First-Time Homebuyer Programs
Jamie David, Director of Marketing & Mortgages
Every homeowner was once a first-time homebuyer. Unfortunately, with housing markets heating up across Canada, it's never been tougher to get onto the property ladder for the first time. Luckily, there are a range of first-time homebuyer programs in Canada that aim to make it easier to buy your first home.
As a first-time homebuyer, it's a good idea to be familiar with any programs that apply to your situation, be they rebates, tax benefits, ways to fund your down payment or the minimum you must put down for your home purchase. Read on for information on these programs, as well as some more general information about the homebuying process.
Programs for First-Time Homebuyers in Canada
Here are some of the main first-time homebuyer incentives and rebates you should be aware of.
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. With this plan, you may borrow up to $35,000 tax-free from your RRSP to fund your down payment. Just keep in mind that the money must be in your RRSP at least 90 days before the purchase of your house.
The RRSP Home Buyers' Plan is advantageous for Canadians because, generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt, but you must start repaying the amount borrowed from the RRSP two years after you buy. You will have a 15-year period to complete the repayment process.
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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 homebuyers, 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. Homebuyers 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.
First Time Home Buyers' Tax Credit
The First Time Home Buyers' Tax Credit, introduced in the 2009 federal budget, allows first-time homebuyers 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/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.
First-Time Homebuyer Incentive
The First-Time Homebuyer Incentive was launched by the Canada Mortgage and Housing Corporation (CMHC) back in September 2019. It's an interest-free loan targeting first-time homebuyers that contributes up to 10% of the total cost of your home (5% for an existing home, and 10% for a newly-built home), which helps to reduce your regular mortgage payments significantly over time. You have to repay the loan within 25 years or when you sell the home, whichever comes first. One of the major drawbacks of this particular incentive is that the eligibility guidelines are quite strict, making it inaccessible for many first-time homebuyers. You can find out detailed information about the First-Time Homebuyer Incentive on our blog, including a thorough examination of eligibility criteria.
First Home Savings Account
This new savings vehicle was announced in the 2022 federal budget, and is expected to be available starting in early 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. You can learn more about the First Home Savings Account on our blog.
Provincial first-time homebuyer programs
Most first-time homebuyer 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 homebuyer pages, where you can find detailed, province-specific information.
- First-Time Homebuyer Alberta
- First-Time Homebuyer British Columbia
- First-Time Homebuyer Manitoba
- First-Time Homebuyer New Brunswick
- First-Time Homebuyer Newfoundland and Labrador
- First-Time Homebuyer Nova Scotia
- First-Time Homebuyer Ontario
- First-Time Homebuyer Prince Edward Island
- First-Time Homebuyer Quebec
- First-Time Homebuyer Saskatchewan