Top 10 Government Programs to Help Young People Access Homeownership in Canada
Purchasing a home is a significant milestone, and for many young Canadians, it can seem daunting due to rising property prices and financial constraints. Fortunately, the Canadian government offers several programs designed to assist first-time homebuyers in achieving homeownership. Below are the top 10 programs available, along with practical information on eligibility and benefits for each.
1. First-Time Home Buyer Incentive (FTHBI)
The FTHBI is a shared-equity mortgage program where the government provides 5% or 10% of the home's purchase price to reduce monthly mortgage payments. This incentive is repayable after 25 years or upon sale of the property. As of March 31, 2024, the program was discontinued to refocus federal funding on new actions to support renters and lower the costs of homeownership.
2. Home Buyers' Plan (HBP)
The HBP allows first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use as a down payment without immediate tax consequences. The withdrawn amount must be repaid to the RRSP over a 15-year period. In April 2024, the government announced an increase in the HBP limit from $35,000 to $60,000 to further assist first-time buyers.
3. First Home Savings Account (FHSA)
Introduced in 2023, the FHSA combines the tax advantages of an RRSP and a Tax-Free Savings Account (TFSA) to help Canadians save for their first home. Individuals can contribute up to $8,000 annually, with a lifetime contribution limit of $40,000. The government is working with financial institutions to have the infrastructure in place for individuals to open an FHSA and start contributing.
4. Home Buyers' Amount
This non-refundable tax credit provides up to $5,000 to first-time homebuyers to help offset the costs associated with purchasing a home, such as legal fees and land transfer taxes. The amount is indexed annually to inflation.
5. GST/HST New Housing Rebate
Eligible buyers can receive a rebate on the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST) paid on a new or substantially renovated home. The rebate amount depends on the purchase price and the province in which the property is located.
6. Canada Greener Homes Grant
This program offers financial incentives for homeowners undertaking energy-efficient renovations. While not exclusive to first-time buyers, it can be beneficial for those looking to improve the energy efficiency of their new home.
7. Multigenerational Home Renovation Tax Credit
Introduced in 2023, this refundable credit allows families to claim up to $7,500 to build a secondary unit in their home to accommodate seniors or adults living with disabilities. This can be particularly useful for young buyers looking to create a multigenerational living space.
8. Home Accessibility Tax Credit (HATC)
This non-refundable credit helps support seniors and individuals living with disabilities with a rebate on mobility renovations for their home for up to $10,000 in qualifying expenses.
9. Housing Accelerator Fund
Announced in Budget 2022, this $4 billion initiative encourages municipalities to make transformative changes, such as removing prohibitive zoning barriers, to accelerate housing construction. The fund was topped up with an additional $400 million in Budget 2024.
10. Canada Mortgage and Housing Corporation (CMHC) Insurance
CMHC offers mortgage loan insurance to help buyers with a down payment as low as 5%. This insurance protects lenders in case of default, allowing buyers to secure a mortgage with a smaller down payment. Eligibility criteria include a minimum credit score and a maximum gross debt service ratio.
By leveraging these programs, young Canadians can navigate the path to homeownership more effectively, making the dream of owning a home a reality.