CMHC’s Homebuying Step by Step guide has the answers you need to your mortgage financing questions.

Congratulations! You’ve decided to begin your search for a new home, or perhaps you’ve already found the home of your dreams and are ready to make an offer. It’s now time to consider your mortgage options. But with so many different choices available, how can you select the right kind of mortgage for your needs?To help you make an informed decision, Canada Mortgage and Housing Corporation (CMHC) offers the following answers to some of the most common questions Canadians have about choosing a mortgage:

• What is the difference between conventional and high-ratio mortgages?
  A conventional mortgage is a loan for up to 80 per cent of the purchase price (or market value) of a home. With a conventional mortgage, the buyer supplies a down payment of at least 20 per cent, and mortgage insurance is usually not required. If your down payment is less than 20 per cent of the purchase price, however, you will typically need a high-ratio mortgage. High-ratio mortgages normally have to be insured (by CMHC, for example) against payment default.
• What are fixed, variable or adjustable interest rates?
  When you choose a mortgage, you have to decide whether you want the interest rate to be fixed, variable or adjustable. A fixed rate is locked-in for the entire term of the mortgage. With a variable rate, the payments remain the same each month, but the interest rate fluctuates in accordance with the overall market. For adjustable rate mortgages, both the interest rate and the mortgage payments vary based on market conditions. Talk to your lender to find out which option is right for you.
• Should I choose an open or closed mortgage?
  With a closed mortgage, you pay the same amount each month for the entire term of the mortgage. Closed mortgages can be a good choice if you want a fixed payment schedule, and you don’t plan on moving or refinancing before the end of the term. An open mortgage allows you to pre-pay a lump sum or even the entire loan at any time without a penalty. An open mortgage can be a good choice if you’re planning to sell your home in the near future, or if you want the flexibility to make lump sum payments.
• What about the term, amortization and payment schedule?
  The term is the length of time (usually from six months to 10 years) that the interest rate and other conditions of your mortgage will be in effect. Amortization is the period of time (such as 25 or 30 years) over which your entire mortgage debt will be repaid. Lastly, the payment schedule sets out how frequently you will make payments on your mortgage — usually either monthly, biweekly or weekly.

Time is running out!  

Only available for the 2009 tax year.

The Home Renovation Tax Credit is a non-refundable tax credit based on eligible expenses for improvements to your house, condo or cottage. It can be claimed on your 2009 income tax return. It applies to work performed or goods acquired after January 27, 2009, and before February 1, 2010 under an agreement entered into after January 27, 2009.

Important Notice
Eligible expenses for goods acquired during this period, even if they are installed after January 2010, will still qualify. If an eligible expense involves work performed by a contractor or a third party, and the work is not completed by the end of the eligible period, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made.

The HRTC applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 − $1,000) × 15%].

Details at: http://www.cra-arc.gc.ca/hrtc/

1. 1. What is the home buyers' tax credit (HBTC)?

   For 2009 and subsequent years, the HBTC is a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (i.e., generally means that the closing is after this date).

   2. How is the new HBTC calculated?

   The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750.

   3. Am I eligible for the HBTC?

   You will qualify for the HBTC if:

   • you or your spouse or common-law partner acquire a qualifying home; and
   • you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

   If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first-time home buyer. However, the home must be acquired to enable the person with the disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

   4. What is a qualifying home?

   A qualifying home is a housing unit located in Canada acquired after January 27, 2009. This includes existing homes and those being constructed. Single-family homes, semi‑detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co‑operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

   As well, you must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after you buy it.

   5. Who is considered a person with a disability for purposes of the HBTC?

   For purposes of the HBTC, an individual eligible for the disability tax credit (DTC) is one for whom an amount can be claimed under the DTC for the year in which the home is acquired, or could be claimed if costs for attendant care or care in a nursing home were not claimed for the [Medical Expense Tax Credit].

   6. If I buy a house, can my spouse or common-law partner claim the HBTC?

   Either one of you can claim the credit or you can share the credit. However, the total of your combined claims cannot exceed $750.

   7. My friend and I intend to jointly purchase a home, and we both meet the conditions for the HBTC. Can we both claim the credit?

   Either one of you can claim the credit or you can share the credit. However, the total of your combined claims cannot exceed $750.

   8. Do I have to register the acquisition of the home under the applicable land registration system?

   Yes. Your interest in the home must be registered in accordance with the land registration system applicable to where it is located.

   9. How will I claim the HBTC?

   Beginning with the 2009 personal income tax return, line 369 is incorporated into the Schedule 1, Federal Tax to allow you to claim the credit in the year in which you acquired the qualifying home.

   10. Do I have to submit any supporting documents with my income tax return?

   No. However, you must ensure that this information is available, should it be requested by the Canada Revenue Agency (CRA).

   11. Is the HBTC connected to the existing Home Buyers’ Plan?

   No. Although some of the eligibility conditions for the HBTC and the Home Buyers’ Plan are similar, the two are not connected. Your eligibility for the HBTC will not change whether or not you also participate in the Home Buyers’ Plan.

   12. Where can I get more information about the new HBTC?  http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html