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Benefits of being a first-time home buyer

November 24, 2023
min read

Find out if you qualify for these benefits as a first-time home buyer in Manitoba, so you can save money on your big purchase!

Couple buys their first home

Saving up for your first house? A little help goes a long way!

In Canada, there are a few different programs aimed at helping first-time home buyers afford their property, including:

  • First-Time Home Buyers’ Plan
  • First-Time Home Buyers' Tax Credit

Today, we’re exploring some of the benefits available to you in Manitoba!

What is the First-Time Home Buyers' Plan?

Can you use your RRSP to buy a house? Through the Home Buyers' Plan (HBP), you can!

“The RRSP Home Buyers’ Plan is a federal government program that allows first-time home buyers to use their RRSP towards the down payment and legal costs of purchasing a home,” says Victoria Hall, Personal Banking Advisor at Cambrian.

“Essentially, you can borrow funds from your retirement rather than an outside source!”

“RRSPs are tax deductible when purchased and are only taxed when you withdraw the money. But through the Home Buyers’ Plan, you can withdraw up to $35,000 without being taxed.”

“Keep in mind that the RRSP contributions must be made at least 90 days before the purchase of your home.”

Do you qualify as a first-time home buyer?

To qualify, you must:

  • Be a resident of Canada
  • Have a written agreement to buy or build a qualifying home
  • Intend to occupy the qualifying home as your principal place of residence within one year after buying or building it

In addition, you cannot have occupied a home you or your spouse owned in the previous 4 years.

Even if you or your spouse owned a home previously, you may still qualify as a first-time home buyer under this program - again, it’s best to check with your financial institution!

“Make sure to check with your financial institution or employer if your RRSP is eligible for the program. Some employer paid RRSPs may not be eligible,” says Victoria.

Repaying your RRSP withdrawal

Keep in mind that there are some RRSP first-time home buyer disadvantages, too.

Through this program, you are required to pay back the funds you withdraw from your RRSP. You have up to 15 years to do so, and the period begins the second year after you withdraw the funds.

“The full redemption must be paid back to your RRSP within 15 years, not including the first or second year from purchase,” says Victoria.

For example, if you purchase a house in 2023, you’ll need to start paying back the HBP withdrawal in 2025.

Every year, you will have an annual amount that must be repaid. You can pay more if you’d like, which will lower the amount you owe in later years.

To return the Home Buyers' Plan withdrawal, simply contribute to your RRSP and designate the appropriate amount as payment on your tax return!

If you don't repay some or all of the balance due in a calendar year, it must be included as income on your tax return. You’ll also lose that RRSP contribution room, which can limit your retirement savings.

Before taking advantage of this program, make sure you’re ready to repay the funds you initially borrowed.

What is the First-Time Homebuyer Tax Credit?

The First-Time Homebuyer Tax Credit allows you to claim up to $10,000 on your tax return for the purchase of a qualifying home.

As a result, you could receive a tax credit of up to $1,500.

A few conditions apply:

  • You (or your common-law partner) must purchase a qualifying home
  • You haven’t lived in a home owned by your partner in the last four years

Tips for saving

Even with the help of these programs, buying your first home is still a big expense!

Need help saving for your down payment? Take these tips into account:

Prepare for the rise in monthly expenses

If you’re saving up your down payment, try living as though you already have a mortgage!

You can book a meeting with a Cambrian Advisor to add up the monthly cost of your mortgage, utilities, and property taxes. Then, compare it to your current rent payment, and put the difference in a savings account.

Not only will this get you used to living with increased payments, but it will also help you put money away for your down payment! Learn more about the unexpected costs of owning a home.

Set up automatic savings

One way to simplify your savings? Set up an automatic savings program that matches the days you get paid. That means you’ll save every month without even thinking about it.

You can do this through Cambrian Online Banking, or by meeting with an advisor to set up a savings plan that aligns with your goals.

Work with a Cambrian Advisor

“With today’s higher mortgage rates, always work within your budget when looking for a new home,” says Victoria.

“If you already have a mortgage, work with your Personal Banking Advisor at renewal time. There are options to take the higher payment burden away, like debt consolidation, extended amortization, and more.”

Shopping for a home? Let us help you out!

“Meeting with an advisor helps you feel comfortable with your purchase options. You can better account for expenses like condo fees, property taxes, and maintenance.”

“Each and every one of our advisors has the knowledge to help our members complete a full mortgage pre-approval either virtually or in-person!”

Contact us today!

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*All rates and yields subject to change without notice.
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