Buying your first home is both exciting and stressful and also costly if you don't have pre-existing savings to pay for your down payment and closing costs. In an effort to make buying your first home easier and offset some of the costs, the Canadian governments offer a variety of incentives specifically for first time home buyers(FTHB), I will go into some detail about these programs.


The Home Buyers' Amount is a $5,000 tax credit given to first-time home buyers. This tax credit is a non-refundable income tax credit on line 31270 of your tax return. This tax credit can be split between you and your spouse, but the amount cannot be greater than $5,000. Similarly, if more than one person is eligible for the tax credit for a qualifying home, only a maximum of $5,000 can be claimed by all claimants. Since non-refundable tax credits are claimed at a rate of 15%, the effective amount of the tax deduction/rebate is $750 included in your personal tax return under line 369.

In order to be eligible for the First Time Home Buyers' Tax Credit, your home must meet the following requirements:

  • Be within Canada
  • Be an existing or new construction home
  • Be a single, semi-detached, townhouse, mobile home, condominium, or apartment
  • Can include a share in a co-operative housing corporation that gives you possession of the home
  • You must intend to occupy the home within one year of purchase

In order to be eligible for the First Time Home Buyers' Tax Credit, you must meet the following requirements:

  • You or your spouse must purchase a qualifying home
  • The home must be registered in either your name or your spouse's name
  • You cannot have owned a home in the previous four years
  • You cannot have lived in a home owned by your spouse in the previous four years
  • You must present documents supporting the purchase of the home
  • you have recently experienced the breakdown of a marriage or common-law partnership (even if you don't meet the other first-time home buyer requirements)

If you are not a first-time home buyer, you may still qualify for the Home Buyers' Amount. You can qualify if you are a person with a disability, where you are eligible for the disability tax credit and have filled out form T2201. You can also qualify for the tax credit if you purchased the home for a relative with a disability. The home being purchased must be made with the intention of it being more accessible for the person with the disability than their previous home.


Homes purchased in Toronto are subject to both a Provincial Land Transfer Tax and a Municipal Land Transfer Tax. Homes purchased anywhere else in the province are only subject to the Provincial Land Transfer Tax. The Government of Ontario provides incentives to its citizens who are first-time home buyers. You can receive an Ontario Land Transfer Tax Refund up to a maximum $4,000. What this means is if the purchase price of your home is less than $368,333, you would pay no land transfer tax. If the purchase price is greater than $368,333, then you would receive the maximum rebate of $4,000, but still owe the remainder of the land transfer tax.

The City of Toronto provides incentives to its citizens who are first-time home buyers. You can receive a Municipal Land Transfer Tax Refund up to a maximum of $4,475. What this means is if the purchase price of your home is less than $400,000, then you would pay no land transfer tax. If the purchase price is greater than $400,000, then you would receive the maximum rebate of $4,475, but will still owe the remainder of the land transfer tax.

If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate. This incentive applies for both new construction and resale homes. If you qualify, your real estate lawyer will claim the rebates electronically through Teraview when they register your transfer/deed.
Note: You have to apply within 18 months of the date of transfer to qualify for this rebate if not done by your lawyer.


If you have purchased a newly constructed or substantially renovated home, you may be eligible to reclaim the GST or federal part of the HST charged on the purchase of said property.
This incentive applies to:

  • purchasing from a builder or constructing your own home
  • renovations where at least 90% of the interior of the existing home has been removed or replaced
  • mobile and floating homes
  • conversion of non-residential property into a home
  • purchasing shares in a co-operative housing project


The Federal Government's Home Buyers' Plan(HBP) was updated March 2019 to allow first-time home buyers to withdraw up to $35,000 tax-free from their registered retirement savings plan (RRSP), tax free, to buy or build a home. This is a recent increase over the previous limit of $25,000. Because the HBP is considered a loan, the amount must be repaid within a period of 15 years. If you're purchasing with someone who is also a first-time home buyer, you can both access $35,000 from your RRSP for a combined total of $70,000.


