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21 Feb

First-Time Homebuyer in Canada: Qualifications, Incentives & Mortgage Essentials

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Posted by: Avaljit Sandhu

Buying your first home is a big deal! It’s exciting, but it can also feel a little overwhelming. Between saving for a down payment, understanding mortgage options, and figuring out if you qualify for any government incentives, there’s a lot to think about. But don’t worry! This guide will break everything down in a simple, easy-to-follow way.

Understanding First-Time Homebuyer Qualifications in Canada

So, what does it mean to be a first-time homebuyer in Canada? The general rule is that you (or your spouse/common-law partner) must not have owned a home in the past four years. But there are a few exceptions:

  • If you’re separated from your spouse, you might still qualify.
  • Some special cases, like having a disability, may have different rules.

Since different programs have different definitions of a first-time homebuyer, it’s important to check the requirements for each one.

Government Incentives & Programs for First-Time Buyers

Good news! The government offers several programs to help make buying your first home easier. Here are some key incentives:

Home Buyers’ Plan (HBP)

  • Allows you to withdraw up to $60,000 from your RRSP tax-free to use for a down payment.
  • You’ll need to repay this amount within 15 years.

First Home Savings Account (FHSA)

  • A tax-free way to save up to $40,000 for your first home.
  • Contributions are tax-deductible, and withdrawals for a home purchase are tax-free.

First-Time Home Buyers’ Tax Credit (HBTC)

  • A tax credit of $10,000, which translates to up to $1,500 in tax savings.

Land Transfer Tax Rebate

  • Some provinces offer rebates to help cover land transfer tax fees when you buy your first home.

GST/HST Housing Rebate

  • Helps offset taxes paid on new homes or major renovations.

These programs can make a big difference in lowering the upfront costs of buying a home, so it’s worth looking into which ones you qualify for!

Home Financing Essentials for First-Time Buyers

Now let’s talk about money—how much you’ll need and what to expect.

Down Payment Requirements

  • 5% for homes under $500,000.
  • 10% for the portion above $500,000 (for homes between $500K – $1M).
  • 20% for homes over $1M (no mortgage insurance required).

Mortgage Options: Fixed vs. Variable Rates

  • Fixed-Rate Mortgage: Your payments stay the same for the entire term, making it easier to budget.
  • Variable-Rate Mortgage: Your rate (and payments) can change based on market conditions, potentially saving you money but also carrying some risk.

Closing Costs to Budget For

Besides your down payment, you should expect additional expenses, such as:

  • Legal fees
  • Home inspection & appraisal costs
  • Title insurance
  • Land transfer taxes (some rebates available!)

Your Credit Score Matters

A good credit score (660+ recommended) helps you get better mortgage rates. If your score is lower, consider improving it by:

  • Paying bills on time
  • Reducing credit card balances
  • Avoiding unnecessary credit inquiries

Key Takeaways for First-Time Homebuyers in Canada

  • Check if you qualify for first-time homebuyer status based on federal and provincial rules.
  • Use government programs to reduce costs and make homeownership more affordable.
  • Plan your finances, including down payments, closing costs, and mortgage options.
  • Work with a real estate agent & mortgage expert to navigate the process smoothly.

FAQ: Self-Employed Mortgages & First-Time Homebuyers

Can self-employed buyers get a mortgage?

Yes! If you’re self-employed, lenders will look at your income history, tax returns, and business financials to determine eligibility.

Do self-employed homebuyers need a larger down payment?

Not necessarily, but if your income is harder to verify, some lenders may require a higher down payment (e.g., 10%–35%).

Can self-employed buyers qualify for first-time homebuyer programs?

Yes! As long as you meet the standard first-time homebuyer requirements, you can still qualify for programs like HBP and FHSA.

About Avaljit Sandhu – Mortgage by Aval Sandhu

Avaljit Sandhu is a trusted mortgage expert in Canada, helping first-time homebuyers secure the best financing options. Whether you’re employed, self-employed, or new to the country, Avaljit works to find personalized mortgage solutions that fit your needs.

📞 Need mortgage advice? Contact Avaljit Sandhu today!                                                                     

Final Thoughts

Buying your first home in Canada doesn’t have to be stressful! With the right knowledge, planning, and support, you can confidently make your dream of homeownership a reality. Be sure to check out all the available incentives, mortgage options, and expert guidance to make the best decision for your future home. 🚀🏡