Family holding a set of keys.

It’s no secret that the housing market has fluctuated dramatically in the last couple of years. With house prices increasing up to 20%, first-time home buyers may shy away from buying a new home anytime soon.

If you’re a first-time home buyer, don’t let these numbers bring you down. The Canadian government is well aware of these changes, and they want to ensure all Canadians have an equal chance to purchase an affordable and safe home. As a result, they’ve implemented some new mortgage rules for first-time home buyers.

In this blog, we will dive into new rules that you can take advantage of starting at the end of 2022-2023. Let’s get into it.

1. Tax-Free First Home Savings Account

To help first-time buyers purchase their first home, the Canadian government will be implementing a Tax-Free First Home Savings Account. Think of this account as a hybrid between a TFSA and an RRSP, with an annual contribution limit of $40,000, tax-deductible contributions, and the ability to make a withdrawal when purchasing a first home, tax-free.

For reference, the current RRSP limit is $27,830 a year, and the TFSA limit is $6,000. So, with the ability to contribute up to $40,000, there is more flexibility and potential to save even more for your down payment, without the worry of additional taxes.

2. Extended and More Flexible First-Time Home buyer Incentive

The first-time home buyer incentive is being extended until March 2025. This incentive allows first-time buyers to put a minimum down payment of 5 or 10% of the home purchase price. By lowering borrowed funds, homeowners can share the housing costs with the government to make it more affordable.

If you’re just starting to learn about mortgages, read our blog, What is a Mortgage & How Does a Mortgage Work? Home Loan Basics for First-Time Buyers. This blog will guide you through contacting mortgage lenders to find out your minimum qualifying rate and how your down payment impacts your mortgage payments. You can also complete a mortgage stress test to ensure you’re financially ready to purchase your first home.

3. Doubling the first-time homebuyers' tax credit

Homeowners that purchased on or after January 1st, 2022, will be able to take advantage of the doubled first-time home buyers tax credit. This non-refundable tax credit is doubling from $5,000 to $10,000, providing up to $1,500 in additional support for first-time buyers. This credit increase is intended to support Canadians buying a home and help with additional closing costs.

Additional Mortgage Incentives and Regulations that Will Change the Real Estate Market

Along with 3 new first-time home buyer incentives, there are a variety of additional mortgage rules you may want to consider when purchasing your home (if you qualify). The following are ways the Canadian government intends to make housing more affordable for Canadians:
  • Launching a New Housing Accelerator Fund
  • Rapidly Building New Affordable Housing
  • New rules to tax property flippers
  • Supporting Rent-to-Own Projects
  • Moving Forward on a Home Buyers’ Bill of Rights
  • Multigenerational Home Renovation Tax Credit
  • A New Generation of Co-Operative Housing Development
  • Investing in Housing for Indigenous Communities
  • Direct Support for those in Housing Need
  • Speeding Up Housing Construction and Repairs for Vulnerable Canadians
  • Affordable Housing in the North
  • Doubling the Home Accessibility Tax Credit
  • Long-Term Supports to End Homelessness

How Shane Homes Can Help You Take Advantage of New Mortgage Rules

Birds eye view of a neighbourhood street.

Now that you're aware of the new Canadian mortgage rules for 2022, it's time to take advantage of them! Buying your first home is a huge investment, and these government regulations and incentives will help you better afford mortgage payments and your down payment.

If you're overwhelmed by the home buying process, you need a home builder, like Shane Homes, that will help you every step of the way. At Shane Homes, we prioritize ensuring your home buying process is stress-free and accommodating to your wants and needs. If you're starting to look for your dream home, use our build and price tool to determine which house is best for you.

Ready to take advantage of the new mortgage rules and purchase your new home? Stop by one of our show homes or contact us today to get started!