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  • Writer's pictureSteven Himelfarb

First-Time Home Buyers: What you need to know before buying a property.

Updated: May 25, 2022

updated 5.2022

Congratulations! You've decided to buy your first property. I am sure you are excited.

Want to learn how you can save some money?

It can be a valuable and rewarding purchase. There is assistance out there to help, but what many first-time home buyers don't know is what programs are there to support them, but also, the often shocking additional expenses that are part of home ownership. Below is a quick resource to help you learn some of the ways to save and some of the main costs you need to know about before getting into that dream home of yours (so you aren't shocked or overwhelmed along the way)

To get help financial help buying your first property, aside from a family gift or similar, you can benefit from these programs or credits:

1. First-Time Home Buyer Incentive program.

This is run and offered by the Government of Canada, all across Canada. It makes it easier for you to buy a home and lower your monthly mortgage payments. This program is a shared equity mortgage. This means that the government shares in the upside and downside of the property value. It allows you to borrow 5 or 10% of the purchase price of a home. You pay back the same percentage of the value of your home when you sell it or within a 25-year window. For details about this incentive program, the new update, who is eligible, and how to apply and repay, visit:

2. Home Buyer's Plan (HBP)

The Home Buyers' Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. The HBP allows you to pay back the withdrawn funds within a 15-year period. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP account. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them.

Certain conditions must be met in order to be eligible to participate in the HBP, To learn more about this program and how to participate in it, visit:

3. First-Time Home Buyer Tax Credit

As of 2022, and subsequent taxation years, the Budget proposes to increase the amount used to calculate the HBTC to $10,000, which would provide a tax credit of up to $1,500 to eligible home buyers.

Right now, a non-refundable tax credit offered by the Federal Government is available to help with the closing costs when buying your first home. This credit allows you to a maximum combined claim of $5000. You must file for this credit in the same year the house was purchased.

To calculate the credit, you multiply the lower (of the applicants) personal income tax rate by $5000.

4. First-Time Home Buyers' Land Transfer Tax Refund (LTTR)

When you buy or move to a new property anywhere in Canada, except Alberta and Saskatchewan, you are subject to a tax that is charged to you. This has been done since the ~1970s.

In most provinces, this tax is calculated as a percentage of house value and where it is located. Each province or municipality sets their own rates. If Purchasing a property in Toronto, there is an additional land transfer tax. (Steeles Avenue at the North, Etobicoke at the West, Scarborough at the East, and Lakeshore at the South.) To learn more about the tax, visit

To help with these extra costs, the Government has provided and refund for part or all of this cost.

To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.

How much Money could you receive? For transactions that occur before January 1, 2017, the maximum amount of the refund is $2,000. Beginning January 1, 2017, the maximum amount of the refund is $4,000. The increased limit of $4,000 applies only to transactions that occur on or after January 1, 2017, regardless of the date the agreement of purchase and sale was signed. Beginning January 1, 2017, no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.

To learn more about the details and limitations of this program, visit

What about all those shocking expenses?

Closing Costs

Costs/expenses over and above the property's price that you may incur as you buy a property. As you are getting (pre)qualified and learn what you can afford, you need to be able to afford these costs in addition to the required down payment, in order to get approved for your mortgage. For many lenders, the amount needed can vary, but often h

overs around 1.5% of the property's purchase price and doesnt always include all of the below costs below in their calculations. The list includes, but isn't limited to:

  • Legal Fees

  • Mortgage Insurance

  • Appraisal Fees

  • Property taxes

  • Property Insurance

  • Deed recording fees

  • Taxes

  • Title Insurance and titles searches

  • Any lender or broker origination fees

Depending on your situation and what you are buying, what is included and how much an expense it will be for you will vary. 1.5% is a good rule to begin with, it could be more.

Property Taxes

A tax you pay on property calculated by the local Government and is to be paid by the owner. It has two components: a municipal portion and an education portion. The amount and how it is calculated (and any changes over time) has to do with your location, the municipal tax rate, education tax rate, and the value of the property.

Provincial Land Tax is the property tax you need to pay if you are not part of a municipality. For a list of municipalities, visit:

All across Canada, the total rates can vary from 0.3-1.5%. To learn about the place where you live and what it could be for you, visit:

Home Maintenance

As a renter, you dont typically pay for this. Now that you are an owner, realizing that homeownership will include more than just the mortgage, taxes, and utilities. Think appliances, windows, roof, furnace (owned or rented), water heater, (owned or rented) and any other component in or outside the house that need to be paid for, fixed, or repaired over time. These components don't and wont last forever. They will need to be replaced or repaired at a cost.

But how much do you need to budget for? You may get lucky and not need anything for months or years or you may find you need something that comes up more often than you'd like. There is an rule used in the industry and a good place to start - 1% of the property's purchase price. This doesnt include the actual expense if you had to buy a new roof, appliances, or rent a furnace or water heater at the beginning. Those are all upfront costs. This rule applies to ongoing maintenance.

It is hard to predict exactly how much you will need and how much it will cost and depends on things like how old the property is, is it in good condition, how big it is, what came with it, along with the uncertainty of any component lasting as long as it is supposed to (warranty or not). This cost is not the same as an emergency repair cost.

Homeowners Insurance

You just bought something of value and will likely fill it with other things of value. It is recommended as it protects your home and possessions against damage and theft. Most lenders require you to have this insurance and valued at the purchase price of the property. If you were able to pay cash for your property, you should still consider buying insurance. It is best to research, possibly through a broker, and learn what products, types, coverage and rates are available to you. More importantly, what the policy is based on and what the insurance actually covers. Will it be based on replacement cost or something else like cash value or extended replacement cost?

Like other insurances, there are many variables that determine your rates and coverage. Keep in mind, that year-over-year, that your insurance will increase in cost, even if you did add any possessions or make any claims.

Monthly Costs

This is about more than your cell phone bill, internet or TV expenses. Although you need to factor that into this too. This is more about your utilities. As a renter, you may or may not have had to pay extra for them as part of your rent. As a property owner, you are now responsible for these. Heat, hydro, and water.

These costs depend greatly on your location, size of property, the condition of the property, types of windows and components, among other variables. Rather than giving you an amount, it is best to ask the previous owner of a property of interest what their costs were to gauge your costs better. Again, your usage may make those costs more or less. Some of these utilities must be specifically paid to and through certain providers for certain properties, like condominiums.

To help you in your journey as home owners and beyond, Book and Free Consultation with me. I am here to help you get more than the best rate...I am with you every step of the way with professional and expert advice.

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