Programs for first-time home buyers

• Important information about the different programs available to you
• How to use the Home Buyers’ Plan to borrow from your RRSP
• How to make homeownership more attainable

After years of saving, monitoring the real estate market, and weighing your options with family – you’ve decided to take the leap into homeownership. Congratulations! This is one of the most exciting and most important purchases you will make in your life.

Luckily, the different levels of government in Canada offer a variety of programs to help make homeownership more attainable. Depending on where you live, there may be programs available to you – such as the First-Time Home Buyers’ Plan – that can help lessen the financial burden of buying a home and can help make your dreams of homeownership a reality.

Let’s take a look at some of these programs.

First Home Savings Account (FHSA)

The First Home Savings Account (FHSA) is a new registered account that can help Canadians save for a down payment for their first home. It allows you to contribute an annual tax-deductible amount of up to $8,000 with a lifetime contribution maximum of $40,000 per person. The great advantage of an FHSA is that it's like an RRSP and a TFSA, where your contributions to the account are tax deductible and any qualifying withdrawals from the account are tax free. Just like any registered accounts, you can invest and hold multiple investments inside an FHSA which can potentially help in growing your money for a future home purchase.

Some other key information to know about the FHSA:

• You must be a first-time homebuyer at the time you make the withdrawal. This means that you cannot have lived in a home you owned, in any part of the calendar year before the withdrawal or in the past four calendar years.
• You can carry forward any unused contribution in the following year up to a maximum of $8,000 per year (up to the $40,000 lifetime contribution maximum). The carry-forward amounts begin to accumulate only after you open your FHSA.
• You can transfer funds from an FHSA to another FHSA account, RRSP or a RRIF tax free. When you transfer from an FHSA to an RRSP or RRIF, the transfer will not reduce, or be limited by, your available RRSP contribution. It also will not restore any of your FHSA annual contribution limit.
• You don’t need to repay back the withdrawn money from an FHSA, unlike the RRSP Home Buyers’ Plan.

The Home Buyers’ Plan

The Home Buyers' Plan allows you to withdraw up to $60,000 tax-free from your RRSP (Registered Retirement Savings Plan) for a down payment, which is the upfront cost of your home.

Here are some facts about the plan:

• If you are borrowing with a partner, they can also withdraw $60,000 from their RRSP
• All withdrawals from an RRSP for the HBP must be made within 30 days of purchasing the home.
• The government gives you 15 years to re-deposit the money back into your RRSP
• Your repayment period starts the fifth year after the year when you first withdrew funds from your RRSP for the Home Buyers’ Plan. Please note: The extended grace period currently applies to HBP withdrawals made between January 1, 2022, and December 31, 2025.

If you have a Questrade RRSP and are looking to make a withdrawal under the Home Buyers’ Plan or to determine your eligibility to the Home Buyers’ Plan conditions, you can learn more about it in this Home Buyers’ Plan Help and How-to article.

GST/HST New Housing Rebate

The GST/HST New Housing Rebate offers money back to Canadians who buy a newly built home, significantly renovate an existing home, or rebuild a home that was destroyed. The rebate allows you to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) you pay towards these purchases. Learn more.

Land Transfer Tax Rebate

Some Canadian provinces charge a Land Transfer Tax when you buy a house. It’s typically between 0.5% and 2.0% of the purchase price. Luckily, several provinces will rebate a portion or all of the tax if you’re an eligible first-time home buyer. 

You can receive a rebate on some of the land transfer tax if you live in Prince Edward Island, British Columbia, and Ontario.

Also, if you’re buying a home in the city of Toronto, there is also Municipal Land Transfer Tax (MLTT). As of March 1, 2017, you can also receive a rebate of up to $4,475 for this municipal tax. Learn more.

Home Buyers’ Amount

The Home Buyers’ Amount was introduced as part of “Canada’s Economic Action Plan” to help Canadians buy their first home. It’s used to assist in covering closing costs, such as inspections and legal expenses, and land transfer taxes. The Home Buyers’ Amount offers a $5,000 non-refundable income tax credit for the purchase of a qualifying home for you or your spouse or common-law partner. You also must be a first-time home buyer to be eligible for the credit. Learn more.

As you can see there are quite a few programs and incentives available in Canada that can help you purchase your first home. But one of the most important factors when it comes to your mortgage is the rate you receive. With a BetterRate ^® mortgage from QuestMortgage, you can feel confident knowing  that you’ll receive a great rate on your mortgage application right from the start. And, with our expert mortgage advisors, you’ll get someone who can help walk you through every aspect of your journey to homeownership.

See how you can get a mortgage with a BetterRate ^® right from the start. GET MY RATE.

Get started today to see what rate you can qualify for. Start now.

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Please note: The information provided in this article is based on CRA guidelines and may be subject to change.

The information in this blog is for information purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade Group of Companies, its affiliates or any other person to its accuracy.

The Home Buyers’ Plan (HBP), a program offered by the Government of Canada, is designed to help Canadians with making the big move of purchasing their first home. The program allows RRSP account holders to withdraw money out of their account tax-free when the proceeds are used towards purchasing a qualifying home. Once you withdraw the funds, you have up to 15 years to pay it back. There is currently a five year grace period before repayments begin. Please note: The extended grace period currently applies to HBP withdrawals made between January 1, 2022, and December 31, 2025.

