2025 Canada First-Time Home Buyer's Guide - Programs & Incentives

Being a first-time home buyer can be both exciting and stressful – but it also tends to be very expensive. After all, most first-time home buyers in Canada don’t have proceeds from the sale of a property to fund their first purchase! Fortunately, the Canadian government offers a number of first-time home buyer programs to ease the financial burden of breaking into the housing market.

This guide includes all of the resources you'll need to get started on your home-buying journey. Find out more about: 

• The RRSP Home Buyers’ Plan (HBP)
• Tax credits and rebates
• Grants and programs, including the newest federal program, the First Home Savings Account
• Links to our provincial first-time home buyer pages.

You can get started with the helpful video below on the new mortgage rules for 2025, and then read on for more information. 

Programs for first-time home buyers in Canada

Here are some of the main first-time home buyer programs you should be aware of. Have a look at this video, and then read on to learn more. 

First Home Savings Account

The First Home Savings Account is a new savings vehicle that was announced in the 2022 federal budget, and became available as of April 1, 2023. It combines features from both TFSAs (Tax Free Savings Accounts) and RRSPs (Registered Retirement Savings Plans), but has advantages over both. Your contributions to your First Home Savings Account (FHSA) are tax-free, and you don't have to pay yourself back when you take out money from your first home account to purchase your first home.

Account holders can contribute up to $8,000 annually to the account, with room rolling forward if they don’t use it all during the calendar year, up to a lifetime maximum of $40,000. Partners who are saving for a first home together can each have an FHSA, with a combined total room of $80,000. As well, savers can combine the funds saved in the FHSA with those saved in the Home Buyers’ Plan when it comes time to purchase their home.

In order to access the First Home Savings Account, account holders must have entered into an agreement to purchase a home. Alternatively, the funds can be transferred into an RRSP at any time, without tax penalty. Overall, the account can be kept open for 15 years, or until you purchase your first home (it must be closed within the year of entering into an agreement of purchase and sale).

The First Home Savings Account came into effect as of April 1, 2023, and is now widely available at all of Canada’s federally regulated financial institutions. You can learn more about the First Home Savings Account on our blog and in this informative video on our YouTube channel.

RRSP Home Buyers' Plan

If you haven’t purchased a home within the last four years (or lived in a spouse’s home in the same timeframe), you may qualify for the RRSP Home Buyers' Plan (HBP).

The HBP isn't a credit or rebate. Instead, it allows first-time home buyers to use their tax-sheltered savings in a Registered Retirement Savings Plan (RRSP) for their down payment. As of April 16, 2024, the HBP lets you withdraw up to $60,000 for your down payment. The new measure also extended the time home buyers have before they need to start repaying installments to five years from two, for those who make HBP withdrawals between January 1, 2022, and December 31, 2025. Keep in mind that you must repay the amount into your RRSP within 15 years, and the money should have been in your RRSP for at least 90 days before you purchase a home. 

While early RRSP withdrawals are typically considered taxable income, HBP withdrawals are exempt — provided you start your repayments on schedule. Failing to make an annual repayment on time means that the funds withdrawn will be reported as taxable income for that year. Also, remember that this plan comes with the risk of cannibalizing your long-term savings by using funds from your RRSP today.

Land Transfer Tax Rebate

Some Canadian provinces charge a land transfer tax when you buy a house. This is generally between 0.5% and 2.0% of the purchase price of the property, and represents the largest closing cost you'll have to pay. In an effort to help first-time home buyers, several provinces rebate some or all of this tax if you're eligible.

You can receive a rebate on some of the land transfer tax you pay if you live in British Columbia, Ontario or Prince Edward Island. Home buyers in the City of Toronto are also eligible to receive a rebate on the city’s land transfer tax, in addition to the provincial rebate.

Here are the maximum rebates for the four rebates:

• City of Toronto: $4,475
• Ontario: $4,000
• British Columbia: $8,000
• Prince Edward Island: $2,000
  
  

First Time Home Buyers' Tax Credit

The First Time Home Buyers' Tax Credit, introduced in the 2009 federal budget, allows first-time home buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections and other similar closing costs. The First Time Home Buyers' Tax Credit is a non-refundable credit and was valued at $750 until the 2022 budget was passed, which increased the credit amount to $1,500. 

