Programs Available to First-Time Buyers in Canada
Canadian first-time home buyers have access to several federal and provincial programs that can significantly reduce the upfront cost of purchasing a home. At the federal level, the main programs are the First Home Savings Account (FHSA), the RRSP Home Buyers Plan (HBP), the First-Time Home Buyers Tax Credit, and the GST/HST New Housing Rebate for new construction. Most provinces also offer their own first-time buyer land transfer tax rebates, which can save thousands in upfront closing costs.
The First-Time Home Buyers Tax Credit
The First-Time Home Buyers Tax Credit (HBTC) provides a 15% non-refundable federal tax credit on $10,000 — worth up to $1,500 in tax savings for eligible buyers. You qualify if you (or your spouse) have not owned a home in any of the preceding 4 calendar years. The credit can be split between two qualifying buyers (such as spouses who are both first-time buyers) as long as the total claim does not exceed $10,000. Claim it on line 31270 of your T1 return in the year you purchase the home.
Provincial Land Transfer Tax Rebates
Ontario first-time buyers receive a rebate of up to $4,000 on provincial land transfer tax, and Toronto residents receive an additional rebate of up to $4,475 on the municipal land transfer tax. British Columbia offers a full exemption on the Property Transfer Tax for homes under $500,000 for first-time buyers. Many other provinces offer similar rebates. These rebates can represent a significant portion of closing costs and are automatically applied through your lawyer or notary at closing — no separate application is required.
Frequently Asked Questions
Can both spouses use the First-Time Home Buyers definition in Canada?
Yes — both spouses or common-law partners can qualify as first-time buyers independently, as long as neither has owned a home they lived in during the preceding 4 years. If one spouse previously owned a home within the last 4 years, neither spouse qualifies for programs like the HBP and FHSA for a joint purchase — the disqualification of one partner affects the household for these programs. However, for the First-Time Home Buyers Tax Credit, if one partner qualifies and the other does not, the qualifying partner can still claim the credit.
What is the maximum down payment assistance available to a first-time buyer couple in Canada?
A couple where both partners are first-time buyers can potentially access: $80,000 combined from two FHSAs ($40,000 each), $120,000 combined from two RRSP Home Buyers Plans ($60,000 each), $1,500 from the First-Time Home Buyers Tax Credit, and provincial land transfer tax rebates of up to $8,475 in Toronto or similar amounts in other provinces. The combined registered account access alone — $200,000 — can make a significant dent in the down payment for homes in most Canadian markets.
How does the GST/HST New Housing Rebate work for first-time buyers?
If you purchase a newly constructed home or substantially renovate an existing one, you may qualify for a partial rebate of the GST (or the federal part of HST) paid on the purchase. The rebate is 36% of GST paid on homes under $350,000, phasing out completely at $450,000. In provinces with HST, the provincial portion may also be partly rebated. The rebate is typically assigned to the builder at closing, reducing your purchase price, rather than being claimed separately. Your lawyer will handle this as part of the closing process for new construction purchases.
What closing costs should a first-time buyer budget for in Canada?
Beyond the down payment, first-time buyers should budget 1.5–4% of the purchase price for closing costs: land transfer tax (variable by province, reduced by first-time buyer rebates), legal fees ($1,000–$2,000), title insurance ($150–$400), home inspection ($400–$600), property tax adjustment (your share of property taxes from closing date to year-end), and moving costs. CMHC insurance premiums are typically added to the mortgage and not paid out of pocket. In Ontario and BC, total closing costs excluding the down payment are typically $5,000–$15,000 for a $600,000–$800,000 home.
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