First-Time Home Buyer Incentives and Rebates in Canada

The FHSA: your first stop for saving

The Tax-Free First Home Savings Account (FHSA) is the newest and, for most people, the most useful tool. It works like a hybrid of an RRSP and a TFSA: contributions are tax-deductible the way RRSP contributions are, and qualifying withdrawals for a first home purchase are completely tax-free, including any growth inside the account.

When the FHSA launched in 2023, the annual contribution limit was $8,000 with a $40,000 lifetime limit, and unused room carries forward one year at a time. Confirm the current limits on the CRA website before you plan around them, since contribution rules can be adjusted.

• You generally qualify as a first-time buyer if you haven't owned a home you lived in as your principal residence in the current year or the preceding four calendar years. - A spouse's home ownership in that window can also disqualify you, so check the definition carefully if you're buying with a partner. - Money can sit in the account for a set number of years before you must either buy a home, transfer the funds to an RRSP, or withdraw them as taxable income.

The Home Buyers' Plan (HBP)

The Home Buyers' Plan lets you withdraw money from your RRSP, tax-free, to put toward a first home, as long as you repay it. The federal budget raised the withdrawal limit to $60,000 starting in April 2024, up from the longstanding $35,000 — confirm the current figure with the CRA before relying on it.

Repayments are spread over 15 years, generally starting the second year after your withdrawal. Miss a scheduled repayment and the amount due that year gets added to your taxable income instead, so it's a loan from yourself with a real deadline, not free money.

Couples buying together can each use their own RRSP and HBP room, which effectively doubles the amount available to a household. You can also use HBP and FHSA funds on the same purchase, which is where the two programs work best together.

The First-Time Home Buyers' Tax Credit

This is a non-refundable federal tax credit claimed on your income tax return for the year you buy your first qualifying home. You don't get cash back directly; instead, an eligible amount reduces the tax you owe, calculated at the lowest federal tax rate.

The eligible amount was doubled to $10,000 starting with the 2022 tax year, which translates into a credit worth roughly the lowest federal rate applied to that amount — check the CRA's current figures and eligibility rules (including the same first-time buyer definition used elsewhere) before filing.

Some provinces also offer a parallel provincial credit on top of the federal one, so it's worth checking your provincial tax authority when you file.

GST/HST and land transfer tax rebates

If you're buying newly built or substantially renovated housing rather than resale, the GST/HST New Housing Rebate can return part of the sales tax you paid, depending on the purchase price and whether the home is owner-occupied. Builders often factor this into the advertised price, so ask directly what's included.

Several provinces and at least one major city offer land transfer tax rebates specifically for first-time buyers, which can offset some or all of the tax due on closing. The rules, thresholds, and rebate amounts differ by province and change periodically, so check your provincial government's website (and your municipality's, if applicable) rather than assuming a number carries over from a previous year.

What's changed and what to watch for

The federal First-Time Home Buyer Incentive — a shared-equity program where the government co-invested in your down payment — was discontinued in March 2024. If you see it referenced in older articles, treat it as no longer available.

Mortgage insurance rules have also shifted: as of late 2024, eligible first-time buyers purchasing new construction can qualify for a longer amortization on an insured mortgage than the traditional 25 years, which lowers the monthly payment but increases total interest paid. The price threshold for insured mortgages was also raised around the same time. Confirm current amortization options and insured-mortgage price limits with CMHC or your lender, since these are exactly the kind of detail that gets updated.

• None of these programs replace the basic math of your down payment, income, and debt load — they adjust it at the margins. - Combining the FHSA, the HBP, and the tax credit is legal and common, but each has its own eligibility test, so confirm you qualify for each one separately.

Frequently asked