First-time home buyer incentives in Canada: 2025 complete guide

Every government program available to Canadian first-time buyers — FHSA, RRSP HBP, land transfer tax rebates, and how to stack them for maximum benefit.

Canada has more government programs to help first-time home buyers than most people realize. Between tax-free savings accounts, RRSP withdrawals, land transfer tax rebates, and federal tax credits, a couple buying their first home together could access tens of thousands of dollars in government assistance. This guide covers every program available in 2025, who qualifies, exactly how much you can get, and how to stack multiple programs together for maximum benefit.

Who counts as a first-time home buyer in Canada?

Before diving into the programs, it is important to understand the definition — because it is more generous than most people expect.

You qualify as a first-time home buyer in Canada if you have not owned a home that you lived in as your principal residence at any point during the current calendar year or the previous four calendar years.

What this means in practice:

• If you owned a home but sold it more than 4 years ago, you qualify again
• If you own a rental property but have never lived in it as your principal residence, you may still qualify
• Spouses or common-law partners are evaluated separately in some programs — if one partner has never owned, they may qualify even if the other has
• Each program has its own specific eligibility rules — confirm with each program before assuming you qualify

Program 1 — First Home Savings Account (FHSA)

The FHSA is the single most powerful first-time buyer tool the Canadian government has ever created. Introduced in April 2023, it combines the best features of an RRSP and a TFSA specifically for home buyers.

How the FHSA works

• Annual contribution limit: $8,000 per year per person
• Lifetime contribution limit: $40,000 per person
• Carry-forward: Up to $8,000 of unused room can be carried forward to the following year (maximum $16,000 in one year)
• Tax deduction on contributions: Every dollar you contribute reduces your taxable income — exactly like an RRSP. In a 40% combined marginal bracket, an $8,000 contribution saves you $3,200 in tax.
• Tax-free growth: All investment gains inside the FHSA are completely tax-free.
• Tax-free withdrawals: When you withdraw funds to buy your first home, every dollar comes out tax-free — no repayment required, ever. This is the key advantage over the RRSP Home Buyers Plan.
• What you can invest in: Stocks, ETFs, GICs, mutual funds, bonds — the same investments available in a TFSA or RRSP.

The real value of a fully loaded FHSA

Contributing $8,000 each year for 5 years yields a tax refund of roughly $2,400–$3,200 annually. After 5 years: $40,000 contributed plus investment growth (assuming a 6% average return) is approximately $46,500 in the account, plus $12,000–$16,000 in tax refunds along the way.

A couple doing this together: approximately $93,000 in FHSA accounts plus $24,000–$32,000 in total tax refunds. That is real money.

When to open your FHSA

Open your FHSA as soon as possible — even if you are not ready to buy for several years. Contribution room starts accumulating from the day you open the account, not from when you contribute. You cannot retroactively claim room from years before you opened the account.

If you open an FHSA today and contribute nothing, you will have $8,000 of room available immediately and $16,000 by next year.

What happens if you never buy a home?

If you do not use your FHSA for a home purchase by age 71 (or within 15 years of opening), the funds can be transferred to your RRSP or RRIF tax-free with no impact on your RRSP contribution room. You lose nothing by opening an FHSA as a first-time buyer.

Program 2 — RRSP Home Buyers Plan (HBP)

The RRSP Home Buyers Plan has been helping Canadian first-time buyers since 1992. It allows you to borrow from your own RRSP tax-free for a home purchase.

How the HBP works

• Maximum withdrawal: $35,000 per person ($70,000 per couple)
• Tax treatment: The withdrawal is completely tax-free at the time of withdrawal
• Repayment: You must repay the amount to your RRSP over 15 years, starting 2 years after the year of withdrawal. The minimum annual repayment is 1/15th of the total amount withdrawn.
• If you miss a repayment: The missed amount is added to your taxable income for that year.

The key requirement

The funds must have been in your RRSP for at least 90 days before withdrawal. You cannot contribute to your RRSP and withdraw immediately for the HBP — the 90-day seasoning rule prevents this.

HBP strategy tip

If you have RRSP contribution room available, contributing to your RRSP now (even by borrowing short-term from a line of credit) gets the 90-day clock started. The RRSP contribution generates a tax refund, which can then be used to pay back the line of credit.

Using FHSA and HBP together

You can use both programs for the same home purchase. A couple buying together can access:

• $40,000 each from FHSA = $80,000 total
• $35,000 each from RRSP HBP = $70,000 total
• Combined: up to $150,000 in tax-advantaged down payment funds

This is a powerful combination that many first-time buyers in expensive markets like Toronto and Vancouver are using. See our minimum down payment guide for how this fits into the 2025 down payment rules.

Program 3 — First-Time Home Buyers' Tax Credit (HBTC)

The Home Buyers' Tax Credit is a federal tax credit available to all first-time home buyers in Canada.

• You claim a $10,000 non-refundable tax credit on your federal tax return in the year you buy your home
• At the 15% federal tax rate, this translates to a $1,500 reduction in your federal income tax
• Both spouses can claim the credit if purchasing together, but the combined claim cannot exceed $10,000

How to claim: Enter the amount on line 31270 of your T1 personal tax return for the year of purchase.

Eligibility: You or your spouse must be a first-time home buyer and the home must be a qualifying home in Canada that you intend to occupy as your principal residence within one year of purchase.

