First-Time Home Buyer Guide in Canada (2025)
Purchasing your first home in Canada is exciting, but navigating the various programs, regulations, and closing costs can be challenging. Below is a comprehensive guide to the top incentives, official sources, and essential steps you should know about in 2025. Whenever possible, we link to government or authoritative websites so you can verify details and stay up to date.
Grants and Forgivable Loans
There isn’t a single, national grant that simply hands out free money to every first-time home buyer. However, several provincial and municipal programs provide down payment loans or subsidies that can be partly or fully forgiven if you meet certain conditions. For example:
- Manitoba’s Affordable Homeownership Program – Provides 10%–25% of the purchase price as a loan, some of which is forgivable after you’ve lived in the property for a set number of years. (Government of Manitoba)
- Nova Scotia’s Down Payment Assistance Program – Offers an interest-free loan of up to 5% for eligible buyers. (Housing Nova Scotia)
- Local Down Payment Loans – Regions like Peel in Ontario (Peel Region Housing) or Toronto’s HOAP (Home Ownership Assistance Program) may provide forgivable or deferred loans once you fulfill occupancy requirements.
- Land Transfer Tax Rebates & Credits – Ontario offers up to $4,000 in relief on provincial land transfer tax (Ontario.ca), while Prince Edward Island completely waives its 1% property transfer tax for eligible first-time buyers (PEI Government). The federal Home Buyers’ Amount (worth up to $1,500) is claimed on your tax return (CRA).
- Indigenous & Community Funding – Some First Nations, as well as the Manitoba Metis Federation (up to $18,000), offer grants or matching funds for qualifying members. Eligibility rules vary by community.
Provincial and federal housing policies change frequently—monitor updates in official government budgets and municipal websites. Even if you don’t qualify for one program, another may be available in your area.
The End of the First-Time Home Buyer Incentive (FTHBI)
Canada’s First-Time Home Buyer Incentive ended in March 2024 due to low uptake and restrictive income/purchase-price limits. Under the original FTHBI, buyers received 5% or 10% of a home’s value in exchange for sharing future appreciation with the government. If you joined before the program ended, you’re bound by your initial agreement; however, no new applications are accepted. For official updates, check CMHC’s News Releases.
Instead, most first-time buyers now turn to the First Home Savings Account (FHSA) or the expanded RRSP Home Buyers’ Plan to improve affordability without sacrificing a share of the home’s future equity.
Land Transfer Tax and Rebates
Although land transfer taxes (or property transfer taxes) differ across provinces, many regions offer a break for first-time buyers:
- Ontario: A rebate of up to $4,000 on the provincial land transfer tax, plus a separate municipal rebate in Toronto of around $4,475. (Ontario.ca)
- British Columbia: Exempts homes priced around $500,000 or less; partial exemptions apply up to ~$525,000. (BC Property Transfer Tax)
- Prince Edward Island: Waives its 1% transfer tax entirely for qualified first-timers. (PEI Government)
- Alberta and Saskatchewan: Charge only modest registration fees instead of a standard land transfer tax.
Provinces like Manitoba, Quebec, New Brunswick, and Nova Scotia typically do not provide broad LTT rebates specifically for first-time buyers. Even so, you should verify locally if any temporary rebates or municipal programs exist.
Minimum Down Payment
Canada’s down payment rules apply to all buyers equally. According to Canada Mortgage and Housing Corporation (CMHC):
- 5% on the first $500,000 of the purchase price
- 10% on any portion between $500,001 and $999,999
- 20% if the price is $1 million or higher (no default insurance available)
If you put less than 20% down, you must carry mortgage default insurance (e.g., through CMHC, Sagen, or Canada Guaranty). As of mid-2024, eligible first-time buyers of newly built homes can opt for a 30-year insured mortgage, which lowers monthly payments while potentially increasing total interest paid over time. (CMHC Home Buying)
The 0% Down Myth
Canada hasn’t allowed true 0% down payment mortgages in mainstream lending for many years. You must have at least 5%. However, you can receive that 5% as a gift from family or borrow it under a “Flex Down” approach—provided you qualify for the extra loan repayment in your debt service ratio.