GST exemption on newly constructed homes

In March 2025, newly-minted Prime Minister Mark Carney introduced campaign promise to eliminate the 5% Goods and Services Tax (GST) for first-time home buyers purchasing newly constructed or “substantially renovated” properties priced at $1 million or under. The Conservative Party has also proposed a similar measure that would remove GST on new home purchases valued up to $1.3 million, without limiting it to first-time buyers. The final iteration of this policy will depend on the outcome of the Federal Election on April 28, 2025.

Removing GST means buyers could save up to $50,000 on a $1-million home, potentially making ownership more affordable and encouraging builders to increase the housing supply. 

Also read: Federal Liberals and Conservatives vow to remove GST on new home purchases

UPDATE: As of March 31, 2024, the First-Time Home Buyer Incentive was discontinued. 

What first-time homebuyers should know about the U.S. tariffs 

In early 2025, the United States imposed a 25% tariff on Canadian goods (along with a 10% tariff on energy), prompting Canada to retaliate with its own 25% tariff on $30-billion worth of U.S. imports. This uncertainty surrounding tariffs affects the mortgage market in two main ways:

• Bond yields: As investors seek “safe haven” assets during volatile times, bond yields typically plunge. The Government of Canada's five-year bond yield — often used by lenders as a benchmark for five-year fixed rates — has remained between the 2.5 to 2.6% range following the tariff announcement. That drop has translated to lower fixed mortgage rates, potentially making homeownership more affordable for first-time buyers in the near term.
• Bank of Canada rate cuts: Before the U.S. tariff threats emerged, the Bank of Canada (BoC) was on track to bring the overnight lending rate down to around 2.5–2.75%. However, the possibility of a tariff-induced recession could prompt the BoC to slash rates more aggressively, even if inflation ticks upward. On the other hand, if the economy enters a period of stagflation – when inflation rises sharply while economic growth slows – the central bank could be forced to hike rates again sooner than expected. The rate outlook remains highly uncertain, and will remain that way until there’s clarity on a trade agreement between the U.S. and Canada. 

Overall, the impact on home buying is complicated. On one hand, lower mortgage rates make it cheaper to borrow. On the other, a potential rise in unemployment or weaker wage growth may limit how much first-time buyers can qualify for — or feel comfortable taking on. 

Support for newcomers buying their first home in Canada

Buying your first home in Canada as a newcomer can be an exciting but challenging process. While many federal and provincial newcomer programs are available, it’s equally important to understand the practical aspects of navigating the system as a new resident in Canada.  

1. Understand Canadian mortgage requirements

To qualify for a mortgage as a newcomer, most lenders will require proof of income, employment history, and your immigration status, such as a permanent resident card or work permit. Down payment rules are the same for all homebuyers: 5% for homes under $500,000, 10% for the portion of the price between $500,000 and $1.5 million, and 20% for homes priced above $1.5 million. However, if you’re putting down less than 20%, you’ll need mortgage default insurance. As of December 15, 2024, first-time homebuyers borrowers also have the option to extend their amortization to 30 years.

2. Build or transfer your credit history

A strong credit history helps in securing a favorable mortgage rate in Canada, but newcomers often start with no domestic credit record. To build your Canadian credit profile, consider opening a secured credit card and making timely payments for everyday expenses. Over time, this will establish your creditworthiness. Alternatively, some lenders allow newcomers to provide proof of financial stability from their home country, such as international credit reports or reference letters from foreign banks. If this applies to you, ask your lender if they accept these documents as part of your application. 

3. Plan for additional costs beyond the down payment

It’s easy to focus solely on the down payment for your home purchase, but you should budget for additional expenses that can add up quickly. Closing costs, including legal fees, title insurance, home inspections, and property taxes, typically range from 1.5% to 4% of the purchase price. If your down payment comes from international savings, you’ll also need to account for currency exchange rates and transfer fees, which can affect your final budget. Depending on your province or city, you may need to pay land transfer tax, although rebates are available for first-time buyers in places like Ontario, British Columbia, and Prince Edward Island. Preparing for these costs will help ensure there are no surprises on closing day.

Also read- Should you always save a 20% down payment when you buy a home?

4. Prepare for newcomer-specific tax implications

As a newcomer, you may encounter unique tax considerations when buying your first home. For example, non-residents in Ontario and British Columbia may be subject to the Non-Resident Speculation Tax (NRST), which is an additional cost unless you’re exempt as a permanent resident. If you plan to live in your new home, ensure it’s designated as your principal residence to qualify for tax exemptions on future capital gains

5. Take advantage of newcomer mortgage programs

Canada’s major mortgage insurers — Canada Mortgage and Housing Corporation (CMHC), Sagen, and Canada Guaranty — offer specialized programs to help newcomers access financing for their first home. These programs are designed for individuals who might not meet traditional requirements, such as established Canadian credit history. If you’re unsure which program is best for your situation, consult a mortgage broker who can guide you through the options.

