First-time homebuyer programs and benefits

Sept 2021 – 15 min read

When it comes to taking advantage of programs designed to help first-time buyers, even a little bit of help can go a long way, especially if you’re looking to buy in some of Canada’s priciest cities.

As of June 2021, the average property priceOuvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre in Canada is $688,000, and this can often be a much higher figure in hot markets such as Toronto and Vancouver. This makes it even more important for first-time homebuyers to take advantage of tax credits, first-time buyer grants, rebates and incentives that can help with the cost of purchasing a property.

If you’re thinking of buying your first home, the good news is there are several programs available that can help you realize your dream of stepping onto the property ladder.

First-Time Home Buyers Tax Credit (HBTC)

The HBTC allows eligible first-time buyers to claim a $5,000 credit on their tax return. Claiming this credit can result in a tax rebate of $750Ouvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre . This sum can be used to cover things like legal fees, the price of movers or closing costs.

Provided you haven’t lived in another home that you’ve owned for any of the 4 years prior to purchase, you could be eligible if you and your partner bought a home that meets the government’s criteria.

The Home Buyer’s Plan (HBP)

First-time buyers may also qualify for the HBPS’ouvre dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre, a government program that allows you to withdraw money from your RRSP to buy or build a home.

This home can be for yourself or a related person with a disability, and you must meet the government’s criteria to qualify. If you’re eligible, you can borrow up to to $35,000 interest-free from your RRSP. This is per person, so if you’re buying with a partner, you could be eligible to use $70,000 as a couple to finance your home.

Unlike other early withdrawals from your RRSP, the HBP isn’t considered taxable income provided you re-invest it within 15 years. Any amount not repaid will be treated as taxable income for that year.

Provincial programs

In addition to the programs available from the Canadian Government, many provinces also offer plans to help first-time homebuyers. For example, Saskatchewan’sOuvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre First Time Homebuyer’s Credit provides a non-refundable tax credit of up to $1,050, while QuebecOuvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre offers a tax credit of up to $750 on qualifying homes. There are a few other options that vary by province that can help first-time buyers.

GST/HST New Housing Rebate (NHR)

If you’re buying a newly-built home or an existing property that has been ‘substantially renovated’, you could apply to claim an HST/GST tax rebate.Ouvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre

This could apply if you’re purchasing a home directly from the builder or custom building your own property, for example. While the details vary from province to province, you could qualify for a rebate of the provincial tax (HST) or the federal tax (GST) that you paid on the purchase price .
It’s worth noting that this rebate is open to all homebuyers, not just those buying for the first time. However, if your first property falls under an eligible category, you can combine this rebate with other programs that are designed exclusively for first-time buyers to maximize your savings.

Land Transfer Tax Rebate (LTTR)

In most provinces and cities, you’ll need to pay land transfer taxS’ouvre dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre when you buy a property.

The amount of tax you’ll pay is a percentage that is calculated depending on how much you paid for your home , which can amount to several thousands of dollars in closing costs. Land transfer tax is an upfront payment that can’t be factored into your mortgage, so it’s important to consider how this lump sum will impact the final cost of your property. However, you may get some or all of this money back, as to help first-time buyers offset this cost, most provinces offer a partial or full tax rebate .

Municipal programs

In addition to what’s available through the federal government and at the provincial level, there may also be help available through your municipality. This can be especially useful when buying in markets with property prices that are higher than the national average. For example, in Toronto, buyers can receive an additional $4,475 land transfer tax rebateOuvre un nouveau site dans une nouvelle fenêtre - S’ouvre dans une nouvelle fenêtre .

You may also keep an eye out for things like affordable homeownership programs; while not specific to first-time buyers, these can help buyers with a lower household income, or in some cases help people to buy homes up to a maximum purchase price. In Ontario, municipalities like Waterloo, Windsor, Simcoe, and many more have specific programs available.