Buying your first home?

If you’re a first-time home buyer in Canada, there are some great government programs and incentives that can help you with the cost of buying a home.

Here's a breakdown of some key programs and incentives:

1. Tax-Free First Home Savings Account (FHSA): This combines some of the features of an RRSP and TFSA. Contributions will generally be tax-deductible, and when a qualifying withdrawal is made, the amount withdrawn including earnings is not taxable.
2. Home Buyers' Plan (HBP): The Home Buyer's Plan (HBP) allows first-time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) to use towards a qualifying home.
3. GST/HST New Housing Rebate: The GST/HST New Housing Rebate offers qualifying home buyers a GST/HST rebate on the purchase price of a newly built or substantially renovated home. The amount withdrawn under the Home Buyers' Plan (HBP) must be repaid over a period of no more than 15 years.
4. Home Buyers' Amount (HBA): The Home Buyer's Amount (HBA) is a non-refundable income tax credit that can be applied to certain qualifying homes.

For detailed eligibility criteria and further guidance, check out the Incentives for first-time homebuyers section on the tips page.

When you're buying your home, deciding between an insured (high-ratio) mortgage and an uninsured (conventional) mortgage depends on your down payment.

Insured (high-ratio) mortgage: Mortgage default insurance allows you to buy a home with as little as a 5% down payment. This insurance can be added to your mortgage principal or paid upfront, helping you get into your home sooner, even with a smaller down payment.

Uninsured (conventional) mortgage: If you can put down 20% or more, you'll qualify for a conventional mortgage. With a larger down payment, you'll borrow less, pay less interest over time, and may avoid the need for mortgage default insurance.

Tip for first-time buyers: If you're unsure which option is right for you, consider your financial situation and long-term goals. A larger down payment can save you money on interest, but an insured mortgage can help you get into your home with less upfront cash.

To help make your mortgage application process smoother, it’s helpful to have the right documents ready. Here’s a guide to get you started, but remember, this isn’t an exhaustive list — additional information may be required throughout your application.

1. Proof of identity: Make sure your government-issued photo ID (driver’s license, passport, or permanent resident card) is valid and up to date. Helpful tip: Check the expiration date early to avoid delays.

2. Income confirmation:
Most people will need the following:

• Pay stub or direct pay deposit.
• Most recent T4(s), Notice(s) of Assessment (NOA), or year-end pay stub(s) may also be required.

However, if you are self-employed:

• Most recent 2 years of T1 Generals with corresponding NOAs.
• Additional documentation may be required to confirm you are self-employed.

3. Confirmation of down payment: Be prepared to show documents that show where your down payment is coming from. This can include statements for savings accounts, investment accounts, confirmation of a gift, or documents detailing the sale of another property.

4. Bring a list of assets and liabilities: This can include documentation of saving and investment accounts, and statements for lines of credit, amongst other documents.

5. Property purchase: If you’ve already found a property, be ready to provide the Purchase and Sale Agreement and the MLS listing (if applicable).

Tips for a smooth process:

• Keep a document folder in a safe location: Create a dedicated folder for all your documents. Keep it updated with the most recent versions to be prepared at every step of your home financing journey.
• Plan for your deposit: Once your offer is accepted, you’ll usually need a bank draft for the deposit within 24 hours. Make sure you can easily access these funds.
• Ensure your income taxes are current: Recent tax filings and proof of payment may be required, especially for self-employed individuals. Setting up an online account with the CRA can simplify access to these documents.
• Stay on top of your financial statements: Make sure you can easily download or access any financial statements needed, such as saving and investing account statements, employee share ownership plan statement, credit card statements, etc. ensuring they reflect the latest information.
• Understand your personal and family situation: Depending on your marital status, be prepared to provide documentation about child support, spousal maintenance, and other financial arrangements.

If you’re applying with a co-signer, share these tips to avoid surprises down the road. These tips will help you feel more confident and prepared when it’s time to apply for your mortgage.

Yes, TD offers two products to finance a home purchase: a TD Mortgage and a TD Home Equity FlexLine. Here are some key differences:

With a mortgage, you get a loan for a single amount. That amount plus interest must be paid back over time.

With a TD Home Equity FlexLine, you gain ongoing access to credit (Revolving portion)¹⁰. As you pay down your outstanding balance, your available credit increases up to your credit limit. You can also add a term portion at any time¹¹.

A fixed interest rate means your interest rate, along with your payment amount, will stay exactly the same during your mortgage term.

With a variable interest rate, your interest rate can fluctuate based on changes in our TD Mortgage Prime Rate. While your payments will remain the same, the amounts from each payment that go toward the principal and interest can vary.¹²

It's important to take a closer look at the differences between fixed and variable interest rates. We're here to help you make this decision. Request a call to learn more.

When buying a home, first-time home buyers should consider various costs beyond the purchase price. These may include:

1. One-time expenses like legal fees, home inspection, valuation fees, land transfer taxes, and possibly GST/HST for new homes. Don't forget the deposit has to be available prior to making a purchase.  
2. Insurance, such as mortgage default insurance (for smaller down payments) and home insurance, which must be active at closing.
3. Utilities and ongoing maintenance: After moving in, you’ll also need to budget for ongoing costs like property taxes, utilities, condo or homeowners’ fees, and potential renovations or repairs.

For a detailed breakdown of these costs and more helpful guidance, explore the planning the other costs section on TD’s website.

You can leverage your RRSP to purchase a home through the Home Buyers' Plan (HBP). This program allows you to withdraw up to $60,000 from your RRSP to put towards a qualifying home purchase. The withdrawn amount must be repaid within 15 years to avoid tax consequences. While the annual minimum repayment starts in the second year after the year of withdrawal, if a HBP withdrawal takes place between Jan 1, 2022, and Dec 31, 2025, then the annual minimum repayment period has been extended to 5 years from the time of withdrawal.

To explore the full features of an RRSP for home buyers and compare it with the FHSA and TFSA, visit TD's registered plans guide.

• Put your contributions to work: You can invest your eligible contributions and use them when you're ready to purchase a qualifying home.
• Grow your savings tax-free: Any money in your FHSA grows tax-free, which could mean more funds for your dream home. Plus, you might be able to transfer funds tax-deferred from your FHSA to an RRSP or RRIF in your name¹³.
• Know the limits: You can hold an FHSA until December 31st of the year in which the earliest of the following happens: the 15th anniversary of your first FHSA, you turn 71, or the year after your first qualifying withdrawal.
• Be aware of the tax implications: Withdrawals from the FHSA that do not meet all the qualifying withdrawal conditions will be considered taxable income.