The First-Time Home Buyer Incentive is a shared equity mortgage which means the government shares part of the ownership and costs of buying your home. Under the program, the government will contribute 5% or 10% of the home's price towards your down payment in exchange for the same amount of equity in your home. This can significantly reduce your interest payments and CMHC mortgage insurance premiums due to the larger down payment. The government's share in your home will have to be repaid within 25 years or when you sell your home, whichever comes first. Any gains or losses in the market value of your home will be shared with the government. This is not a typical loan, and no interest will be charged.

Effective May 2021 the limit for Qualifying Annual Household Income increased to $150,000 from $120,000 and the maximum total borrowing amount increased to 4.5 from 4.0 times of their qualifying household income. This also means that your maximum borrow amount can be up to $675,000. The program is only available for CMHC-insured mortgages. Therefore, you are automatically ineligible if

  • your purchase price is $600,000 or above, or
  • your down payment is at least 20% of your purchase price.

The Incentive is like a second mortgage on your home. Your first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. It also must be eligible through Canada Guaranty, CMHC or Sagen.

The insurance premium is based on the loan-to-value ratio of the first mortgage only. That is, the first mortgage amount divided by the purchase price. You don't pay mortgage insurance on the incentive - it is included with the total down payment.

The type of home you plan to purchase plays a factor. The table indicates the type of home that qualifies for the incentive and how much of an incentive it may be eligible to receive.

New Construction 5% or 10%
Existing Home 5%
New and existing mobile/manufactured home 5%

Residential properties can have 1 to 4 units and include:

  • single family homes
  • semi-detached homes
  • duplex
  • triplex
  • fourplex
  • town houses
  • condominium units
  • mobile homes

Your property must be located in Canada and must be suitable and available for full-time, year-round occupancy. Your home is for you to live in and can not be used as an investment property.

This Incentive program may be associated with additional costs:

  • Additional legal fees: Your lawyer is closing 2 mortgages so you may be charged higher fees.
  • Appraisal fees: To repay your incentive, you may need to have an appraisal done to determine the fair market value of your home.
  • Other fees: Additional fees may be incurred throughout the life cycle of the incentive, like switching your first mortgage to a new lender or refinancing your first mortgage.
  • Property Insurance premiums: Additional costs may be incurred to account for an additional mortgage registered on the property. Talk to your insurance broker or insurance provider to find out more details.

Repayment Details:

The Incentive must be paid in full - that is no partial payment - after 25 years or when the home is sold. There are a few ways where changes to the Incentive can trigger repayment:

  • You go through a break up and you want to buy out the co-borrower. If this requires additional insured funds, you must pay back the Incentive in full.
  • Porting your mortgage will trigger a repayment of the Incentive.
  • A partial release of security is considered a sale and will trigger repayment of the Incentive.

How to apply:
Once you've been pre-approved for a mortgage, found the home you're looking for and determined you're eligible to apply for the incentive, it's time to apply. Simply fill out these 2 application forms to apply for the First-Time Home Buyer Incentive:

Once complete, give these to your lender. They will submit the application for you. Give the final signed copy of the shared equity mortgage package to your solicitor to retain on your behalf. When you receive your acceptance, call FNF Canada at 1-(855) 844-4535 to activate your incentive and provide the name of your lawyer/notary. This must be at least 2 weeks prior to your closing date.


The Tax-Free First Home Savings Account(FHSA) proposed by the Liberal government and mentioned in the recent budget announcement in April 2022 is expected to be introduced in 2023. The FHSA would give prospective first-time home buyers the ability to save up to a lifetime limit of $40,000 with maximum contributions set at $8,000 per year over a 5-year period. If you do not maximize the annual limit, you lose that room and you'll never hit the $40,000. You can also transfer that money, $8,000 annually, from an RRSP to an FHSA without having to pay taxes on the withdrawal. Like an RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home -including investment income - would be non-taxable, like a TFSA. More details will be provided once finalized.

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Sheron Hurley
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