First-time home buyers in Ontario have access to several federal and provincial programs designed to lower the upfront costs of purchasing a home. These include tax credits, savings accounts, and rebates that can provide thousands of dollars in financial relief. Understanding the eligibility rules and application steps for these incentives is crucial for a successful home purchase. This guide outlines the key programs, their financial amounts, and the common steps involved for Ontario residents entering the housing market.
Federal Financial Programs for First-Time Buyers
The Government of Canada administers several core programs to assist first-time home buyers across the country, including those in Ontario. The Home Buyers' Plan allows individuals to withdraw up to $60,000 from their Registered Retirement Savings Plan tax-free to use for a down payment. This withdrawal must be repaid over 15 years, with repayments typically starting the second year after the withdrawal. For withdrawals made between January 1, 2022, and December 31, 2025, a three-year grace period applies, meaning repayments begin in the fifth year. To qualify, you must be considered a first-time home buyer, meaning you have not owned a home in the current calendar year or the four previous years, and the property must be your principal residence.
The First-Time Home Buyers' Tax Credit is a non-refundable federal tax credit that provides up to $1,500 in tax relief. This credit is calculated by applying the lowest federal tax rate of 15 percent to a claim amount of up to $10,000. Buyers claim this credit on Line 31270 of their income tax return for the year they purchased the home. If you are buying a home with another eligible person, such as a spouse, you can split the credit, but the combined total cannot exceed $10,000. This credit is designed to help offset some of the upfront costs like legal fees and home inspections.
Introduced in April 2023, the First Home Savings Account is a dedicated savings vehicle that combines features of an RRSP and a TFSA. Contributions of up to $8,000 annually, with a $40,000 lifetime maximum, are tax-deductible. Withdrawals used for a qualifying first home purchase are tax-free, and there is no requirement to repay the funds. The account can remain open for up to 15 years or until the end of the year you turn 71, whichever comes first. If you do not buy a home, the funds can be transferred to your RRSP or RRIF without tax penalties.
As of December 2024, first-time home buyers in Canada can access 30-year amortization periods on insured mortgages, extending from the standard 25-year maximum. This applies to buyers with a down payment of less than 20 percent who require mortgage insurance but otherwise meet minimum down payment requirements. The extended amortization reduces monthly mortgage payments, which can improve affordability and help more Canadians qualify for financing. This policy change was announced by the Department of Finance Canada as part of broader housing affordability measures.
Ontario-Specific Rebates and Incentives
Ontario offers its own rebate programs to reduce costs for first-time home buyers within the province. The Ontario Land Transfer Tax Rebate provides a rebate of up to $4,000 for eligible first-time buyers. To qualify, buyers must be at least 18 years old, must occupy the home as their principal residence within nine months of purchase, and must not have previously owned a home anywhere in the world. This rebate directly reduces the provincial land transfer tax payable at closing, which is a significant upfront cost when purchasing property. For purchases of newly constructed homes, the Ontario first-time home buyers' rebate provides a rebate of up to $80,000 of the provincial part of the Harmonized Sales Tax, which works alongside the federal GST/HST New Housing Rebate program.
The Ontario government has also extended the GST/HST exemption to the first $1 million on the purchase of a new or substantially renovated home for first-time buyers. This measure aims to lower the tax burden on new construction and encourage the development of more housing supply. The federal government has proposed new GST relief specifically for first-time home buyers purchasing newly constructed homes under Bill C-4. As of early 2026, this bill has passed the Senate and is awaiting final approval. If implemented, eligible buyers could receive a full rebate of the 5 percent Goods and Services Tax on new homes priced up to $1 million, with the rebate gradually reducing for homes priced between $1 million and $1.5 million, potentially saving up to $50,000.
Key Eligibility Criteria for Programs
Eligibility for first-time home buyer programs hinges on specific definitions and conditions that vary by initiative. For most federal programs, including the Home Buyers' Plan and the First Home Savings Account, you must be a first-time home buyer. This generally means you have not owned a home, or have not occupied a home you owned, in the current calendar year or the four preceding calendar years. Some programs, like the Ontario Land Transfer Tax Rebate, have stricter criteria, specifying that you must not have previously owned a home anywhere in the world. The property itself must also meet certain conditions to qualify for these incentives, as it must be a qualifying home located in Canada that you intend to occupy as your principal residence.
