over time. Is the neighborhood likely to increase in value? With a 5-10% equity stake in the home, CMHC will be along for the ride, both in the case of depreciation or appreciated value of the home.

“Vancouver North Shore is a great example. Now, it’s very much an outlier but if you bought the home in 1986 for $250,000 it’s probably worth $4 million now,” says Taylor.

Comparing markets

The most expensive home you can buy would be about $565,000 a government official told the CBC, which all but disqualifies purchases of detached homes or upscale condos in downtown Vancouver and Toronto. For example, the average home price in the Greater Toronto Area as of May 2019 was $838,540, according to the Toronto Real Estate Board.

CMHC acknowledged earlier this year that the average home in these markets won’t be within reach.

“It may not be a condo in Yaletown or a house in Riverdale, but there are options in both metropolitan areas to accommodate this program,” CMHC said in a press release in April. “In fact, around 23% of transactions in Toronto are for homes under $500,000 and 10% in Vancouver.”

This means that potential buyers will want to be comfortable living in the outer suburbs like Langley or Surrey in Vancouver, or Brampton and Mississauga in Toronto.

Recent residential listings for $472,000 (the average price for a home in Canada) 
*Compiled using listings found on Realtor.ca during the week of May 26th

Downtown Toronto Less than 30 listings
Downtown Vancouver Less than 100 listings
Calgary More than 600 listings
Winnipeg More than 2,000 listings

The program would seem to favour first-time buyers in smaller cities across Canada, at least when comparing options for buyers that tend to want to live in large cities downtown.

What you get for $490,000-$505,000

While this program can get you property up to $565,000 if you put the maximum down payment allowed for an insured mortgage (about 19.99%), we expect many who use this program will have the minimum 5% down payment and are looking to get into the property market sooner with help from the CMHC.

Based on that idea, we’ve compiled a look at some properties you can get in four major housing markets in Canada in the $490,000 to $505,000 price range. Take a look.

In Toronto: No houses listed but one-bedroom condos are available, typically 600-1,000 sq feet. Condos have more rooms and additional bathrooms as you get away from the city core. There is almost no supply below $300,000.

Here’s an example of what you might be able to get in the downtown core (one bedroom) in that price range.

 

 

In Vancouver: No houses listed but one-bedroom condos are available, typically 600-1,000 sq feet. More rooms and additional bathrooms as you get away from the city core.

Here’s an example of what you might be able to get (one bedroom).

In Calgary: You can find listings for two-bedroom bungalow houses downtown, along with two-bedroom condos over 900 square feet.

Here’s an example.

In Winnipeg: Limited supply at this price range. Detached houses are available however, with two-plus stories and multiple rooms. Large condos over 1,000 sq feet are available closer to a $300,00 price point.

Here’s an example.

Listing photos courtesy of Realtor.ca.

Source – LowestRates.ca –  Mike Winters on June 17, 2019

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Homebuyers to get new mortgage incentive, Home Buyer’s Plan boost under 2019 budget

Homebuyers to get new mortgage incentive, Home Buyer’s Plan boost under 2019 budget

 

 

 

WATCH: Federal budget 2019: Incentives for first-time home buyers, skills training

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Can’t afford to buy a house? The government may take on part of the cost.

That is the gist of the boldest proposal that Budget 2019 puts forth to help more middle-income Canadians fulfill their homeownership dream.

Under the new CMHC First-Time Home Buyer Incentive, the Canada Mortgage and Housing Corporation would use up to $1.25 billion over three years to help lower mortgage costs for eligible Canadians.

 

The money would go to first-time home buyers applying for insured mortgages. Borrowers would still have to pony up a down payment of at least five per cent of the home purchase price. On top of that, though, they would receive an incentive of up to 10 per cent of the house price, which would lower the amount of their mortgage.

For example, say you’re hoping to buy a $400,000 home with the minimum required five per cent down payment, which works out to $20,000. With the new incentive, you could receive up to $40,000 through the CMHC. Now, instead of taking out a $380,000 mortgage, you’d need to borrow only $340,000. This would lower your monthly mortgage bill from over $1,970 to less than $1,750.

