You are doing a lot of online research, getting prepared to be a well-informed buyer, saving for your down payment and yet, it appears that there is conflicting information on what is a First Time Home Buyer.
Guess what? You are not crazy. The federal and provincial governments have different definitions of a First Time Home Buyer. And to confuse you even more, Canada Mortgage and Housing (CMHC) and other companies that insure mortgages in Canada have a separate definition as well.
In British Columbia, a “First Time Home Buyer” is just that. A person who has never owned a home before, anywhere in the world. The house you are buying must be located in BC, as your principal residence. The size of the lot must be 1.24 acres or less and its value must be under $500,000 to take advantage of the first time home buyers property transfer tax exemption.
There are partial exemptions between $500,000 and $550,000, but the main savings is for homes worth less than $500,000.
In Canada at the federal level, a “First Time Home Buyer “is defined as if you, or your spouse, have not owned a home for 4 full calendar years. The federal First Time Home Buyer's Program allows you to borrow money from your RRSPs to use as a down payment.
The insurers, Canada Mortgage and Housing, Genworth and Canada Guaranty, define a “First Time Home Buyer” as someone who hasn’t purchased a home before OR hasn’t owned a home in 4 full calendar years OR someone who recently experienced a breakdown in a marital or common-law partnership.
Here are some examples:
You have recently split up with your partner, found a $600,000 property and have a $31,000 down payment. You can participate in the CMHC First Time Home Buyer program but must have the cash savings or a gifted down payment. It cannot be from RRSPs.
You have not owned a home for 5 years, found a $600,000 property. You can withdraw up to 35,000 in RRSPs for your down payment, use savings or a gift. You can also take advantage of the CMHC First Time Home Buyers program.
You have never owned a home before, found a $600,000 property. You can withdraw up to $35,000 in RRSP for your down payment, use savings or a gift. You can also take advantage of the CMHC First Time Home Buyers program. There is no savings of Property Transfer Tax as the property is greater than $500,000.
To take advantage of every program you would need to purchase a property for under $500,000 and NEVER owned a house ever. So even if you have never owned a home you might not qualify for First Time Home Buyers programs. However, home ownership is still a tried and true way to gain wealth in Canada so regardless of whether you fit the box of First Time Home Buyer, it is still worth jumping in.