Other tax incentives for Canadian homeowners

Homeownership in Canada can be financially challenging; to help offset some of these costs, the federal government offers a number of tax incentives for homeowners. While some are specifically for first-time home buyers – such as the First Time Home Buyers’ Tax Credit and Land Transfer Tax Rebate – others can be utilized by anyone who owns their home. These include:

Multigenerational Home Renovation Tax Credit (MHRTC) 

The MHRTC is designed to make it more affordable for multiple members of the same family to live together in one dwelling. This credit offers a refund for eligible expenses for renovations that create self-contained secondary units, such as “in-law suites”. Up to $50,000 can be claimed for each completed qualifying renovation during the taxation year, with a credit of 15% of costs, up to a maximum of $7,500 for each claim.

Home Accessibility Tax Credit

The HATC is a non-refundable tax credit for renovations that make the home accessible for those with disabilities. The alterations must be created to allow an individual to be mobile or functional within the dwelling, gain access to the building, or reduce their risk of harm within it. The HATC has an annual expense limit of $20,000, with a tax credit up to $3,000, and can be claimed by eligible or qualifying individuals.

GST/HST New Housing rebate

The GST/HST New Housing Rebate offers money back to Canadians who buy a newly-built home, substantially renovate an existing home, or rebuild a home that was destroyed due to fire. In all three cases, an individual will incur GST/HST on their purchase. The GST portion of a new home purchase or renovation can be rebated to all Canadians who qualify. It's not exclusively available to first-time home buyers, but it's regularly used by first-time home buyers that are buying newly-built homes.

This rebate applies to the federal component of this tax, but some provinces also have their own version of this rebate, which reimburses buyers a portion of the provincial component.

Tax obligations for homeowners

Principal residence tax exemption

A big perk for homeowners in Canada is that they do not need to pay capital gains when selling their principal residence. However, in order to qualify for the exemption, those selling their home must report the sale to the CRA, and designate it as their principal residence when filing their personal income tax return. This must be done the year the home is sold.

However, those who own a secondary property, including cottages and investment homes, will be subject to capital gains tax when the home is sold, or passed down through the estate. As of April 16, 2024, the capital gains tax rate for individuals in Canada increased to 66.7% for those with more than $250,000 in capital gains per year. Under this new structure, the first $250,000 of capital gains will be taxed at a rate of 50%, with the remainder taxed at the new two-thirds inclusion rate.

Check out our blog on the latest changes to capital gains tax in Canada.

Underused housing tax

Introduced in January 2022 to help address the nation’s housing shortage, the federal government now requires an annual federal tax of 1% on the ownership of vacant or underused housing. While the tax “generally applies to foreign national owners” of Canadian real estate, some Canadian homeowners – such as those who own a property as part of a partnership, or as trustee of a trust, may need to file a UHT return. However, there are some exemptions which homeowners can see if they qualify for using the CRA’s self-assessment tool. 

Residential property flipping rule

First introduced in the federal government’s 2022 budget, this is a new deeming rule that requires taxpayers to own a property for at least 365 consecutive days in order to claim the principal residence exemption or 50% capital gains inclusion. Properties that are sold earlier than this timeframe will now be considered “flipped” properties – defined as buying and selling a residential property within a short time period to realize a profit – and their proceeds will now be taxed fully as business income. This also applies to rental properties, as well as “assignment sales”, where the rights to purchase a property change ownership before its official sale closing. However, there are some exemptions – homeowners can visit the CRA’s website to learn more.

Accommodation sharing

Accommodation sharing refers to renting out part or all of a residential property – including both primary and secondary residences – usually for a short term of time, and often through a third-party website such as AirBnB. Any income obtained from accommodation sharing must be reported to the CRA, and is subject to income tax. The CRA will usually consider the income to be from a rental property if basics such as heat, laundry, utilities and parking, are provided. However, if the property rental includes services such as cleaning, meals, and security, the CRA may instead define the income to be self-employed business income.

Accommodation sharing homeowners may also be subjected to taxation at the provincial or municipal level, for example, Toronto’s Municipal Accommodation Tax (MAT), which charges 6% of the listing price and cleaning fee.