Unless you have a disability (or are helping a relative who has one) to buy or build a home, you have to be a first-time home buyer to qualify for this program. To be considered as a first-time home buyer, you must have not owned a home which is your principal residence in the last 4 years before withdrawing the funds from your RRSP for a home purchase. As well, RRSP contributions must be held in the RRSP for at least 90 days before they qualify to be withdrawn to participate in the HBP.

For more on how to qualify, visit the CRA site How to participate in the Home Buyers' Plan.

Note that qualifying account holders can withdraw funds from more than one RRSP account. For example, if you and your spouse each have an individual RRSP and choose to participate in the plan, you can withdraw a combined maximum of $60,000 per person for a total of $120,000. If you have an individual RRSP and also a Spousal RRSP, you can withdraw a combined maximum of $60,000 CAD (or CAD-equivalent) under the HBP.

How to participate and apply

If you qualify for the HBP and wish to participate in the program, there are six main steps you have to follow and complete:

1. Questrade self-directed accounts: sell shares to ensure funds are available for HBP withdrawal.

    

   Questwealth (QWP) accounts: start from step 2.

2. Complete the CRA Home Buyers’ Plan form and digital sign it.

 

3. Complete the Questrade’s Home Buyers’ Plan (HBP) RRSP withdrawal request form and digital sign it.

 

4. Upload both CRA HBP form and Questrade’s HBP withdrawal request form under Account Management>Upload Documents> Document Type> RRSP Home Buyers Plan in your Questrade account.

    

   Please note: Please do not create a withdrawal request here as you will incur withholding taxes.

5. Upload void cheque or direct deposit form to your Questrade account.

 

6. Monitor status through Account Management>Upload documents>Upload history.

 

• Please monitor and wait for your upload status to change from Pending Review to Complete which typically takes 5-10 business days. Ensure your documents are complete and without any discrepancies. If there’s any discrepancies in your uploaded documents, your status will change to Rejected and you will receive an email highlighting the details of the rejection. Please keep an eye on your email if you get a rejected document.

Please note: You need to submit the 2 forms (CRA Home Buyers' Plan and Questrade’s HBP withdrawal request form) and your banking details (through void cheque or direct deposit form) for us to start processing your application.

Please take a look at our detailed instructions for submitting your documents:

Document	Instructions
CRA Home Buyer's Plan application	Download and fill out the CRA Home Buyers’ Plan form Scan and upload to your Questrade account   To upload your CRA HBP application form, log in to your Questrade account and go to Accounts > Account management > Upload documents. Please select “RRSP Home Buyers Plan” under Document type when uploading this document.
Questrade - Home Buyers' Plan RRSP Withdrawal Request	Download and complete the Questrade’s HBP withdrawal request form here and digital sign Upload the bank details to your Questrade account To upload your HBP withdrawal request form, log in to your Questrade account and go to Accounts > Account management > Upload documents. Please select “RRSP Home Buyers Plan” under Document type when uploading this document. Note: There are various withdrawal options on this form. Processing times will vary, depending on the withdrawal method you choose. For more information, please check overall processing time below this section.
Void cheque or direct deposit form	Please ensure your name and banking details on these forms match exactly the same as the information on the Questrade HBP withdrawal request form. The bank account holder should be the same as the RRSP account holder. Upload the from to your Questrade account To upload your void cheque or direct deposit, log in to your Questrade account and go to Accounts > Account management > Upload documents. Please select “Void cheque” or “Direct deposit” under Document type when uploading this document.

Fees: There are no withholding taxes for HBP withdrawals, but the standard de-registration fee applies ($25+GST/HST for partial, $50+GST/HST for full).

Overall processing time

The processing time is typically 5–10 business days from when your documents are correctly filled out and arrive at Questrade to when the HBP funds are available in your bank account. This includes:

• Our time to process the documents (1–2 business days).
• Number of days for the money to appear in your bank account once we have sent it to your bank. This varies, depending on the withdrawal method you use:
• Electronic funds transfer - up to 5 business days
• Wire transfer - 1–2 business days. Please note: Currently, Tangerine, EQ Bank, Transferwise, and Motus do not accept incoming wire transfers or make outgoing wire transfers. As a result, withdrawals to Tangerine, EQ Bank, Transferwise, and Motus via wire transfer are not accepted at this time.
• Cheques - 10+ business days

Please allow enough time for mailed or couriered documents to arrive. Processing of your documents starts as soon as we receive your scanned digital documents.

Important to know

Here are some key things you should know about the home buyers' plan:

• You have to be a Canadian resident to benefit from this program
• All withdrawals from an RRSP for the HBP must be made within the same calendar year
• Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP
• For more details on unlocking or withdrawing from a locked-in retirement plan (LIRA, L-RSP, etc.), please check out this article.
• If you hold both a Spousal RRSP and a "regular" (individual) RRSP, your combined maximum withdrawal amount under the HBP is $60,000 CAD (or CAD-equivalent)