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2023 Canada First-Time Home Buyer's Guide - Programs & Incentives

Complete guide for first-time home buyers in Canada

Jamie David

Being a first-time home buyer can be both exciting and stressful – but it also tends to be very expensive, especially if you don’t have any pre-existing assets to help you get a mortgage. 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 incentives and programs to ease the financial burden of breaking into the housing market.

This page includes all of the resources you'll need to get started on your home buying journey. Find out more about the first-time home buyer incentive, RRSP plan, tax credits and rebates, grants, and programs available in Canada in 2023, including the newest federal program, the First Home Savings Account. There are also some helpful links to our provincial first-time home buyer pages, where you can learn more about the various incentives and programs available at the provincial level.

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

WATCH: How much mortgage can you afford in 2023?

First-time home buyers: Frequently asked questions

How do I qualify as a first-time home buyer in Canada?

How much do I need for a down payment as a first-time home buyer?

What is the Canadian government incentive for first-time home buyers?

What is the maximum RRSP contribution amount for a first-time home buyer?

What is the FHSA limit in Canada?

What bank has FHSA in Canada?

Programs for first-time home buyers in Canada

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

WATCH: First-Time Home Buyer Programs in Canada: What you need to know

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).

Though the First Home Savings Account came into effect as of April 1, 2023, it is not yet widely available from all of Canada’s 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 a first-time home buyer, the HBP lets you withdraw up to $35,000 for your down payment, which must be repaid into your RRSP within 15 years. There are some additional conditions to be aware of, and there's a risk you may cannibalize your long-term savings by using funds from your RRSP today – be sure to do your research before using this program. As well, 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, in annual instalments over the 15-year timeline. Failure to make an HBP repayment will result in that portion of the funds being earmarked as taxable income for that tax year.

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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 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/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.

First-Time Home Buyer Incentive 

Launched in September 2019 by the Canada Mortgage and Housing Corporation (CMHC), the First-Time Home Buyer Incentive (FTHBI) is an interest-free loan for eligible first-time home buyers to help reduce their regular mortgage payments. This incentive contributes up to 10% of the total cost of your home (5% for an existing home, and 10% for a newly-built home), which you’ll need to pay back within 25 years or when you sell the home, whichever comes first. The FTHBI is also a type of equity-share mortgage, meaning the government retains a share of the home’s equity, sharing in any increase or decline in its value over time.

By reducing the overall mortgage amount through a larger down payment, the FTHBI can help first-time home buyers save a significant amount of money over the course of their mortgage. However, the program has been less popular than anticipated due to its very stringent qualification guidelines that can make it difficult for people to access.

You can read in detail about the First-Time Home Buyer Incentive on our blog, including a thorough examination of eligibility criteria.

More information for first-time home buyers

Below are some other general tips on how to buy a house as a first-time home buyer in Canada. Check the links in each section for more information on any of these topics.

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

The First-Time Home Buyer Incentive program in particular has more restrictive criteria pertaining to your mortgage loan amount versus your household income.

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 million, you'll need 10% on the amount between $500,000 and $1 million. For houses over $1 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. If your down payment is between 5% to 9.99%, the mortgage insurance will represent 3.6% of the mortgage amount. For down payments of 10% to 14.99%, the mortgage insurance will cost 2.40%. And for down payments of 15% to 19.99%, mortgage insurance costs 1.80%.

Mortgage default insurance isn’t available for homes with a purchase price of more than $1 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 education topics

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