|12 Step Guide to Buying Your Home||Additional Costs When Buying a Home||Government Programs for Buyers|
|Buying Strategies||House Hunting Checklist||Calculators|
|Dream Home Checklist||Buying the Best House||Title Insurance|
A home is usually the single largest investment that most people make in their lives. Achieving your dream can be made easier by taking advantage of various Government Programs for home buyers and property owners. Some of the programs are targeted to first-time buyers, while others apply more generally. Other programs benefit those in the industrial, commercial and multi-unit property market. Your REALTOR can provide information on these programs and help you to determine your eligibility.
CMHC Purchase Plus Improvements
According to the Mortgage Consumer Survey, 37% of mortgage consumers didn’t know their renovation costs could be added to their mortgage (up from 31% in 2018).
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property.
This option eliminates the need to obtain secondary financing after the purchase to pay for improvements. The homebuyer obtains a single first mortgage, makes a single mortgage payment, and benefits from first mortgage interest rates.
- Flexible advancing options for small- or large-scale improvements and new construction.
- Insured financing up to 95% of “as-improved” value for 1 or 2 unit owner-occupied properties, and up to 90% for 3 to 4 unit owner-occupied properties.
- Down payment requirements are based on the lending value as determined by CMHC, which is the lower of the market value or the purchase price/cost of construction.
Energy efficiency rebate
CMHC Green Home offers a premium refund up to 25% to borrowers who buy, build or renovate for energy efficiency using CMHC-insured financing.
For more information call CMHC at (416) 221-2642 or www.cmhc.ca.
|Maximum Mortgage (95%)||$118,750|
|Minimum 5% down payment||$6,250|
Flexible Advancing Options
CMHC Improvement offers a choice of flexible advancing options, making it easy to access funds for immediate improvements when purchasing a home.
Single advances: improvement costs less than or equal to 10% of the as-improved value.
Progress advances: improvement costs greater than 10% of the as-improved value.
- Basic Service: Lender validation of advances without pre-approval from CMHC.
- Full Service: CMHC validation of advances for up to 4 consecutive advances at no cost.
For loans involving improvements, the property is assessed on a dual basis:
- The as-is value (the current market value of the property), and
- The as-improved value (the market value of the property after improvements), which is used to determine the LTV ratio and down payment requirements.
(If proposed improvements are generally accepted to add value to a property, the lender can submit to CMHC the as-is value plus the cost of improvements.)
The lending value is the lesser of:
- The as-improved value, or
- The as-is value plus the cost of improvements.
You will need documentation to support the as-improved value. Examples include a list of improvements and cost estimates, plans for major renovations or a building permit, as applicable.
Individuals who are Canadian citizens, permanent residents of Canada, or non-permanent residents who are legally authorized to work in Canada.
Loan-to-value (LTV) ratios
For homeowner loans (owner-occupied properties), the loan-to-value ratio for 1 – 2 units is up to 95% LTV. For 3 – 4 units, the ratio is up to 90% LTV.
For small rental loans (non-owner occupied), the loan-to-value ratio for 2 – 4 units is up to 80% LTV.
Minimum equity requirements
For homeowner loans, the minimum equity requirement for 1 – 2 units is 5% of the first $500,000 of lending value and 10% of the remainder of the lending value. For 3 – 4 units, the minimum equity requirement is 10%.
For small rental loans, the minimum equity requirement is 20%.
Purchase price / lending value, amortization and location
For both homeowner and small rental loans, the maximum purchase price / lending value or as-improved property value must be below $1,000,000.
For homeowner loans, CMHC-insured financing is available for one property per borrower/co-borrower at any given time.
The maximum amortization period is 25 years.
The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. The property must also have year-round access (via a vehicular bridge or ferry if it is on an island).
Traditional and non-traditional down payments
A traditional down payment comes from sources such as savings, the sale of a property, or a non-repayable financial gift from a relative.