If you’re researching mortgage products, ask each lender about acceptable sources for your down payment and have documentation (like a gift letter) ready.
Mortgage Rates and Lender Perks
Banks and other lenders price mortgages based on your credit score, debt-to-income ratio, and the overall rate environment. Being a new buyer doesn’t automatically grant a lower rate, though an insured (high-ratio) mortgage can sometimes come with a slightly lower posted rate (in exchange for paying the insurance premium).
Some lenders provide small incentives—like a free appraisal or a cash bonus—to attract first-time customers. Always compare the total mortgage package, including interest rate, prepayment options, and any fees, to find the best overall value.
Closing Costs and Budgeting
Real estate professionals recommend setting aside around 1.5% to 4% of the purchase price for closing costs, which can include:
- Land transfer tax (minus any first-time buyer rebates)
- Legal or notary fees (often $1,000–$1,500)
- Title insurance (~$250–$400)
- Home inspection (~$400–$600)
- Appraisal fee (~$300, sometimes waived)
- Adjustments (property tax, condo fees) if already paid by the seller
- Moving expenses and home insurance premiums
The federal $1,500 Home Buyers’ Amount is claimed when filing your taxes, so it won’t directly reduce closing day costs. Depending on your province, your lawyer may deduct land transfer rebates at closing. Keep an emergency fund for unexpected fees that can arise at the last minute.
Property Owned Outside Canada
Most Canadian first-time buyer programs consider your homeownership history worldwide. For example, Ontario’s land transfer tax rebate (Ontario.ca) and the federal RRSP Home Buyers’ Plan (Canada.ca) will check if you’ve owned property outside Canada. You usually need at least four consecutive years without owning any real estate to reset your “first-time buyer” status.
Spousal Ownership Rules
If your spouse owned a property previously, certain rebates might be reduced or unavailable unless both parties qualify as first-timers. Ontario’s land transfer rebate, for instance, may provide a partial refund when only one spouse meets the criteria. However, federal measures like the RRSP Home Buyers’ Plan or the FHSA can be claimed individually if at least one spouse is considered a first-time buyer.
Occupancy Requirements
Virtually all first-time buyer incentives require you to occupy the home as your principal residence. The RRSP Home Buyers’ Plan and the FHSA mandate that you move in within a year, while provincial rebates often specify an occupancy window (e.g., nine months in Ontario). A home purchased purely for rental or investment won’t qualify, though living in part of a multi-unit property generally meets the occupancy rule.
Divorce or Separation
If you co-owned a home with an ex-spouse, you might still regain first-time status. The RRSP Home Buyers’ Plan (CRA: HBP) allows separated individuals to participate again if they’ve been living apart for at least 90 days and meet other ownership criteria. Some provinces also offer separation-based exemptions, but federal tax credits typically adhere to a four-year lookback period.
Buying a Newly Built Home
New construction buyers can tap into the GST/HST New Housing Rebate, which refunds part of the sales tax if you use the home as your principal residence. The rebate amount depends on your province and the property’s price. For more details, check the official GST190 form and relevant provincial schedules.
Starting August 2024, a 30-year insured mortgage option is also available to first-time buyers purchasing newly built homes (CMHC Updates), which can lower your monthly payments. Some builders add incentives like free upgrades, closing credits, or appliance packages to attract first-time buyers.
Impact on Mortgage Qualification
Most first-time buyer programs boost your mortgage application rather than hinder it. Using RRSP funds or the FHSA for a down payment can reduce your loan-to-value ratio, making you more appealing to lenders. Meanwhile, land transfer tax rebates or other credits lower your immediate out-of-pocket costs, helping ensure you have enough funds for closing.
If you borrow your down payment (Flex Down), keep in mind that lenders will include that debt in your overall debt service calculations. Otherwise, these programs generally increase your purchasing power and financial flexibility.