For the Home Buyers' Plan, you must intend to occupy the home within one year of purchase, and for rebates on new homes, the property must be newly built or substantially renovated. The purchase must also be for your own use and not for rental or investment purposes at the time of acquisition, though rules may allow for future changes in use. Personal eligibility factors include age, residency, and financial status. To open a First Home Savings Account, you must be at least 18 years old and a Canadian resident for tax purposes. For the Ontario Land Transfer Tax Rebate, you must be at least 18 years old at the time of purchase. Your financial situation will determine your access to other supports, such as the extended 30-year amortization, which is only available for insured mortgages where the down payment is less than 20 percent of the purchase price.
Step-by-Step Guide to Accessing Benefits
The process of accessing first-time home buyer benefits involves planning, application, and follow-through over several years. The first step is to explore your housing options and review your finances thoroughly. This includes estimating all associated costs like the down payment, closing costs, property taxes, home insurance, and maintenance. You should then calculate what you can afford and get pre-approved for a mortgage, which helps you understand your borrowing limit and makes you a more serious buyer in the eyes of sellers. Concurrently, you should investigate and apply for the specific savings programs for which you are eligible.
To use the Home Buyers' Plan, you must have sufficient funds in your RRSP and submit a withdrawal request to your financial institution using CRA Form T1036. To open a First Home Savings Account, you need to confirm your eligibility with a participating financial institution and provide government-issued ID and your Social Insurance Number. Contributions to the FHSA can be made at any time to build your down payment savings with tax advantages. During the purchase process, you must ensure your agreement of purchase and sale meets program requirements, as for the HBP and FHSA you will need a signed agreement to purchase a qualifying home to make a withdrawal.
After your purchase closes, you must claim the tax credits and rebates. The First-Time Home Buyers' Tax Credit is claimed on your annual income tax return for the year of purchase. Land transfer tax rebates in Ontario are typically processed by your lawyer or notary at the time of closing, reducing the amount you need to pay. The final crucial step is managing repayments for programs like the Home Buyers' Plan. You must begin repaying the withdrawn amount to your RRSP over 15 years. The repayment schedule starts in the second year after your withdrawal, unless you withdrew funds between 2022 and 2025, in which case you have a three-year grace period and start repaying in year five. If you miss a required annual repayment, that amount is added to your taxable income for that year, so keeping track of these obligations is essential to avoid unexpected tax bills.
Common Financial Mistakes to Avoid
One frequent mistake is underestimating the full suite of costs associated with buying a home. Beyond the purchase price and down payment, buyers must budget for closing costs, which include legal fees, land transfer taxes, and title insurance. Ongoing expenses like property taxes, utilities, home insurance, and maintenance can add significantly to monthly housing costs. First-time buyers should also inquire about any utility hook-up or transfer fees for services like hydro, water, and internet to avoid surprises after moving in. Another common error is not understanding the long-term implications of using retirement savings for a home purchase.
While the Home Buyers' Plan provides immediate funds, it reduces your retirement savings and requires repayment over 15 years. Missing repayments converts the amount into taxable income, creating a financial penalty. Similarly, while the First Home Savings Account does not require repayment, it has a lifetime contribution limit of $40,000, so using it requires strategic planning alongside other savings goals. Failing to get professional advice can lead to missed opportunities or compliance issues, as many programs have detailed eligibility rules, such as the definition of a first-time buyer or the requirement to occupy the home as a principal residence. A knowledgeable mortgage broker or financial advisor can help you understand which rebates and credits you qualify for and ensure you apply correctly, and they can also assist with mortgage pre-approval, which clarifies your budget and strengthens your position when making an offer on a home.