A non-traditional down payment must be arm’s length and not tied to the purchase and sale of the property, either directly or indirectly, such as unsecured personal loans or unsecured lines of credit. Non-traditional down payments are available for 1 – 2 units, with 90.01% to 95% LTV, with a recommended minimum credit score of 650.
Whether the property is owner occupied or non-owner occupied, subject to an MLI application or not, we offer different approaches to rental income for qualification purposes.
Find out more about the approach(es) that can be used to calculate rental income and the inputs to consider when calculating the debt service ratios.
At least one borrower (or guarantor) must have a minimum credit score of 600. In certain circumstances, a higher recommended minimum credit score may be required. CMHC may consider alternative methods of establishing creditworthiness for borrowers without a credit history.
Debt service guidelines
The standard threshold is a gross debt service (GDS) ratio of 35% and a total debt service (TDS) ratio of 42%. The maximum threshold is a GDS ratio of 39% and a TDS ratio of 44% (recommended minimum credit score of 680). CMHC considers the strength of the overall mortgage loan insurance application, including the recommended minimum credit scores.
The GDS and TDS ratios must be calculated using an interest rate that is either the contract interest rate or the Bank of Canada’s 5-year conventional mortgage interest rate, whichever is greater.
Single advances include improvement costs less than or equal to 10% of the as-improved value.
Progress advances include new construction financing or improvement costs greater than 10% of the as-improved value. With Full Service, CMHC validates up to 4 consecutive advances at no cost. For Basic Service, the Lender validates advances without pre-approval from CMHC.
Non-permanent residents (homeowner loans only)
Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is only available for non-permanent residents for homeowner loans for 1 unit, up to 90% LTV, with a down payment from traditional sources.
Non-permanent residents are not eligible for alternative methods of establishing creditworthiness. In cases where a credit report is not available, a letter of reference from the borrower’s financial institution in their country of origin may be considered.
HST New Housing Rebate
You may be eligible to claim a rebate for a part of the HST you pay on the purchase price or cost of building your home if:
- You buy a new or substantially renovated home (including the land or if you lease the land) from a builder.
- You buy a new mobile home (including a modular home) or a floating home from a builder or vendor.
- You buy a share of capital stock of a co-operative housing corporation.
- You construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so).
- Your home is destroyed in a fire and is subsequently rebuilt.
- Resale homes are exempt from the 6% HST.
- New homes are subject to the 6% HST. New home buyers can apply for a 36% rebate of the 6% HST applicable to the purchase price to a maximum of $7,560 for homes costing $350,000 or less before HST.
- For new homes priced between $350,000 and $450,000 before HST, the HST rebate would be reduced proportionately.
- New homes priced $450,000 before HST or higher would not receive a rebate.
In the GTA, most builders include the HST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net HST cost.
How much money could I receive?
The maximum amount of the refund is $2,000.
|Cost of Home||Tax Payable||Tax Refund||Net Tax Payable|
If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Finance, within 18 months after the transfer. No interest is paid on this refund.
How much money could I receive?
For conveyances or dispositions 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 conveyances or dispositions 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.
The refund will be reduced if one (or more) of the purchasers is not a first‑time homebuyer. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
Examples – Parent and Child
Where a parent who is not a first‑time homebuyer, and a child who is a first‑time homebuyer, purchase a home with equal 50/50 interests, the child may claim a refund of 50% of the land transfer tax refund. The child's claim cannot exceed 50% of the maximum allowable refund (i.e., 50% of $2,000 for conveyances or dispositions prior to January 1, 2017 or 50% of $4,000 for conveyances or dispositions on or after January 1, 2017).
In a situation where a parent is also on title to a child's property, such as at the insistence of a bank, it will be necessary to pay land transfer tax at the time of registration and apply for a refund from the Ministry of Finance.
If the parent did not acquire a beneficial interest in the property as a result of the conveyance:
•the ministry will accept the fact that the parent was on title as a trustee for the child, and
•the child would qualify for the first‑time homebuyers refund, provided that all other eligibility requirements are met, and evidence of the trust is submitted (e.g., a letter from the bank confirming that the parent is on title for mortgage purposes or a copy of a trust agreement).
