First-Time Home Buyer Incentives in Ontario

Ontario first-time buyers can use several programs at once. The main ones are the First Home Savings Account, the Home Buyers' Plan, the Ontario land transfer tax rebate, the federal Home Buyers' Amount tax credit and, for new builds, a GST rebate. Stacking them can cut your tax bill and help you save a larger down payment. The old federal shared-equity loan is closed to new applicants.

These rules are set by the federal and provincial governments. They can change. Use this guide to learn how each program works. Then confirm the current details with your mortgage broker, accountant or lawyer before you sign an offer.

A Quick Look at the Programs

• First Home Savings Account (FHSA): A savings account with a tax break going in and tax-free withdrawals for a first home.
• Home Buyers' Plan (HBP): A way to borrow from your own RRSP for a down payment.
• GST rebate on new builds: A tax rebate for first-time buyers of newly built homes, up to a price limit.
• Ontario land transfer tax rebate: A set amount back on closing day.
• Home Buyers' Amount: A federal tax credit claimed on your tax return.

The sections below explain each one.

The Retired Federal Shared-Equity Program

You may still see old articles about the federal First-Time Home Buyer Incentive. It gave buyers an interest-free loan toward the price of a home. It was repaid when the home was sold or after a set number of years.

The program had tight income limits. In high-price areas like the GTA, it was hard to use. Few people ended up qualifying. The federal government closed it to new applications in March 2024. If you find a page that offers it, the page is out of date.

First Home Savings Account (FHSA)

The FHSA is a registered account built for first-time buyers. It mixes features of an RRSP and a TFSA. A TFSA is a tax-free savings account. An RRSP is a retirement savings account.

• What you put in is tax-deductible. It lowers your taxable income.
• Growth inside the account is tax-free.
• Withdrawals for a qualifying first home are tax-free.
• You do not have to pay the money back into the account.

The government sets a yearly limit on what you can add. It also sets a lifetime limit. If you do not use all of your yearly room, you can carry some of it forward to the next year. Check the current limits with your bank or accountant.

Couples can each open an FHSA. Then both can take tax-free withdrawals for the same home. That roughly doubles the boost.

Because the FHSA does not need to be repaid, it is a great first step. Open one as early as you can, even if you add a small amount. The sooner you open it, the sooner your room starts building.

Home Buyers' Plan (HBP)

The HBP lets you take money out of your RRSP tax-free, up to a set limit. You can use it for a down payment or closing costs. A couple can each take out that amount for one home. That can add up to a large down payment.

It is a loan from yourself, not a gift. You must pay the money back into your RRSP over fifteen years. Repayment starts in the second year after the year you took the money out. Each year, the tax agency tells you the minimum payment.

If you miss a payment, the missed amount counts as income that year. You will owe tax on it.

The HBP and the FHSA work together. You can draw from both for the same home. That gives you a bigger down payment and a smaller mortgage.

A bigger down payment can also help with the cost of condo living. Our guide on how to evaluate condo maintenance fees shows how to plan your full monthly budget.

The GST Rebate for New Builds

If you buy a newly built home or condo as your main home, a federal rebate may apply. It can refund the full federal GST, or the federal share of HST, on homes up to a set price. Above that price, the rebate shrinks on a sliding scale. At a higher price limit, it ends.

The rebate is a once-in-a-lifetime benefit. It applies to agreements signed after a set start date, and it runs for a limited number of years. Check the current dates and price limits before you sign.

This can save a lot of money. Many new condos and townhomes in Halton and Peel fall in the eligible price range. Browse Mississauga Condos for Sale to see the types of units available.

Remember that new builds also have other closing costs, such as development levies. Our Closing Costs in Ontario guide lists them.

Ontario Land Transfer Tax Rebate

Every buyer in Ontario pays provincial land transfer tax at closing. The tax is based on the price. First-time buyers get a rebate of a set amount. On lower-priced homes, it can wipe out the whole tax. On higher-priced homes, it cuts the bill by the full rebate amount.

To qualify, you must meet these rules.

• You are at least 18.
• You are a Canadian citizen or permanent resident.
• You have never owned a home anywhere in the world.
• If you have a spouse, they have not owned a home while married to you.

The process is simple. Your lawyer claims the rebate on closing day when the transfer is registered. You do not pay and wait for a refund.

Oakville, Burlington, Milton and Mississauga only charge the provincial tax. Toronto adds a city tax on top. That is one reason closing costs can be lower in the West GTA. See our full closing costs guide for more.