Note: This is a tax credit, not a refund. It reduces the tax you owe — if you owe less than $1,500 in federal tax, you will not receive the full benefit.

Program 4 — GST/HST New Housing Rebate

If you are buying a newly constructed home or substantially renovating an existing home, you may qualify for a rebate on the GST or HST paid.

Federal GST rebate

Available on new homes purchased for under $450,000. The maximum federal rebate is $6,300. The rebate phases out between $350,000 and $450,000 and is not available above $450,000.

Provincial HST rebate (Ontario)

Ontario offers an additional rebate of up to $24,000 on the provincial portion of HST for new homes under $400,000 purchased as a principal residence. This rebate does not phase out the same way as the federal rebate.

Who qualifies

The home must be purchased as your primary place of residence. Investment properties and cottages do not qualify for the full rebate.

Builder-credited rebate

In many new construction purchases, the builder already factors the rebate into the purchase price and assigns it to themselves. Read your Agreement of Purchase and Sale carefully to understand whether you receive the rebate directly or the builder has already claimed it.

Program 5 — Provincial land transfer tax rebates

Each province that charges land transfer tax offers some form of first-time buyer rebate. These can save thousands of dollars at closing.

Ontario land transfer tax rebate

• Up to $4,000 rebate on provincial land transfer tax
• This covers the full LTT on homes up to approximately $368,000
• Partial rebate on homes above that threshold
• Available to Canadian citizens and permanent residents only

Toronto land transfer tax rebate

Toronto buyers pay a second municipal land transfer tax on top of the provincial one. First-time buyers also receive up to $4,475 rebate on Toronto's municipal LTT. Combined with the Ontario rebate, Toronto first-time buyers can save up to $8,475 in land transfer taxes.

BC property transfer tax rebate

British Columbia first-time buyers receive a full exemption from BC Property Transfer Tax on homes up to $500,000. A partial exemption applies on homes between $500,000 and $525,000. No exemption is available above $525,000.

Given that average home prices in Metro Vancouver exceed $1,000,000, this rebate applies to a limited number of BC first-time buyers in practice.

Prince Edward Island

PEI offers a rebate of up to $2,000 on land transfer tax for first-time buyers.

Provinces with no land transfer tax

Alberta, Saskatchewan, and rural Nova Scotia do not charge provincial land transfer tax — first-time buyers in these provinces have no rebate to claim because there is no tax to rebate.

Program 6 — Canada Greener Homes Grant (for buyers of older homes)

If you are buying an older home that needs energy efficiency improvements, the Canada Greener Homes Grant offers up to $5,600 in grants and up to $40,000 in interest-free loans for eligible retrofits including:

• Insulation upgrades
• Heat pump installation
• Window and door replacements
• Solar panel installation
• Smart thermostats

To qualify: You must get a pre-retrofit EnerGuide evaluation before starting work and a post-retrofit evaluation after. The grant is available to homeowners of existing homes — not new construction.

Note: Check the current status of this program at canada.ca as funding availability changes periodically.

How to stack multiple programs — a real example

Here is a realistic scenario showing how a couple can combine multiple programs when buying their first home in Ontario.

Couple profile:

• Combined income: $140,000
• Buying a $650,000 resale home in Toronto
• Both are first-time buyers
• Both have had FHSAs open for 3 years

Step 1 — FHSA withdrawals

Person A: $24,000 (3 years × $8,000). Person B: $24,000. Total from FHSA: $48,000.

Step 2 — RRSP Home Buyers Plan

Person A: $20,000 from RRSP. Person B: $15,000 from RRSP. Total from HBP: $35,000.

Step 3 — Personal savings

$20,000. Total down payment: $103,000 (approximately 15.8% of $650,000).

Step 4 — Tax savings from FHSA contributions

Approximately $8,000–$12,000 in total tax refunds received over 3 years of FHSA contributions.

Step 5 — Land transfer tax rebates at closing

• Ontario LTT rebate: $4,000
• Toronto LTT rebate: $4,475
• Total LTT rebate: $8,475

Step 6 — First-Time Home Buyers' Tax Credit

$1,500 federal tax credit on next year's return.

Total government assistance received: approximately $17,975 in direct rebates and credits plus $8,000–$12,000 in FHSA tax refunds already received = approximately $26,000–$30,000 in total government benefit.

First-time buyer checklist — what to do right now

If you are planning to buy your first home in the next 1–5 years, here is exactly what to do:

Today

Open a First Home Savings Account at any major bank or online broker. Even a zero balance account starts your contribution room accumulating.

This month

Contribute the maximum $8,000 to your FHSA if you have the funds. You will receive a tax deduction on your next return.

This year

Check your RRSP balance and contribution room. Start directing savings into your RRSP to build up your HBP withdrawal pool. Remember the 90-day seasoning rule.

Before you make an offer

Use Smart Mortgage Calculator to analyze any listing you are considering. See the full monthly payment, CMHC insurance cost, land transfer tax by province, and whether you qualify based on your income — see our affordability guide for the GDS/TDS math behind qualification.

At closing

Make sure your lawyer applies all applicable land transfer tax rebates automatically. Do not assume this happens — confirm with your real estate lawyer before closing day.

After closing

Claim the First-Time Home Buyers' Tax Credit ($10,000) on your tax return for the year of purchase.

Frequently asked questions

Government programs and eligibility rules change. This article reflects programs available as of May 2025. Always confirm current rules with the CRA, your financial institution, and a licensed mortgage broker before making real estate decisions.