The incentive would be 10 per cent for buyers purchasing a newly built home and 5 per cent for existing homes. Only households with an annual income under $120,000 would be able to participate in the program.

Watch: Finance Minister Bill Morneau presented the 2019 federal budget in the House of Commons Tuesday.


Home owners would eventually have to repay the incentive, possibly at re-sale, though it’s unclear yet how that would work.

Also, mortgage applicants still have to qualify under the federal stress test, which ensures that borrowers will be able to keep up with their debt repayments even at higher interest rates.

However, the incentive would essentially lower the bar for test takers, as applicants would have to qualify for a lower mortgage.

On the other hand, the amount of the insured mortgage plus the CMHC incentive would be capped at four times the home buyers’ annual incomes, or up to $480,000.

This means the most expensive homes Canadians would be able to buy this way would be worth around $500,000 ($480,000 max in insured mortgage and incentive, plus the down payment amount).

The government is hoping to have the program up and running by September.

Home Buyer’s Plan gets a boost

As was widely anticipated, the government would also enhance the Home Buyer’s Plan (HBP), which currently allows first-time buyers to take out up to $25,000 from their registered retirement savings plan (RRSP) to finance the purchase of a home, without having to pay tax on the withdrawal. The budget proposes raising that cap to $35,000.

The new limit would apply to HBP withdrawals made after March 19, 2019.

New measures would encourage more borrowing, possibly drive up home prices

Economists said the new CMHC incentive and the enhanced HBP would encourage Canadians to take on more debt, stimulate housing demand, and possibly push up housing prices.

“It’s a different kind of borrowing,” David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, said of the CMHC incentive.

And with a home-price limit of around $500,000, the program is unlikely to help middle-class millennials buy homes in Vancouver and Toronto, where average property values are far higher, said TD economist Brain De Pratto.

 

Those taking advantage of the higher HBP limit, on the other hand, would have to keep in mind that the government is not extending the program’s repayment timeline, said Doug Carroll, a tax and financial planning expert at Meridian.

Home buyers must put the money back into their RRSP over 15 years to avoid their HBP withdrawal being added to their taxable income. Now Canadians will have to repay a maximum of $35,000 – instead of $25,000 – over the same period, Carroll noted.

In general, the economists and financial experts Global News spoke to saw the budget as being focused on demand-side housing measures, rather than policies that would encourage the construction of new homes.

And while the budget does earmark $10 billion over nine years for new rental homes, it does not propose major tax breaks for homebuilders.

Tax incentives proved to be an effective way to stimulate residential construction in the past, said Don Carson, tax partner at MNP.

“They really drove supply,” he said.

Source: Global News –

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A first-time homebuyer’s guide to Canadian government programs and incentives

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Photos: James Bombales

Whether you want to stop paying skyrocketing rental rates, start building equity, or own property that can be passed down to your children, purchasing a home is likely a long-term goal of yours. However, with rising home costs and the mortgage stress test introduced in 2018, achieving that goal can be a challenge for many Canadians. Fortunately, there are a number of programs and incentives offered by the federal government that first-time homebuyers can apply for.

“First-time homebuyers in Canada have the opportunity to take advantage of some great federal government programs to assist them when purchasing their first home,” says Michael Therriault, Financial Advisor at Scotiabank. “They can apply for multiple programs as long as they are eligible, so it is strongly recommended for potential first-time homebuyers to meet with a financial advisor at their bank to go over their individual circumstances and to help determine the best program(s) for them.”

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1. Home Buyer’s Plan

Early withdrawals from an RRSP are usually considered taxable income, but with the Government Home Buyer’s Plan, you can apply your RRSP savings toward the price of your home — tax free.

“The Home Buyer’s Plan (HBP) is a program that allows you to withdraw up to $25,000 ($50,000 per couple) in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability,” says Olga Coulter, Senior Account Manager at the Canada Mortgage and Housing Corporation (CMHC). “To be eligible, you must be a first-time homebuyer (ie. you haven’t purchased a home or lived in a spouse’s home within the last four years) and have a written agreement to buy or build a qualifying home for yourself or for a related person with a disability.”