Comparison of Key Program Amounts and Limits
The various first-time home buyer programs offer different financial benefits, each with its own limits and conditions. The following table compares the key amounts for the major federal and Ontario-specific programs available to first-time buyers. These figures are based on program details verified against federal and provincial government sources as of February 2026. Understanding these amounts and how they interact is a key part of financial planning for a first home, as they are designed to work together but their combined benefits depend on individual circumstances like the purchase price, the type of home, and the buyer's income.
| Program | Maximum Financial Benefit | Key Limit or Condition |
|---|---|---|
| Home Buyers' Plan (HBP) | $60,000 withdrawal | Must repay over 15 years |
| First-Time Home Buyers' Tax Credit (HBTC) | $1,500 tax relief | Non-refundable. Based on $10,000 claim |
| First Home Savings Account (FHSA) | $40,000 lifetime contributions | Tax-deductible contributions, tax-free withdrawals |
| Ontario Land Transfer Tax Rebate | $4,000 rebate | For first-time buyers on provincial tax |
| Proposed GST Rebate (Bill C-4) | Up to $50,000 | On new homes up to $1 million (proposed) |
| Extended Mortgage Amortization | 30-year term | For insured mortgages with less than 20% down |
A buyer using both the First Home Savings Account (FHSA) and the RRSP Home Buyers' Plan (HBP) could access funds for a down payment. The FHSA has a lifetime contribution limit of $40,000 per person. The HBP allows a withdrawal of up to $60,000 from an RRSP. The Ontario land transfer tax rebate for first-time buyers provides a rebate of up to $4,000. These programs can reduce financial barriers to homeownership.
Frequently asked questions
What is the maximum amount I can withdraw from my RRSP for a home under the Home Buyers' Plan?
You can withdraw up to $60,000 from your Registered Retirement Savings Plan tax-free under the Home Buyers' Plan to use for a down payment on your first home. This amount is per person, so a couple could potentially withdraw a combined $120,000. The funds must be repaid to your RRSP over a 15-year period, starting the second year after your withdrawal. If you made your first withdrawal between January 1, 2022, and December 31, 2025, you receive a three-year grace period and begin repayments in the fifth year.
How much is the First-Time Home Buyers' Tax Credit in Ontario?
The First-Time Home Buyers' Tax Credit provides a non-refundable federal tax credit of up to $1,500. This is calculated by applying the lowest federal income tax rate of 15 percent to a maximum claim amount of $10,000. You claim this credit on your income tax return for the year you bought the home. If you are purchasing with another eligible person, you can split the credit, but the total combined claim cannot exceed $10,000.
Do I have to repay money taken from a First Home Savings Account?
No, you do not have to repay funds withdrawn from a First Home Savings Account for a qualifying first home purchase. Unlike the Home Buyers' Plan, the FHSA offers tax-deductible contributions and tax-free withdrawals without a repayment requirement. The account has a lifetime contribution limit of $40,000 per person. If you do not use the funds to buy a home, you can transfer them to your RRSP or RRIF without tax penalties.
Are there any programs for buying a newly built home as a first-time buyer?
Yes, there are programs for newly built homes. The Ontario first-time home buyers' rebate provides a rebate of up to $80,000 of the provincial part of the HST on new homes. The federal government has also proposed a new GST rebate under Bill C-4, which would offer a full rebate of the 5 percent GST on new homes priced up to $1 million for first-time buyers, with a phased reduction up to $1.5 million. This proposed measure could provide up to $50,000 in tax relief.
What is the Ontario land transfer tax rebate for first-time buyers?
The Ontario land transfer tax rebate for first-time buyers provides a rebate of up to $4,000 on the provincial land transfer tax. This rebate is applied at the time of closing to reduce upfront costs. To qualify, buyers must be at least 18 years old and must not have previously owned a home anywhere in the world. This program is one of several provincial incentives designed to assist first-time home buyers with the significant closing costs associated with purchasing a property. It is important to confirm eligibility with a mortgage professional or legal advisor, as specific rules apply for this program.
What is the minimum down payment required for a first home in Ontario?
The minimum down payment in Ontario is calculated based on the purchase price of the home. For the first $500,000 of the purchase price, the minimum down payment is 5 percent. For any portion of the purchase price above $500,000, the minimum down payment is 10 percent. This structure is a key financial requirement that first-time buyers must plan for when saving for their home purchase.
Sources and further reading
- First-Time Home Buyer Programs in Canada in 2026 ratehub.ca
- Homebuying Step by Step: Guide, Worksheet and Checklist cmhc-schl.gc.ca
- First Time Home Buyer in Ontario, WFCU mywfcu.ca
- First-Time Homebuyer Incentives in Canada blog.remax.ca
- Taking advantage of first-time home buyer tax benefits rbcroyalbank.com
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.