Generally, when we think about a first time home buyer – we often envision a young 20 or 30 something couple looking for their first home to grow a family in. Is that what you think of too?
What if I told you – that even as a later in life adult – you could get many of the same benefits as a first time buyer? It’s just one of the topics we discuss early in your home purchasing journey – I want to help you to understanding your financing options and what can best work in your situation.
Currently, most lenders will consider you a first time home buyer if you have never owned a home before. But there are two other scenarios where you can be classified as a first time home buyer – even if you are older than 50 years – and take advantage of many perks!
A mid-life adult can qualify as a first time home buyer in Alberta if you, your spouse or your common law partner have not owned a home in the last 4 fiscal years. So let’s say you owned a home, met some financial challenges, moved into a rental, and are now ready to buy again. As long as 4 years (as defined by the government) has passed, you may qualify as a first time home buyer.
The second scenario for mid-life adults – is if you have had a recent end to your marriage or your common law partnership, you can qualify as a first time home buyer. This means if you are leaving your matrimonial home (or you are both agreeing to sell the matrimonial home), then you can put a smaller down payment to purchase your next home, as you are classified as first time home buyer.
So why is this important to know and understand?
As a first time home buyer, you can qualify for a high-ratio mortgage, meaning you only have to put down 5% and may have an easier time qualifying for mortgage for your next purchase. For a $400,000 home, you may only have to have $20,000 as your down payment. Maybe you want to consider a condo? Well now a $200,000 condo will only require a down payment of $10,000. This might mean you can save money and access a mortgage more quickly for your next home.
The second benefit of being a late life first time home buyer is that you can take advantage of some of the government programs and even tax benefits that could assist in your situation. Programs like the First Time Home Owners Tax Break, First Home Savings Account (FHSA) with some tax benefits, Home Buyers Benefit (when building a home), and more, could be accessible to you.
The very first step I recommend to all clients is to speak with a trusted mortgage broker. With a bit of your information, they can evaluate all current government programs, tax benefits and ways to start preparing for your home purchase. They can give you an idea with current mortgage stress tests, what would you actually qualify to spend on a home, and anything you can do to improve your ability to qualify.
Once you know what your spending power is, then it is much easier for you and I to work together to make a plan for buying your next home.
I work with many adults who are in their 50s, 60s and even 70s who have never owned a home – and we’ve worked together to develop the perfect plan to get them into home ownership. It is never too late! But even if you’ve been renting the last couple of years, there is still hope if you want to consider owning again.
Having a home you own means that you can make renovations and modifications to adapt your home as your health and mobility needs change. You can add grab bars or ramps or change to a walk in shower as you need with much less effort than if you were renting. If your plan is to age in place, then planning to own your home will go a long way to setting you up to successfully achieving that goal.
Are you wanting to be a first time home buyer in 2025 – if so, let’s chat!
Associate, REALTOR® / Schmidt Realty Group Inc.