However, it’s important to note that that these funds must have been in your account for at least 90 days before the purchase of your home and they do have to be paid back within a 15-year timeframe. “Essentially, you are ‘borrowing’ these funds from your RRSP as they need to be repaid over a 15-year period beginning the second calendar year after the withdrawal,” adds Therriault.

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2. First-Time Home Buyers’ Tax Credit

Introduced in 2009, the First-Time Home Buyers’ (FTHB) Tax Credit helps to make purchasing a home more affordable by allowing Canadians to claim a portion of their home purchase on their personal tax return that same year. This helps to offset expenses like legal fees, home inspections and other closing costs.

“The FTHB Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009,” says Coulter. “For an eligible individual, the credit will provide up to $750 in federal tax relief.”

To be eligible, you, your spouse or common-law partner must have acquired a qualifying home (a unit located in Canada purchased after January 27, 2009) and cannot have lived in another home you or your partner owned in the year of acquisition or in any of the four preceding years.

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3. GST/HST New Housing Rebate

If you are purchasing a new construction home, performing substantial renovations to an existing home, or rebuilding a home that was destroyed by fire, you will want to apply for the GST/HST New Housing Rebate. Filling in this form can save you thousands of dollars, as it recovers a portion of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) if all eligibility conditions are met.

“You may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, or on converting a non-residential property into a house,” explains Coulter. “You may also be eligible if you are doing substantial renovations or have hired someone to complete substantial renovations to an existing home, such as an addition.”

CMHC Mortgage Loan Insurance Programs

In addition to tax-related programs, first-time homebuyers have access to several CMHC Mortgage Loan Insurance Programs that can help them achieve the dream of homeownership. Listed below, these programs offer flexible terms and conditions to meet a variety of financing needs and are available throughout the country.

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4. CMHC Purchase

While it’s ideal to put at least 20 percent down, home prices in cities throughout Canada are rising faster than many homebuyers can save. “CMHC Purchase can help open the doors to homeownership by enabling homebuyers to buy a home with a minimum down payment of 5 percent,” says Coulter. “The premiums can either be paid up front in a lump sum or incorporated into an applicant’s mortgage loan payments.”

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5. CMHC Improvement

With such tight housing markets throughout the country, homebuyers may be interested in purchasing a fixer-upper that needs a little TLC. “CMHC Improvement allows the purchase of an existing residential property with improvements and new construction financing,” explains Coulter. “Features include flexible financing options with the option for CMHC to manage up to four advances at no cost to the borrower.”

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6. CMHC Newcomers

Obtaining a mortgage can be especially difficult for newcomers to Canada. If you’re a permanent resident with a strong credit rating you may be able to qualify for a typical bank mortgage, however, if you don’t meet all the criteria, the CMHC Newcomers program can help.

“We have helped newcomers with permanent resident status become homeowners with a minimum down payment starting at 5 percent – regardless of how long they have been in Canada,” says Coulter. “Non-permanent residents can also purchase a home with a minimum down payment of 10 percent of the value of the home.”

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7. CMHC Self-Employed

Homebuyers who are self-employed may have difficulty qualifying for a mortgage given that their monthly income may be less predictable. CMHC’s Self-Employed program allows business owners with proper documentation to access mortgage loan insurance under the same criteria and insurance premiums as those with more calculable income.

“Self-employed Canadians make up about 15 percent of Canada’s labour force,” says Coulter. “CMHC facilitates access to mortgage loan insurance for business owners by providing enhanced flexibility for satisfying income and employment requirements for all self-employed borrowers at no additional cost.”

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8. CMHC Green Home

“CMHC Green Home encourages homebuyers to choose more energy-efficient housing options to increase comfort and healthier living, while reducing greenhouse gas emissions,” says Coulter. “The program offers a partial premium refund of up to 25 percent directly to borrowers who either buy, build or renovate a home to make it more energy-efficient using CMHC insured financing.”

The amount of the refund varies depending on the level of energy-efficiency achieved by your home as assessed by Natural Resource Canada (NRCan). Condo buyers are also eligible for the CMHC Green Home refund if the building is built to the LEED Canada New Construction standard.

Source: Livabl.com –  

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