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First-time home buyer programs

Region: Ontario Answer # 402

The Government of Canada has four programs to assist first-time home buyers:

  1. First-Time Home Buyers’ Tax Credit (HBTC)
  2. Home Buyers’ Plan (HBP)
  3. First-Time Home Buyer Incentive
  4. Tax-Free First Home Savings Account (FHSA)

In addition to these federal programs, most provincial governments offer land transfer tax refunds to first-time home buyers. As well, mortgage loan insurance is available from Canada Mortgage and Housing Corporation (CMHC).

Real estate matters involve large sums of money and complicated legal issues. To get help, call a lawyer now.

Who is considered a First-Time Home Buyer?

You are considered a first-time home buyer if:

  • In the four year period (the four years prior to a home purchase), you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.
  • In the case of the Home Buyers’ Plan, the four year period begins on January 1 of the fourth year before the year you withdraw funds from your RRSP, and ends 31 days before the date you withdraw the funds. For example, if you are withdrawing the funds on July 31, 2022, the period is from January 1, 2018 to June 30, 2022.


  • If you are a person with a disability or you are helping a related person with a disability to buy or build a home, qualifying as a first-time home buyer may not be required.
  • If you have recently experienced the breakdown of a marriage or common-law partnership, you, generally will not be prevented from participating in the program even if you do not meet the first-time home buyer requirements, provided that you live separate and apart from your spouse or common-law partner for a period of at least 90 days as a result of a breakdown in your marriage or common-law partnership.

Visit canada.ca for the full definition of a first-time home buyer and the four year period.

1.  First-Time Home Buyers’ Tax Credit (HBTC)

The First-Time Home Buyers’ Tax Credit (HBTC) – known as the Home buyers’ amount on your income tax return- exists to assist first-time home buyers with the costs associated with the purchase of a home, such as legal fees, disbursements and land transfer tax.

The HBTC is a $10,000 non-refundable income tax credit amount on a qualifying home purchased in 2022. For an eligible individual, the maximum credit amount is $1,500. For homes purchased in 2021 or earlier, you can claim up to $5,000 with a maximum credit amount of $750.

Visit canada. ca for more information, including eligibility requirements and what is considered a qualifying home.

2.  Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows first-time home buyers to withdraw up to $35,000 from their RRSP on a tax deferred basis to use toward the purchase of a home in Canada.

Details of the plan include:

  • If both you and your spouse or common-law partner qualify under the HBP, you can each withdraw up to $35,000 from your RRSPs for a total of $70,000.
  • Before you are entitled to withdraw the money, you must have entered into a written agreement to purchase or build a home that you intend to occupy as your principal residence.
  • Money can be withdrawn from your RRSP provided it has been in your RRSP for at least 90 days.
  • Money withdrawn under this federal program must be paid back to your RRSP within 15 years. Repayment to your RRSP can be made in a lump-sum payment or annual payments over the 15 years. If you do not pay the full amount back to your RRSP within 15 years, the amount outstanding will be subject to tax when you file your income tax return in the following year.

3.  First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a program in which the Government of Canada will provide 5% or 10% of the down payment of your home and then you repay the Government either 5% or 10% of the property’s market value at the time of repayment, up to a maximum repayment amount.

Type of Property

  • Purchasers of existing homes are eligible for the incentive amount of 5%.
  • Purchasers of new construction homes are eligible for the incentive amount of 5% or 10%.
  • Purchasers of new and existing mobile/manufactured homes are eligible for the incentive amount of 5%.

One eligibility requirement is that buyers must earn $120,000 or less, although buyers in Toronto, Vancouver, and Victoria may qualify with an increased annual income of $150,000.

Home buyers must replay the incentive at the end of the 25-year term or when the property is sold, whichever is earlier. For more information, visit the Government of Canada, First-Time Home Buyer Incentive.

4. New Tax-Free First Home Savings Account (FHSA)

On December 15, 2022, the federal government’s Bill C-32 (Fall Economic Statement Implementation Act, 2022) received Royal Assent. The new legislation amends the Income Tax Act to include the new Tax-Free First Home Savings Account (FHSA). The FHSA allows prospective first-time home buyers to save up to $40,000 (over a lifetime, and a maximum annual contribution of $8,000 over five years) tax-free toward their first home. The FHSA is effective April 1, 2023. Contact your financial institution for details on the new account, or visit the Government of Canada website on the FHSA.

Mortgage loan insurance

In Canada, home buyers must purchase mortgage loan insurance, also known as mortgage default insurance, when the down payment on their new home is between 5% (the minimum amount it can be) and 20% of the purchase price.

Available from the Canada Mortgage and Housing Corporation (CMHC), mortgage loan insurance helps protect the lender against mortgage default, and enables consumers to purchase homes with a minimum down payment of:

  • 5% for homes costing less than $500,000
  • 10% on the portion of any mortgage it insures $500,000 and over

For example, to buy a home for $750,000, the home buyer would need a minimum down payment of $50,000, which is the total of 5% of $500,000 ($25,000), plus 10% of the remaining $250,000 ($25,000). Homes purchased for more than $1 million do not qualify for mortgage loan insurance, as a 20% down payment is required to buy these homes.

To obtain mortgage loan insurance, lenders pay an insurance premium, the cost of which is normally passed on to the home buyer. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump-sum or it can be added to the mortgage and included in the monthly payments. For more information about mortgage loan insurance, refer to topic #409 Mortgage loan insurance.


Land transfer tax refunds

First-time home buyers may also be eligible for a land transfer tax refund of up-to $4,000, depending on when the home was purchased, and if it is a resale or newly constructed home. To determine if you qualify for a rebate, you should consult a lawyer. More information can also be found on provincial rebates in topic #396 Land Transfer Tax, or from the Ontario Ministry of Finance.


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Get legal help

Real estate matters involve large sums of money and complicated legal issues. To get help, call a lawyer now.

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