First-Time Home Buyer Programs and Incentives in Ontario

Buying a first home involves several programs run by different governments, and they do not all use the same definition of a first-time buyer. Knowing which ones apply to you can affect how much you save and when you claim.

This article gives an overview of the main federal and Ontario programs, who qualifies, and where the exceptions are. Confirm the details for your situation with a lawyer or accountant.

The federal savings tools

The First Home Savings Account (FHSA) is open to residents of Canada who are at least 18 (19 where that is the age of majority) and 71 or younger on December 31 of the year they open it. You must be a first-time home buyer, meaning you have not lived in a qualifying home you owned or jointly owned as your principal residence in the current calendar year or the previous 4 calendar years. If you have a spouse or common-law partner, to open an FHSA you must also not have lived, in the current calendar year or the previous 4 calendar years, in a home your spouse or partner owned or jointly owned as your principal residence. This spousal condition does not apply if you have no spouse or partner. Participation room is $8,000 in the year you open your first FHSA, with a lifetime limit of $40,000.

The RRSP Home Buyers' Plan (HBP) lets you withdraw up to $60,000, which must be repaid to your RRSP over up to 15 years. The two can be used together for the same qualifying home if you meet all conditions at the time of each withdrawal.

Ontario's land transfer tax refund

Ontario's first-time homebuyer refund is up to $4,000. The buyer must be at least 18, must never have owned an eligible home anywhere in the world, and must occupy the home as their principal residence within nine months. The refund must be claimed within 18 months after registration.

Two exceptions matter. For agreements signed after November 14, 2016, the refund is limited to Canadian citizens and permanent residents, but a buyer who is neither at closing has 18 months after registration to become one and then apply. And if the buyer's spouse owned an eligible home while married to or in a spousal relationship with the buyer, neither spouse qualifies.

Programs at a glance

Some buyers may qualify for further credits or municipal programs. Those depend on the facts and the municipality, so confirm them with an accountant or lawyer.

Down payment and mortgage insurance rules

Federal guidance sets the minimum down payment at 5% for homes of $500,000 or less, 5% of the first $500,000 plus 10% of the portion above $500,000 for homes from $500,000 to $1.5 million, and 20% for homes of $1.5 million or more. Below 20% down, you will typically need mortgage loan insurance.

For CMHC insurance, the purchase price must be below $1,500,000, and a non-repayable financial gift from a relative is a traditional down payment source. Permanent residents can use all CMHC homeowner products with no minimum period of residency, while non-permanent residents need legal authorization to work in Canada.

What to do next

• Check whether you or your spouse have owned a home, since the tests differ by program.
• Confirm your citizenship or residency status for the land transfer tax refund.
• Note the 18-month refund deadline after registration.
• Sort out down payment sources and insurance needs early.
• If you are not a Canadian citizen or permanent resident, ask a lawyer about federal and Ontario rules on foreign buyers before you sign.

Frequently asked questions