First Time Home Buyer Guide

Written By Guest User

Buying your first home can be challenging, stressful, and daunting. For many Canadians, this is the single biggest purchase of their lives. However, it also exciting and rewarding extremely rewarding! In an effort to help first-time home buyers with their first home purchase, Canada has a number of programs and tax-credits available to those who qualify.

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First Time Home Buyer - Federal Qualifications

To understand whether you qualify as a first time home buyer at the Federal lavel, you need to meet the below criteria:

  • You must be at least 18 years of age

  • You must be a Canadian citizen or a permanent resident

  • The home you bought must be in Canada

  • You must intend to live in the home as your primary residence within one year of purchase

  • You cannot have owned a home within the last four years

  • If you're buying with a spouse (or common law partner) who is not a first-time homebuyer, you cannot have lived in a house that they owned within the last 4 years

  • You must have documentation verifying that you have purchased a home

First Time Home Buyer - Federal Programs

  • RRSP Home Buyer’s Plan

    • The RRSP Home Buyer’s plan allows you to withdraw up to $35,000 tax-free from your RRSP to use towards your down payment

    • You must pay back the amount withdrawn within the 15 years

    • You must contribute to the RRSP at least 90-days before you plan to withdraw the funds to close on your home

  • First Time Home Buyer’s Tax Credit

    • The FTHB Tax Credit was created to help recover some of the closing costs associated with purchasing a new home, until 2022 the rebate was $750. However, as of 2022, any homes bought in that year and after are eligible for a $1,500 credit

  • First Time Home Buyer Incentive

    • Launched in Sept 2019, the FTHB Incentive is “shared equity mortgage” for up to 10% of the total cost of your home (5% for an existing home, 10% for a newly built home) – basically CMHC will be a part owner of the home up to the percent contributed but you’ll have exclusive access to your home.

    • The mortgage must be repaid within 25 years or whenever you sell the home

  • First Home Savings Account

    • The most recent program introduced by the federal government is the FHSA. The FHSA combines features of the RRSP and TFSA into one account dedicated to helping individuals purchase their first home

    • Like the RRSP, any contributions into the FHSA are tax free and can be used to reduce your taxable income

    • Like the TFSA, any gains and future withdrawals from the FHSA are tax free

    • An additional perk above the RRSP, is that any money withdrawn from the FHSA for the purchase of a home does not need to be repaid

    • You can contribute up to $8,000 per year to a max of $40,000 and any unused amounts from a current year can be carried over to future years

    • You must purchase a home within 15 years of opening an FHSA or you can transfer unused funds into an RRSP

First Time Home Buyer - Ontario Qualifications

In addition to the Federal programs that are available to all Canadians, certain provinces have their own Frist Time Home Buyer Programs and Qualification requirements. For Ontario, to qualify as a first time home buyer you need to meet the following criteria:

  • You must be at least 18 years old

  • You must be a Canadian citizen or a permanent resident

  • You must occupy the home as your primary residence within 9 months of the date of transfer

  • You cannot have previously owned a home ever, either in part or in full, anywhere in the world 

  • If you're married, your spouse cannot have previously owned a home ever, either in part or in full, anywhere in the world

First Time Home Buyer - Ontario Programs

  • Provincial Land Transfer Tax Rebate: The Ontario Land Transfer tax rebate allows First-Time Home Buyers to claim up to a maximum of $4,000 on the provincial portion of their land transfer tax

  • Toronto Land Transfer Tax Rebate: Houses purchased in Toronto have the unique requirement to also play a municipal land transfer tax in addition to the provincial land transfer tax. However, First-Time Home Buyers also get a rebate on this tax up to a maximum of $4,475

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