Home Buying Resources & Programs for Teachers in Canada

Home Buying Resources & Programs for Teachers in Canada
Written by
  • Christine Beaudoin
| Jan 28, 2021
Reviewed, Jun 6, 2023

Buying a home is a huge undertaking and likely the largest financial investment you’ll make throughout your lifetime. That’s why nesto has compiled this special guide to help ensure teachers across Canada are aware of the various resources and programs available to help you make an informed decision and save money along the way. There are also helpful links included if you need some mortgage payment relief at any point during your time as a mortgage holder.

Are you a first-time buyer?

Government Discounts & Programs for Teachers 

  • First-Time Home Buyer Incentive (FTHBI). The FTHBI is designed to help ease mortgage costs for first-time home buyers by reducing monthly payments through shared-equity loans – up to 5% towards the down payment of a resale home and as much as 10% for newly-built homes. The idea is that, by boosting the size of your down payment, the FTHBI decreases monthly mortgage costs, making home ownership more affordable. First introduced in 2019, the program has since been expanded for the high-priced Toronto, Vancouver and Victoria markets. Originally, the maximum home price to be eligible was four times household income, but is rising to 4.5 times household income in spring 2021. The buyer’s income threshold is being raised from $120,000 to $150,000. The changes mean the maximum home price for eligible first-time buyers in the three markets goes from $505,000 to about $722,000. Helpful links:CMHC First-time homebuyer incentive;
  • First-time homebuyer incentive: Vancouver, Victoria, Toronto;
  • Federal Liberals boost first-time homebuyer incentive
  • First-Time Home Buyers’ Tax Credit (HBTC). The HBTC is offered by the federal government to help offset closing costs associated with buying your first home. It allows you, as a first-time home buyer, to claim $5,000 on your personal tax return, resulting in a maximum $750 rebate. You must apply to receive the credit on the tax return in the same year in which you purchase a home.
  • Home Buyers’ Plan (HBP). You may be able to withdraw money you’ve already contributed to your registered retirement savings plan (RRSP) and use it towards anything related to your home purchase, including your down payment, closing costs or real estate fees. Under the federal government’s HBP, you can withdraw up to $35,000 ($70,000 for a couple) from your RRSPs tax- and interest-free to buy or build a qualifying home for yourself or a related person with a disability. See:What is the RRSP Home Buyers’ Plan (HBP)?
  • What is the home buyers’ plan? 
  • GST/QST/HST New Housing Rebate. If you’re purchasing a newly built home from a builder, custom-building your own home, or substantially renovating an existing home, you may qualify for a rebate of the provincial GST/QST or federal part of the HST that you paid on the home. Helpful link:GST-HST New Housing Rebate

Home Buying, Step by Step for Teachers

Short-Term Relief & Solutions for Teachers

  • Mortgage Deferral. The federal government introduced a six-month Mortgage Deferral Program – which officially wrapped up September 30th, 2020 – to help Canadians stay in their homes while the job market recovered from COVID-19. Fortunately, there may be other mortgage relief options available through your financial institution. It’s important to check with your lender for your options before you go into default on your mortgage. See: What Are Your Other Mortgage Relief Options?
  • HELOC. A home equity line of credit (HELOC) is a type of revolving credit. This means that, once qualified, you can borrow money, pay it back, and borrow it again, up to a maximum credit limit. HELOCs typically allow for interest-only payments, which may seem like a good option but, as with any loan, you should have a plan in place to pay it off in full so that you don’t keep paying interest. Helpful links: 
  • Helocs could be lifeline for cash strapped retirees;
  • Conventional Mortgage vs Heloc;
  • Home equity loan;
  • Extending Your Amortization Period. An amortization period is the length of time it takes to pay off your mortgage in full. The most common mortgage amortization is 25 years. Extending your amortization period enables you to  lower your mortgage payment. Keep in mind, however, that the longer you take to pay off your mortgage, the more you pay in interest. Helpful link: Mortgage amortization strategies 
  • Blend to Term or Blend & Extend Option. Your financial institution may offer various blended options where they calculate a new interest rate taking into consideration both your mortgage rate and the current rate. This lowers your mortgage payments if the current rate is lower than your mortgage rate. With a blend to term option, your new interest rate is in effect until the end of your term. Your mortgage term is the length of time of your current mortgage contract before it needs to be renewed (most common is five years, but 1-10-year options are available). You may be able to extend the length of your mortgage before the end of your term. This allows you to benefit from your new interest rate over a longer timeframe. Financial institutions call this early renewal option blend and extend. Helpful link:Break your mortgage contract
  • Converting to a Fixed Rate. You may be able to convert your mortgage from a variable to a fixed interest rate. If you can find a comparable term fixed-rate mortgage that’s lower than your mortgage’s current variable rate, your payments will also be lower. This option can also protect you from future increases in interest rates. Check with your financial institution to see if this option is available to you. Helpful links:Locking in your mortgage could save you money but it depends on your plans;
  • Switching from variable to fixed mortgage rate;
  • Interest-Only Payments. Interest-only payments allow you to defer the mortgage principal while you continue to pay the interest on your mortgage. Your financial institution may allow you to defer your mortgage principal up to a maximum amount. You may also be required to repay the deferred principal over a specific timeframe. While this option offers temporary relief, it can also significantly increase the cost of your mortgage. Helpful link:Financial tools – Mortgage calculator
  • Capitalization. Your financial institution may allow you to add late payments to your mortgage principal. This is often referred to as capitalization. Typically, you can only use this option once during the life of your mortgage. Your financial institution may allow you to capitalize: missed mortgage payments and interest; property tax payments; utility bills; property repair costs; condo fees; and other outstanding charges. This option can, however, significantly increase the amount you owe on your mortgage. With the capitalization option, your mortgage payments are modified to reflect the increase in your mortgage principal. This means your mortgage payments can be higher. Helpful link:10 things for lenders to think about when capitalizing interest; 
  • Sale by Borrow Plan. With this plan, your financial institution allows you to sell your property for fair market value to a third party. You continue to live in your home while it’s for sale (typically 90 days or less). During this time, you agree to occupy and maintain the home. You may also be required to continue making payments or partial payments toward the mortgage.

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