27 Jun

Can Child Tax Credit Income Be Used To Qualify for a Mortgage?

Mortgage Tips

Posted by: April Hopfner

If you’re growing your family, chances are you may need more space! You might be looking to upgrade to a larger home, but you’re wondering what income can be used to qualify. If you’ve asked your bank, they may have told you that the Child Tax Credit amount can not be included as income. The truth is, sometimes it can!

As a mortgage professional, I have access to a variety of lenders that I can work with on your behalf. Some of these are the mortgage side of major banks, but many are companies that specialize in mortgages only. There are a few lenders that I work with that do accept the Child Tax Credit as income. As with any mortgage program, there are some restrictions, but generally speaking, this credit can be included in your income as long as it does not exceed 30% of the total income on the application.

For some families, this amount could mean all the difference. This income could allow a family to afford a home they may not have been approved for based on their employment income alone. This is something to keep in mind if you have children under the age of 16 and are looking to purchase a different home.

If you want to learn more about using the Child Tax Credit on your application, or all things mortgages, visit me at mortgagesbyapril.com or email me at ahopfner@dominionlending.ca. I’d love to hear from you and talk about how we can get you into the home of your dreams!

April Hopfner
Mortgage Associate
Dominion Lending Centres – The Mortgage Firm

10 Jun

Using RRSPs for Your Down Payment – What You Need to Know

Down Payments

Posted by: April Hopfner

Saving up for a down payment can be hard! With rising grocery and living costs, it’s difficult to build up savings, let alone thousands of dollars to buy your first home.

Fortunately, the Canadian government has created some programs to assist homebuyers. If you’ve been contributing to an RRSP, the Home Buyer’s Plan might be the perfect option get into your first home sooner!

How does it work?

Here are some of the basics you need to know:
1. You must be a considered a first time homebuyer – this means you must not have occupied a home owned by you or your spouse/common-law partner for the four year period beginning Jan. 1 of the fourth year before you withdrew the RRSP funds and ending 31 days before withdrawal. That’s a mouthful! Basically if you are looking to withdraw funds on July 31, 2019, you can’t have owned or lived in a home your spouse owned from Jan. 1, 2014 to June 30, 2019.
2. You can withdraw up to $35,000 – based on the balance in your RRSP account, you can withdraw up to $35,000, as long as it is not a locked-in or group RRSP. That would be a 5% down payment on a $700,000 home!
3. Your RRSPs must have been in the account for at least 90 days prior to withdrawal – the funds must have been in your account for 90 days or they may not be deductible for any year. Trust me, you want the deduction on your tax return!
4. You must intend to live in the home within 1 year of buying or building it – this means you must move in within a year. And no, you’re not allowed to purchase it as a rental property!
5. You must pay back the RRSPs within 15 years – the total amount you withdraw will be divided by 15 years, and each year you must contribute that amount back into your account. For example, if you withdrew $20,000, you must pay back at least $1,333.33 each year for 15 years. You have the option to contribute more each year to pay it off faster. If you fail to pay back the amount calculated, you will be taxed on those amounts on your annual tax return.
6. You must complete the necessary paperwork – there is a specific request form that needs to be filled out and submitted to your financial institution that confirms you are taking out the funds for a down payment.
7. You must have an agreement to purchase or build a home – this means before you can apply for the program, you must have an actual accepted offer on the home you want to purchase. Pre-approvals do not apply in this case.

The Home Buyer’s Plan can be an exceptional way to help you get into your first home since it is basically an interest-free loan from yourself (as long as you complete the necessary steps and pay it back as directed by the CRA!).

If you have questions about using your RRSP as a down payment, please contact me or your own mortgage or tax professional. More details about the program can be found on the CRA website at: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html.

Happy Home Buying!

April Hopfner