Housing Incentive Programs

Housing incentive programs are intended to assist homebuyers in the purchase of their home. There are various programs provided by each level of government. There are also opportunities to access co-operative housing support programs offered by not-for-profits in the private sector.


Municipal Programs

Mortgage Flexibilities Support Program

To increase affordable home ownership opportunities in Saskatoon, the Mortgage Flexibilities Support Program was created by The City of Saskatoon, Canada Mortgage and Housing Corporation (CMHC) and the Saskatchewan Housing Corporation (SHC).

Only homes in designated projects qualify for this program. Private home builders provide new units that can be sold at prices that households with incomes below the Maximum Income Limits (MILs) can afford.

Total household income of the buyer must meet the Maximum Income Limits:

Household Size Income Limit by Household Size

One Person: $69,975
Two Persons: $74,640
One dependent: $79,305
Two dependents: $83,970
Three or more dependents: $88,635

Households maximum net worth limit: $25,000

With a 5% down payment grant from the City of Saskatoon and mortgage loan insurance from CMHC or Genworth Financial, qualified homebuyers will have the means to finance the purchase of a new home.

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Provincial Programs

Saskatchewan’s First-Time Home Buyers’ Tax Credit

The Saskatchewan First-Time Home Buyers’ (FTHB) Tax Credit provides a non-refundable income tax credit of up to $1,050 to eligible taxpayers. In order to determine the total credit value ($1,050), the maximum dollar amount (the first $10,000 of an eligible home purchase) must be multiplied by the lowest provincial tax rate (10.5%). For example, the maximum amount of $10,000 is multiplied by 10.5% to determine the credit value of $1,050. The 2019-2020 Saskatchewan Provincial Budget estimates the tax expenditure associated with the FTHB tax credit to be $5.3 million in 2019.

Who is eligible?

The eligibility criteria and rules for claiming the Saskatchewan First-Time Homebuyers’ Tax Credit are the same as those for the federal First-Time Homebuyers’ Tax Credit. However, the value and calculation of the Saskatchewan FTHB tax credit are different from the federal credit.

For the Saskatchewan FTHB tax credit, an individual can claim $10,000 on their provincial tax return for the purchase of a qualifying home in the year if both of the following apply:

• An individual or their spouse or common-law partner acquired a qualifying home

• An individual did not live in another home owned by them or their spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer)

A qualifying home must be registered in an individual and/or their spouse’s or common-law partner’s name with the Land Titles Registry and must be located in Saskatchewan. The definition of a qualifying home includes existing homes and homes under construction. The FTHB tax credit generally applies to qualifying homes acquired after December 31, 2011.

The following are considered qualifying homes:

• single-family houses

• semi-detached houses

• townhouses

• mobile homes

• condominium units

• apartments in duplexes, triplexes, fourplexes, or apartment buildings

Note: If an individual has received a loan through the Graduate Retention Program First Home Plan, they may not claim the Saskatchewan home buyers’ amount.

How do you claim the Saskatchewan FTHB tax credit?

To claim the Saskatchewan FTHB tax credit, enter $10,000 on line 5837 in Part A of Form SK428 as part of your Provincial Tax Return. The FTHB tax credit amount can be split between an individual and their spouse or common-law partner, but the combined total cannot be more than $10,000. When more than one individual is entitled to the amount (for example, when two people jointly buy a home), the total of all amounts claimed cannot be more than $10,000.

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Federal Programs

First-Time Home Buyer Incentive Program (FTHBI)

This federal initiative is designed to help young Canadians access home ownership in a fiscally responsible and affordable way. In all cases, the borrower must meet minimum down payment requirements with traditional sources such as savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member. By obtaining the FTHBI, the borrower may not have to save as much of a down payment to be able to afford the payments associated with the mortgage.

How does it work?

The FTHBI enables first-time homebuyers to reduce their monthly mortgage payment without increasing their down payment. The Incentive is not interest bearing and does not require ongoing repayments.

Through the First-Time Home Buyer Incentive, the Government of Canada will offer:

• 5% for a first-time buyer’s purchase of a re-sale home
• 5% or 10% for a first-time buyer’s purchase of a new construction

Who is eligible?

There are several qualifiers to apply for this program:

• An individual must have the minimum down payment to be eligible;
• An individual’s maximum qualifying income must be no more than $120,000; and
• An individual’s total borrowing is limited to 4 times the qualifying income.

If an individual meets these criteria, they may then apply for a 5% or 10% shared equity mortgage with the Government of Canada. A shared equity mortgage is where the government shares in the upside and downside of the property value.

Minimum Down Payment Requirement: For 1-2-unit properties, 5% of the first $500,000 of the lending value and 10% of the remainder of the lending value, from traditional sources of down payment. For 3-4-unit properties, the minimum down payment is 10% of the lending value, from traditional sources of down payment.

Maximum Down Payment Requirement: For a 10% Incentive, the maximum down payment is 9.99%. For a 5% Incentive, the maximum down payment is 14.99%.

Traditional Sources of Down Payment: A traditional down payment comes from sources such as savings, withdrawal/collapse of a registered retirement savings plan (RRSP), funds borrowed against proven assets, or a non-repayable financial gift from a relative.

Non-Traditional Sources of Down Payment: A non-traditional down payment source, such as unsecured personal loans or unsecured lines of credit used to satisfy minimum down payment requirements is not eligible for the Program.

Loan-to-Value Requirement: The insured first mortgage loan-to-value must be above 80%. Mortgage-to-Income Requirement The combined mortgage and Incentive amount cannot exceed four times the total qualifying income. The amount for the mortgage loan insurance premium is excluded from this calculation.