Property owners can learn more on the federal government's website.

More information for first-time home buyers

This section will help you with some other general tips on how to buy a house as a first-time home buyer in Canada. For instance, if you're curious about how the new 30-year amortization option could impact your monthly mortgage payments? Watch our video for a detailed breakdown and practical insights.

What are the criteria for first-time home buyers in Canada?

To qualify for the various federal and provincial first-time home buyer tax credits and programs in Canada, there are a number of criteria that need to be met. Each program has a different set of criteria. However, there are a number of criteria pertaining to age, citizenship status, recency of home purchase, and home occupancy that are generally similar among them. For federal programs such as the First Time Home Buyers’ Tax Credit and the RRSP Home Buyers’ Plan, the following apply:

• You must be at least 18 years of age
• You must be a Canadian citizen or permanent resident
• The property/home you bought must be in Canada
• You cannot have owned a home within the last four years
• If you're buying with a spouse (or common law partner) who is not a first-time homebuyer, you cannot have lived in a house that they owned within the last 4 years
• You must have documentation verifying that you have purchased a home
• You must intend to live in the home as your primary residence within one year of purchase

Make sure to read the information on our site about the various federal and provincial first-time home buyer programs and incentives to get more specific eligibility information.

Down payment

For first-time home buyers, the down payment is probably the main thing you'll need to think about for your first purchase. In Canada, you must put down a minimum of 5% as a down payment for homes less than $500,000. If the purchase price is between $500,000 and $1.5 million (as of December 15, 2024), you'll need 10% on the amount between $500,000 and $1.5 million. For houses over $1.5 million, the minimum down payment is 20%.

Mortgage default insurance

Mortgage default insurance, also sometimes known as CMHC Insurance (although CMHC is just one of three mortgage default insurance providers in Canada), may seem like a strange concept, but it’s relatively straightforward. If you have a down payment of less than 20% of the home’s value, you must purchase mortgage default insurance. But this doesn’t act as insurance for you. Rather, it protects your lender in case you don’t make your mortgage payments. It’s designed to make financial institutions comfortable with lending to individuals who don’t have a large down payment.

Mortgage insurance is calculated as a percentage of the value of the mortgage amount, and , as of December 15, 2024, also depends on the length of your amortization. 

For those with an amortization of 25 years, If your down payment is between 5% to 9.99%, the mortgage insurance will represent 4% of the mortgage amount. For down payments of 10% to 14.99%, the mortgage insurance will cost 3.10%. And for down payments of 15% to 19.99%, mortgage insurance costs 2.8%.

For those who extend their amortization length to 30 years (an option available to all first-time home buyers as of December 15, 2024), a 20-basis-point (0.2%) is added to each tier.

Source: Canada Mortgage and Housing Corporation

Mortgage default insurance isn’t available for homes with a purchase price of more than $1.5 million. As a result, anyone buying a house in excess of this amount must have at least 20% as a down payment on their purchase.

Provincial first-time home buyer programs

Most first-time home buyer programs are found at the federal level, but there are several provinces that have their own programs as well (along with the land transfer tax rebates we mentioned earlier). Quebec, for example, offers an additional tax credit (max $750) to first-time homebuyers. 

To properly understand what you'll be eligible for in your province, it's worth speaking to a mortgage broker near you - consultations are free. Below are all of our provincial first-time home buyer pages, where you can find detailed, province-specific information. 

• First-Time Home Buyer Alberta 
• First-Time Home Buyer British Columbia
• First-Time Home Buyer Manitoba
• First-Time Home Buyer New Brunswick
• First-Time Home Buyer Newfoundland and Labrador
• First-Time Home Buyer Nova Scotia
• First-Time Home Buyer Ontario
• First-Time Home Buyer Prince Edward Island
• First-Time Home Buyer Quebec
• First-Time Home Buyer Saskatchewan

First-time home buyer education topics

• First Home Savings Account
• First Time Home Buyers' Tax Credit
• First-Time Home Buyer Incentive
• RRSP Home Buyers Plan
• Land Transfer Tax Rebate
• First-Time Homebuyer Grants
• First-Time Homebuyer Loans

Also read:

• 30-year amortizations for all first-time home buyers
• The 2024 First Home Savings Account: Everything you need to know
• Where to get the FHSA
• How to save for a house in Canada
• 7 Tips to get approved for a mortgage
• The Bank of Mom and Dad and your down payment