New Graduate Retention Program First Home Plan in Saskatchewan
The First Home Plan provides loans to first-time homebuyers, and it allows borrowers to repay the loans
with credits from the Graduate Retention Program. If you are a recent graduate in Saskatchewan, you may qualify for this program.
To participate in the First Home Plan, you must have Graduate Retention Program tax credits, and you
must be planning to buy your first home in Saskatchewan. The home may be a single-family home, townhouse, mobile home, or condo, but it must be your primary residence. If you have not owned a home in the last five years, you may also qualify for this program.
If you are buying a home with another person and you both qualify for the program, you may both participate. However, you must apply separately.
Graduate Retention Program Credits
The Graduate Retention Program provides tax rebates to eligible graduates in Saskatchewan. To qualify,
you must have completed an approved postsecondary program within the last seven years. In most cases, schools register their graduates for this program automatically, but you may apply on your own if needed.
As of 2016, graduates with a one-year certificate receive up to a $3,000 rebate. Graduates with a two- or three-year diploma qualify for up to a $6,400 rebate, and graduates with three- or four-year undergraduate degrees qualify for up to $15,000 and $20,000, respectively. The exact amount of your rebate depends on how much tuition you paid.
Saskatchewan distributes these rebates as nonrefundable tax credits over a period of seven years. You receive 10% of your rebate each year for the first four years and 20% each year for three years. The rebate can cover your provincial tax bill, but it cannot create a refund. However, you may save unused credits for future years as long as all of the credits are claimed within 10 years.
The First Home Plan
If you want to buy your first home, you may apply for a loan through the First Home Plan. The loan you receive through this program will be the amount of your unused credits. Note this program only includes your Graduate Retention Program credits. It does not take into account any other credits.
For instance, if you graduated with a two-year certificate and qualified for the maximum rebate for $6,400, you could qualify for a $6,400 loan through the First Home Plan. However, if you used $1,000 of your credits, you could only qualify for a $5,400 loan.
How to Apply for the First Home Plan
To apply, complete an application for the First Home Plan, and submit it to the Saskatchewan Housing Corporation. You also need a copy of your Graduate Retention Program eligibility certificate and all the notices of assessment you have received from the Canada Revenue Agency since becoming eligible for the Graduate Retention Program.
You must complete the application process before taking possession of your home. Unfortunately, if you have already taken possession of your home, you cannot take advantage of this program. Ideally, the government of Saskatchewan prefers participants to apply for the First Home Plan before they even start applying for mortgages.
Distribution of Funds
Once you are approved for a First Home Plan loan, you should obtain a mortgage and find a home to buy. Then, at least 10 days before moving into your new home, send the mortgage approval, sales, and purchase agreements, and any other requested documents to the Saskatchewan Housing Corporation. At that point, you will receive the funds from your loan.
Repaying a First Home Plan Loan
When you file your taxes, you should claim the maximum amount of Graduate Retention Plan credits available to you. The amount of credits you claim is the amount of your loan payment for the year. For example, if you claim $600 in Graduate Retention Program credits, the annual payment for your First Home Plan loan will be $600.
You should make your repayment to SHC after receiving your notice of reassessment from the CRA or by June 30 of every year. If you like, you may pay off the loan early.
Saskatchewan First-Time Homebuyer’s Tax Credit
Unfortunately, if you use an FHP loan, you cannot claim Saskatchewan’s First-Time Homebuyer’s Tax Credit. If you claim this credit on your tax return while you have a First Home Plan loan outstanding, the balance is due on your loan immediately. Ultimately, you have to decide which of these programs works better for your situation.
The First-Time Homebuyer’s Tax Credit is a $1,100 nonrefundable provincial tax credit, and in some cases, it may be advantageous to claim this credit rather than apply for a First Home Plan loan. For example, if you only have $600 in unused Graduate Retention Plan credits, you can only apply for a $600 First Home Plan loan. As a result, you may prefer to claim the $1,100 First-Time Homebuyer’s Tax Credit instead.