Debt Service Guidelines: Maximum threshold: GDS 39% / TDS 44%. Only applied on first mortgage and subject to requirements by lenders and mortgage loan insurers.

Security: The Incentive will be a second mortgage on the title of the property, with no regular principal payments, is not interest bearing, and has a maximum term of 25 years. The Incentive will have an equity-like payout, where the Program will share in the upside and downside of the property value upon repayment.

How much are you required to pay back?

You can repay the Incentive at any time in full without a pre-payment penalty. You have to repay the Incentive after 25 years or if the property is sold, whichever happens first. The repayment of the Incentive is based on the property’s fair market value.

How is repayment calculated?

If a homebuyer receives a 5% Incentive, the homebuyer will repay 5% of the home’s value at repayment. (i.e. You receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000 your payback would be 5% of the current value or $15,000).

If a homebuyer receives a 10% Incentive, the homebuyer will repay 10% of the home’s value at repayment. (i.e. You receive a 10% incentive of the home’s purchase price of $200,000, or $20,000 and your home value decreases to $150,000, your repayment value will be 10% of the current value or $15,000).

Note: If your property value goes down, you are still responsible for repaying the shared equity mortgage based on the current home value at time of repayment.  

Example:

• Anita wants to buy a new home for $400,000 and has saved the minimum required down payment of $20,000 (5% of the purchase price).
• Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.
• This lowers the amount Anita needs to borrow and reduces the monthly expenses.
• As a result, Anita’s mortgage is $228 less a month or $2,736 a year.
• Ten years later, Anita sells the home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.
• This would result in Anita repaying 10%, or $42,000 at the time of selling the house.

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Federal First-Time Homebuyers’ Tax Credit

The federal FTHB Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief. In order to determine the total credit value (i.e. $750), the maximum dollar amount (i.e. $5,000) is multiplied by the federal tax rate (15%).

Who is eligible?

An individual can claim $5,000 on their federal tax return for the purchase of a qualifying home in the year if both of the following apply:

• An individual or their spouse or common-law partner acquired a qualifying home
• An individual did not live in another home owned by them or their spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer)

A qualifying home must be registered in an individual’s or their spouse’s or common-law partner’s name in accordance with the applicable land registration system and it must be located in Canada. It includes existing homes and homes under construction.

The following are considered qualifying homes:

• single-family houses
• semi-detached houses
• townhouses
• mobile homes
• condominium units
• apartments in duplexes, triplexes, fourplexes, or apartment buildings

How do you claim the FTHB tax credit?

To claim the FTHB tax credit, enter $5,000 on line 369 of your Schedule 1, Federal Tax Return. You and your spouse or common-law partner can split the claim, but the combined total cannot be more than $5,000. When more than one person is entitled to the amount (for example when two people jointly buy a home), the total of all amounts claimed cannot be more than $5,000.

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The Home Buyers’ Plan

To help with the down payment and costs associated with the purchase of a first home, the Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) to purchase or build a home, without having to pay tax on the withdrawal. Unlike regular RRSP withdrawals, HBP withdrawals are not added to a person’s income when withdrawn. Instead, the HBP withdrawals must be repaid over a 15-year period or included in the individual’s income if not repaid.

To provide first-time home buyers with greater access to their RRSP savings to purchase or build a home, the Federal Budget 2019 proposed to increase the Home Buyers’ Plan withdrawal limit to $35,000. This amount is available for withdrawals made after March 19, 2019.

Who is eligible?

To participate in the HBP, you must meet both the HBP eligibility and RRSP withdrawal conditions.

Do you meet the HBP eligibility conditions?

• You must have a written agreement to buy or build a qualifying home for yourself and;
• You must be considered a first-time home buyer.

Or

• You must have a written agreement to buy or build a qualifying home for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).

Do you meet the RRSP withdrawal conditions?

• You must be a Canadian resident at the time of the withdrawal.
• You must receive or be considered to have received, all withdrawals in the same calendar year.
• You cannot withdraw more than $35,000.
• Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $35,000 or less.
• Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.
• Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.
• Neither you nor your spouse or common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.
• You must buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1st of the year after the year of the withdrawal.

How do you withdraw funds from your RRSPs under the HBP?

To withdraw funds from your RRSPs under the HBP, fill out Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP. You must fill out this form for each withdrawal you make. After filling out Area 1 of Form T1036, give it to your RRSP issuer. The issuer must fill out Area 2. You can withdraw a single amount or make a series of withdrawals in the same calendar year.

Example:

• Alex and Michelle are a young couple living in Toronto where high home prices have put their goal of homeownership further from reach. With the increased HBP withdrawal limit, they will be able to withdraw up to $35,000 each from their RRSPs, for a total of $70,000, allowing them to contribute more toward their down payment, making home ownership possible.
• For Canadians who have experienced a breakdown in their marriage or common-law partnership, it can be difficult to keep the family home under new and more challenging financial circumstances. To help Canadians facing this challenging life event maintain homeownership, individuals that experience the breakdown of a marriage or common-law partnership will be permitted to participate in the Home Buyers’ Plan, even if they do not meet the first-time home buyer requirement. This measure would be available for withdrawals made after 2019.

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GST/HST New Housing Rebate

You may be eligible for a new housing rebate for some of the GST/HST paid when purchasing your home if you are an individual who:

• purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
• purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
• constructed or substantially renovated your own home, or hired a builder to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

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