Example ‑ Spouse
A qualifying purchaser may also claim a refund in proportion to his or her spouse's interest if that purchaser's spouse has owned a home before becoming the purchaser's spouse, but not while being that purchaser's spouse.
The ability of a purchaser to include his or her spouse’s interest in determining the maximum refund is restricted if the spouse is not a Canadian citizen or a permanent resident of Canada on the date of the conveyance or disposition. For more information, read here.
My partner and I are buying a home together. I have owned a home, but he has not. Does he qualify for the first‑time homebuyers refund?
Your partner's eligibility for a refund depends on whether you are spouses as defined in section 29 of the Family Law Act. Please refer to the Definitions section for the meaning of spouse.
If you are not spouses, then your partner may claim a refund based on his interest acquired in the home. If you are spouses, and both of you are Canadian citizens or permanent residents of Canada, your partner may claim a refund up to the maximum refund amount applicable to your transaction (you can claim the refund for your interest and your partner's interest), as long as you did not own a home while you were each other's spouse. If you did own the home while you were spouses of each other, then your partner does not qualify for a refund even if you did not live in the house together.
How do I get the refund?
If you qualify, you can claim an immediate refund at time of registration in one of two ways:
• If registering electronically, complete the required statements under the "explanation" tab of the land transfer tax statements.
•If registering on paper, file an Ontario Land Transfer Tax Refund Affidavit For First-time Purchasers of Eligible Homes at the Land Registry Office.
Do I qualify?
To get a refund of land transfer tax, you:
•must be at least 18 years old
•must occupy the home as your principal residence within nine months of the date of transfer
•cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, and
•if you entered into an agreement of purchase and sale before December 14, 2007, the eligible home must be newly constructed and you must be eligible for the Tarion New Home Warranty.
If you have a spouse, your spouse cannot have owned an eligible home, or an interest in an eligible home, anywhere in the world while being your spouse.
You must apply for a refund within 18 months after the date of the transfer.
Find a Land Registry Office
Refunds claimed after registering
If you did not claim the refund at the time of registration and paid all of the land transfer tax owing, you can apply for a refund. To do this, you must submit:
•an original, completed Ontario Land Transfer Tax Refund Affidavit for First-time Purchasers of Eligible Homes [PDF - 350 KB]
•a copy of the registered conveyance (transfer/deed)
•evidence of the amount of tax that was paid on registration
•a copy of the docket summary (if transfer was registered electronically)
•a copy of the agreement of purchase and sale (including all schedules, amendments and assignments)
•a copy of the statement of adjustments relating to the conveyance
•a copy of documents that provide proof of occupancy of the home, such as copies of telephone/cable bills, driver's licence, newspaper/magazine subscriptions, etc.
•for agreements of purchase and sale entered into before December 14, 2007, a copy of the Tarion New Home Warranty, which is also known as the Certificate of Completion and Possession
Send your application to:
Ministry of Finance
Advisory, Objections, Appeals and Services Branch
33 King Street West
PO Box 625
Oshawa ON L1H 8H9
The application and any refund payment may be audited by the Ministry of Finance. Charges may be laid and fines result if you obtain or attempt to obtain a refund by deceit, falsehood or any fraudulent means.
