FAQs

What is the Homebuyers Plan?

The Home Buyers Plan is a federal government program that allows homebuyers to use $20,000 for each purchaser from his/her own RRSP
You must not have owned a principal residence within the last 5 years.
You must intend to occupy your home as a principal residence.
The funds to be withdrawn must have been invested in an RRSP for a minimum of 90 days prior to withdrawal.
You must complete a Form T1036.

Do I qualify for the 5% downpayment program?

The home must be located in Canada and is to be occupied as your principle residence.
You have a 5% down payment from your own resources.
You must be able to cover closing costs equivalent to 1.5% of the purchase price of the home.
You meet the lender's eligibility requirements regarding income, employment and credit worthiness.

What should I expect for closing costs?

Closing costs are approximately 1.5% of the Purchase Price. The following are examples of approximate costs, please note this is not an exhaustive list.

Appraisal fee $300
Home inspection $300
Legal fees (approximate) $750
Tax adjustment (if applicable)
Interest adjustment (if applicable)

What type of income proof do I have to provide?

Lenders require a level of comfort that the borrower has sufficient income and cash flow to cover the mortgage payment and any other monthly obligations. Here is a summary of the types of documents lenders require based on what type of job you have:

Salaried employees

Job letter on company letterhead, signed by an appropriate member of your organization
Pay stubs - typically lenders require 2 recent pay stubs

Hourly employees

Pay stubs - showing year to date verification
T4s and/or Personal Tax returns (T1 Generals) - 3 years to take an average.
Notice of Assessment(NOA) - most recent to confirm no taxes owing

Commission Income

T4s and/or Personal Tax returns (T1 Generals) - 3 years to take an average.
Notice of Assessment(NOA) - most recent to confirm no taxes owing
Job letter - confirming position

Self Employed

NOAs(Personal Notice of Assessments) - 2 years
Personal Tax Returns (T1 Generals showing personal net income)
Financial Statements of Company - 3 years average of net income used. Depending on lenders policies, the add-back of various personal expenses run through the company may or may not be allowed. (eg. depreciation, amortization, capital cost allowance).

Overtime

Will be used as long as there is a proven track record. Typically a 2 year average.

Bonuses

Proven track record is required for it to be used. Typically a 2 year average.

Alimony and Support

Evidence that payments have been made regularly. Copy of the divorce or separation agreement is required.

Car allowances

Varies from lender to lender

Tips

Generally not recognized unless declared for tax purposes