How to Apply or Use These Programs
Each incentive has its own steps and guidelines. Here’s where to start:
- Home Buyers’ Amount (Federal Tax Credit): Claim this on your personal tax return for the year you purchase. Check the CRA’s General Tax Guide for line details.
- RRSP Home Buyers’ Plan: Complete Form T1036 from the CRA and submit it to your RRSP provider. You have to buy or build your home before October 1 of the year following your withdrawal.
- First Home Savings Account (FHSA): Open an FHSA at a financial institution. Contribute within annual and lifetime caps, then withdraw for a qualifying home purchase tax-free. (CRA: FHSA)
- Land Transfer Tax Rebates: Typically claimed at closing by your lawyer or notary. If missed, you can apply directly to the provincial finance ministry afterward (e.g., Ontario).
- Provincial/Municipal Down Payment Assistance: Apply through your local housing authority. Requirements usually include an application form, income verification, and a mortgage pre-approval.
- GST/HST New Housing Rebate: Usually handled by your lawyer or builder with form GST190 and relevant provincial schedules.
- 30-Year Insured Mortgage for New Builds: Inform your lender or mortgage broker. They’ll apply through CMHC (or another insurer) to get you the 30-year amortization option if you qualify.
Always inform your real estate agent, mortgage broker, and lawyer that you’re a first-time buyer. They can help you apply for the right incentives and ensure paperwork is filed properly.
Frequently Asked Questions
Is there a way to buy a house with 0% down in Canada?
Not through traditional lending. The minimum is 5%, though you can receive that as a non-repayable gift or borrow it (Flex Down) if you meet the debt service requirements. True 0% down mortgages were phased out over a decade ago.
Do first-time buyers automatically get better interest rates?
Being a first-time buyer does not grant a special rate. Your mortgage rate depends on credit score, loan-to-value ratio, and market conditions. Some lenders offer small perks or rebates, but they generally don’t significantly alter the interest rate itself.
What are the occupancy rules for these programs?
Most require that you occupy the home as your principal residence. For instance, the RRSP Home Buyers’ Plan states you must move in within one year of purchasing or building the property, and land transfer tax rebates typically require occupancy within set timeframes (like nine months in Ontario).
Can I combine the RRSP Home Buyers’ Plan and FHSA?
Yes. You can use both to maximize your down payment. Just be mindful of the respective contribution limits, withdrawal rules, and timing. (CRA: FHSA Details)
What if I owned a home abroad?
Most first-time definitions consider global ownership. If you owned property outside Canada, you likely do not qualify as a first-timer unless you’ve sold that property and have gone at least four consecutive years without owning real estate.
How do I qualify for Ontario’s land transfer tax rebate?
You must be a Canadian citizen or permanent resident, be at least 18 years old, never have owned a home anywhere in the world, and occupy the home within nine months of closing. (Ontario’s Official Guide)
If I co-own with someone who isn’t a first-timer, do I lose my benefit?
It depends. Some programs (like Ontario’s LTT rebate) require both spouses to be first-time buyers for a full rebate, granting only a partial refund otherwise. Federal programs like the Home Buyers’ Plan can still apply individually to the spouse who is a first-timer.
Is the Home Buyers’ Amount a tax credit or a rebate?
It’s a non-refundable tax credit worth up to $1,500 (federally), claimed on your annual return. This means it reduces your income tax liability but doesn’t give you a direct rebate check.
What if I get divorced or separated after owning a home?
The RRSP Home Buyers’ Plan allows for requalification in cases of relationship breakdown if you meet specific conditions (e.g., you’ve been living separately for 90+ days). Some provincial programs also acknowledge divorce or separation, but the federal tax credit usually applies the standard four-year rule.
Where can I find official info on these programs?
It’s best to visit government websites such as Canada.ca, CMHC, or your provincial portal (e.g., Ontario.ca, BC.gov) for the most current legislation and program details.
Disclaimer: This article is for general informational purposes only and reflects policies as of 2025. Regulations may change, and different rules could apply in various provinces or municipalities. Always verify details with official government websites or seek advice from a real estate lawyer, mortgage broker, or financial advisor before making a final decision.