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GOVERNMENT ASSISTANCE

Thousands of Canadians have greatly benefited from government incentive programs geared towards helping first-time buyers realize home ownership.

Initiated in the early 1990s, programs such as the RRSP Home Buyers Plan, the Ontario Home Ownership Savings Plan, and the 5 Per Cent Down Payment Plan have all made housing more accessible to first-time purchasers.

RRSP Home Buyers Plan:
If you (or your spouse) have not owned a principal residence, you are eligible to participate in the RRSP Home Buyers Plan. Each spouse can withdraw up to $20,000, for a total of $40,000, from their RRSPs under the plan.

Just complete a Form T1036 (available from your Revenue Canada district office) and submit it to your RRSP issuer after signing the agreement of purchase and sale. Once approved, the form gives you permission to withdraw funds from your RRSP without taxes being withheld.

The money you withdraw from your RRSP must be repaid over a period of not more than 15 years to retain your tax deferred status. Payments begin the second year following the year in which the withdrawal is made.

Ontario Home Ownership Savings Plan:
If you're an Ontario resident, over 18 years of age, and earning less than $40,000 per annum (or if you and your spouse have a combined income of less than $80,000), the Ontario Home Ownership Savings Plan may work to your advantage.

To qualify, you must open an Ontario Home Ownership Savings Plan at any financial institution across the province by December 31. Funds deposited into the OHOSP will earn interest at competitive rates. Only one OHOSP can be opened per person (joint accounts are not available).

Ontario Home Ownership Savings Plan (OHOSP) tax credits are available on annual contributions of $2,000 individually or $4,000 per couple. Credits vary depending on income and the amount invested in your OHOSP, but generally, you can earn tax credits of up to $500 individually or $1,000 per couple for five consecutive years.

The plan must be closed and the funds used to purchase a home by the end of the seventh year, otherwise you will have to repay your OHOSP tax credit with interest.

5 Per Cent Downpayment Plan:
Having trouble saving for a downpayment? The 5 Per Cent Downpayment Plan may be the answer.

Purchasers who can easily afford monthly mortgage payments but are having difficulty accumulating a downpayment may be eligible for financing of up to 95 per cent based on the plan. The property must be used as a principal residence and not exceed a pre-established price ceiling ($250,000 in Toronto).

A maximum total debt ratio of 42 per cent, including mortgage principal, interest, taxes, outstanding loans, and credit cards, exists.

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