First-Time Home Buyer Programs in Ontario

Buying your first home comes with a lot of new expenses, but there are programs available that can help.

If you’re planning to buy your first home in Niagara, it’s worth understanding these programs before you start seriously looking. Some can help you save for your down payment, while others can reduce certain costs when you buy.

The rules are different for each program, so don’t assume that qualifying for one automatically means you qualify for all of them.

Here are some of the main programs Ontario first-time buyers should know about.

First Home Savings Account (FHSA)

If you’re saving for your first home, an FHSA is one of the first options worth looking into.

You can contribute up to $8,000 per year, with a $40,000 lifetime contribution limit.

Contributions are generally tax-deductible, which can reduce your taxable income. If you meet the requirements for a qualifying withdrawal, you can then use the money toward your first home without paying tax on the withdrawal.

You also don’t have to repay the money afterward.

One thing people don’t always realize is that your FHSA contribution room only starts once you actually open the account. You may also be able to carry forward up to $8,000 of unused participation room to a future year.

If buying a home is in your future, it can be worth looking into an FHSA before you’re ready to actively house hunt.

RRSP Home Buyers’ Plan

If you already have money saved in an RRSP, the Home Buyers’ Plan may give you another option for your down payment.

Eligible buyers can currently withdraw up to $60,000 from their RRSP under the Home Buyers’ Plan.

If you’re buying with someone else and you both qualify, each person can potentially use their own HBP withdrawal.

Unlike a qualifying FHSA withdrawal, money taken from your RRSP through the Home Buyers’ Plan generally needs to be repaid over time.

The good news is that you can use the FHSA and Home Buyers’ Plan for the same qualifying home if you meet the requirements for both programs.

A mortgage professional or financial advisor can help you figure out whether using one or both makes sense for your situation.

Ontario First-Time Home Buyer Land Transfer Tax Refund

Land transfer tax is one of the closing costs buyers need to plan for in Ontario.

Eligible first-time buyers may qualify for an Ontario land transfer tax refund of up to $4,000.

For qualifying buyers, that means no Ontario land transfer tax would be payable on the first $368,000 of the purchase price. If you’re buying above that amount, the maximum provincial refund is still $4,000.

There are specific eligibility requirements for this program. For example, you generally cannot have previously owned an eligible home or an interest in one anywhere in the world.

Your real estate lawyer can confirm whether you qualify and how the refund will be handled as part of your closing.

First-Time Home Buyers’ GST/HST Rebate

There’s also a newer program that’s particularly important if you’re considering new construction.

The federal First-Time Home Buyers’ GST/HST Rebate can eliminate the GST, or federal portion of the HST, on qualifying new homes up to $1 million. The rebate is gradually reduced for qualifying homes between $1 million and $1.5 million.

This isn’t a rebate for a typical resale home. It’s aimed at qualifying new or substantially renovated homes and has its own eligibility requirements and timelines.

If you’re deciding between buying from a builder and purchasing an existing home, make sure you understand whether the rebate applies to the specific property you’re considering.

What Does This Mean for Niagara Buyers?

Your first home doesn’t have to look the same as everyone else’s.

Depending on your budget, you might be comparing a condo in St. Catharines, a townhouse in Thorold or a detached home in Welland. You may also be looking at new construction and trying to decide whether the incentives are worth it compared with buying resale.

Our guides to buying in Welland and buying in Thorold can help if either community is on your list.

The important thing is to look at the whole cost of buying, not just how much you’ve saved for your down payment.

You’ll also want to plan for legal fees, land transfer tax if applicable, adjustments and other expenses due around closing. Our Ontario closing costs guide goes through those costs in more detail.

Once you’ve figured out what you have available for your purchase, the next step is understanding how much house you can comfortably afford.

Where Should You Start?

1. Find out which programs you qualify for. Each program has its own definition of a first-time buyer and its own eligibility rules.
2. Look at your savings. Figure out what you already have available in your FHSA, RRSP and other savings accounts.
3. Talk to a mortgage professional. They can help you understand your financing and how different down payment amounts affect your mortgage.
4. Plan for closing costs too. Don’t put every dollar you’ve saved toward the down payment and forget about the expenses due at closing.
5. Then start looking at homes. Once you understand your budget, we can help you see what it actually buys in different Niagara communities.

Frequently Asked Questions

How much can I contribute to an FHSA?

The annual contribution limit is $8,000, with a lifetime contribution limit of $40,000. Your contribution room begins once you open your first FHSA.

Do I have to repay money I withdraw from my FHSA?

Not if it’s a qualifying withdrawal. That’s one of the major differences between the FHSA and the Home Buyers’ Plan.

Can I use my FHSA and Home Buyers’ Plan together?

Yes. If you meet the requirements for both programs, you can use an FHSA qualifying withdrawal and the Home Buyers’ Plan toward the same qualifying home.

How much can I withdraw from my RRSP through the Home Buyers’ Plan?

The current HBP withdrawal limit is $60,000 per eligible person.

How much is Ontario’s first-time buyer land transfer tax refund?

Eligible first-time buyers can receive a refund of up to $4,000 of Ontario land transfer tax.

Does the new first-time buyer GST/HST rebate apply to resale homes?

Generally, no. The program applies to qualifying new or substantially renovated homes and has specific eligibility requirements.

Can The Barry Team help me figure out which programs I qualify for?

We can explain how these programs fit into the home-buying process and help you understand what your budget can buy in Niagara. For tax, mortgage or legal advice specific to your situation, we’ll recommend confirming the details with the appropriate professional.

Ready to Start Planning Your First Home?

You don’t need to have everything figured out before talking to us.

We can help you understand the buying process, narrow down where you want to live and show you what homes are available within your budget.

Download our Buying Guide or book a Buyer’s Meeting to get started.

You can also call 905-357-8067 or email emily@thebarryteam.ca.