A Quick Guide to The First-Time Home Buyer Programs in Nova Scotia

Hey There, Future Homeowners! Ready to take the leap into buying your first home in Canada? It’s super exciting, but let’s be honest, it can feel like a bit of a maze. Let’s break down the first-time home buyer programs that Canada offers, making your journey to homeownership a bit smoother and definitely more affordable.

1. First-Time Home Buyer Incentive (FTHBI) *

Think of the FTHBI as a buddy who helps you with your down payment, so you don’t feel the monthly mortgage pinch quite as much. This program chips in 5-10% of the home’s purchase price, which can be a game-changer for your budget. Just keep in mind that it’s a shared equity mortgage – more like a partnership than a freebie. For more in depth information on this program click here.

*As of March 21, 2024, the First Time Home Buyer Incentive will be discontinued.

2. RRSPs: Home Buyers’ Plan (HBP)

Saving money in your RRSPs? The HBP lets you borrow up to $60,000 from it, tax-free, to fund your home purchase. It’s like giving your past self a high-five for being so savings-savvy!  If you are buying a home with a partner, they can also utilize this program allowing you to take a combined $70,000 from your RRSP’s.  Click here for more information on the HBA program.

Don’t forget: This isn’t “free money”; you’ll need to repay it within 15 years. Your mortgage broker can guide you through this.

3. First Home Savings Account (FHSA)

The FHSA is a recent addition to the toolkit for first-time homebuyers in Canada, offering an innovative way to save for that all-important down payment. It’s a special account where you can save up to $40,000 towards your first home – with some pretty sweet tax advantages. Click here for more information on the HBA program.

Pro Tip: Consider combining the benefits of the FHSA and the RRSP for a well-rounded approach to saving for your home. The FHSA offers tax-free growth and withdrawal, while the RRSP provides an opportunity to leverage your past savings for your down payment.

4. GST/HST New Housing Rebate

This rebate allows first-time homebuyers to recover some of the GST or HST paid on the purchase of a new home, substantially reducing the overall cost. Eligibility depends on whether the home is to be the primary place of residence. Click here for more information on the HBA program.

Extra Insight: In addition to DPAP, explore how to maximize the Nova Scotia first-time home buyer’s HST rebate and other government down payment programs to potentially unlock up to $25,000 in assistance.

5. The Nova Scotia Down Payment Assistance Program (DPAP)

This program is like a helpful neighbor, ready to give you a leg up with your down payment. It offers interest-free, repayable loans to first-time home buyers in Nova Scotia, helping you cover up to 5% of the purchase price of your new home. The best part? It’s designed to be flexible, catering to both new construction and existing homes. Plus, if you’re buying in Halifax, the maximum purchase price limit might surprise you – it’s pretty generous! Just remember, this program has its criteria, so make sure you check out all the details. Click here for more information on the HBA program.

You can apply for DPAP directly through the Government of Nova Scotia’s website. Make sure to review the full eligibility requirements before starting your application.

6. First-Time Home Buyer Tax Credit (HBTC)

The HBTC is like a little ‘thank you’ from the government for buying a home. The HBTC is a non-refundable tax credit that can help recover a portion of your closing costs, such as legal expenses, inspections, and land transfer taxes. This credit is worth up to $750 and can provide a little financial relief after the home purchase.

Myth – “A 5% down payment is only for first-time home buyers”

Contrary to what many people believe, a 5% down payment is not exclusive to first-time home buyers. This down payment is instead reserved for anyone who intends to “owner occupy” a property. It is possible that you can actually buy a second or third property with 5% down if you turn your existing residence into a rental.

Additional Steps to Consider

1.Get Pre-Approved for a Mortgage: Before you shop for a home, get pre-approved for a mortgage. This process locks in your interest rate for up to 120 days and gives you a clear idea of what you can afford.

2. Understand Closing Costs: Many first-time buyers forget about closing costs. These expenses, like inspections, legal fees, and tax adjustments, often total 2-3% of the purchase price.

3. Learn the Real Estate Lingo: Familiarize yourself with key terms like closing date, purchase and sale agreement, and financing. Understanding these will help you navigate the process with confidence. Financing – ensuring that you have your down payment ready and a mortgage pre-approval.

• Closing date – this is the date that you’ll get the keys for your first home purchase and pay for the property.
• Purchase and sales agreement – this is usually called the offer and is your formal agreement made to the seller. This is where you include detailed information and conditions like inspections (ex. checking the condition of your roof), tax adjustments, fuel adjustments etc.
• Closing costs – these are the additional costs on top of your down payment that you will pay when buying a home. These are paid on the closing date at your lawyers office, or paid ahead of time.

Navigating the Process

Buying your first home can seem overwhelming, but breaking it down into manageable steps makes it much easier. Here’s how to navigate the process effectively:

1.Understand Your Financial Readiness: Before shopping for your dream home, calculate your budget, including the down payment and closing costs.

• Misconception: “The down payment is the only cash I need.”
  Reality: You’ll also need funds for closing costs, which typically include property inspections, legal fees, and tax adjustments. These costs can add up to 2-3% of the purchase price.

2. Get Pre-Approved for a Mortgage: Work with a licensed mortgage broker to secure pre-approval for a mortgage. This process not only locks in your interest rate for up to 120 days but also ensures you’re looking at homes within your financial capacity.

• Misconception: “Credit scores can’t be improved.”
  Reality: Credit scores are crucial for mortgage approval and can be improved over time. A mortgage broker can guide you on how to boost your score to access better mortgage options.

3. Research and Prioritize: List your “must-haves” and “nice-to-haves” for your ideal home. Be prepared to compromise, as it’s rare to find a property that meets every need.

4: Collaborate with Trusted Experts: Choose a realtor and mortgage broker you trust to guide you through property inspections, negotiations, and legal requirements.

• Misconception: “There’s no easy way to learn about buying a home.”
  Reality: Educating yourself is key. Resources like Alex Lavender’s Mortgages For Millennials make understanding the home-buying process simple and accessible.

Conclusion

Navigating the world of first-time home buying in Canada is less daunting when you’re aware of the programs designed to assist you. From equity sharing schemes and withdrawal plans to tax rebates and credits, there’s a range of support available to ease your journey to homeownership. It’s always advisable to consult with a mortgage broker to understand how these programs can specifically benefit you in your unique situation.

First Time Home Buyer Nova Scotia FAQs

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