For more information, please check this source: https://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html
As a taxation measure granted under the City of Toronto Act, 2006, Toronto City Council approved:
- effective February 1, 2008, MLTT (Toronto Municipal Code Chapter 760 ) will be applied to purchases on all properties in the City of Toronto, in addition to the Provincial Land Transfer Tax
- effective March 1, 2017, adopted item EX22.2, changed the MLTT rate structure and rebate eligibility criteria
First Time Purchaser Rebate
The first-time home purchase rebate applies to:
- newly constructed
- resale residential properties
The rebate does not apply to:
- commercial, industrial or multi-residential properties
Prior to March 1, 2017
For conveyances and dispositions of beneficial interest in land of an eligible home prior to March 1, 2017, and a rebate of up to $3,725.00. The definition of a first-time purchaser is:
- the purchaser is at least 18 years of age
- the purchaser must occupy the home as their principal residence no later than nine months after the date of the conveyance or disposition
- the purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time
- if the purchaser has a spouse, the spouse cannot have owned a home, nor had any ownership interest in a home, anywhere in the world while they were the purchaser’s spouse
On or After March 1, 2017
For conveyances and dispositions of beneficial interest in land of an eligible home on or after March 1, 2017, and a rebate of up to $4,475.00. The definition of a first-time purchaser includes all of the above, and:
- the purchaser is a Canadian citizen or permanent resident of Canada. If the purchaser becomes a Canadian citizen or permanent resident within 18 months of the transfer, they may apply for and may qualify for the rebate
Valid Canadian Citizenship Documentation
- Canadian passport
- valid or expired no more than five years
- Birth certificate from Ontario or other Canadian province or territory (issued under Vital Statistics Act)
- Canadian Certificate of Registration of birth abroad
- Certified Statement of live birth from Ontario, or other Canadian province or territory
- Certificate of Canadian Citizenship or Certificate of Naturalization (paper document or card, not commemorative issue)
- Certificate of Indian Status (paper or plastic card)
- Registered Indian Record (certified)
- Temporary Confirmation of Registration document
- Valid Permanent Resident Card
- Confirmation of Permanent Residence (IMM 5292, 5688)
- Canadian Immigration Identification Card
- Record of Landing (IMM 1000)
Rebates Claimed After Registering
If you did not claim the exemption at the time of registration and paid all of the MLTT owing, an application for the rebate can be submitted directly to the City of Toronto along with a copy of the following documents:
- Municipal Land Transfer Tax Rebate/Exemption Application
- Supplementary Information Form
- MLTT Authorization of Representative Form
- Registered conveyance (transfer/deed)
- Docket summary (if transfer was registered electronically)
- Agreement of Purchase and Sale (including all schedules, amendments and assignments)
- Statement of Adjustments
- proof of Canadian citizenship or permanent residency status in Canada
- proof of occupancy for each first time home purchaser indicating the purchaser’s name and new address listed within 9 months of the date of registration, such as but not limited to:
- telephone/cable bills
- driver’s licence
Note: utility and property tax bills are not acceptable forms of proof of occupancy.
Submit documents by mail, fax or email:
The rebate application with all supporting documents must be received within 18 months after the date of which the conveyance or disposition occurred. A fee to process the refund will be applied.
For Agreement(s) of Purchase and Sale which were executed on or before December 31, 2007 and the closing date is on or after February 1, 2008, check for eligibility under the Grandfathering Exemption.
The Grandfathering Exemption is applicable if the Agreement of Purchase and Sale was executed:
- on or before December 31, 2007, and
- the closing date is on or after February 1, 2008
Effective March 1, 2015, the grandfathering exemption cannot be claimed electronically using Teraview statement 10011. The MLTT must be paid in full upon registration and an application for rebate can be submitted directly to the City of Toronto along with a copy of the following documents:
- Municipal Land Transfer Tax Rebate Exemption Application
- MLTT Authorization of Representative Form
- Registered conveyance (transfer/deed)
- Docket summary (if transfer was registered electronically)
- Agreement of Purchase and Sale (including all schedules, amendments and assignments) entered into before December 31, 2007
- Statement of Adjustments
10-Step Guide to Selling Your Home
- Step 1: Decide When to Sell
- Step 2: Find a REALTOR ® Who is Right for You
- Step 3: Sign a Listing Agreement
- Step 4: Determine Your Home’s Asking Price
- Step 5: Add a Lawyer to Your Team
- Step 6: Prepare Your Home for Sale
- Step 7: Let Your REALTOR® Market Your Home
- Step 8: Prepare Your Finances
- Step 9: Receive an Offer
- Step 10: Close the Deal