June 2025 Newsletter

If you’re like most Canadians, buying a home is probably the biggest investment you’ll ever make. But for first-time home buyers, just saving up enough money for the down payment can take years or even decades to accomplish.

Thankfully, Canada’s federal and provincial governments offer several different programs designed to support first-time home buyers by offsetting some of the costs associated with buying a home, and helping them purchase their first property. 

This article offers an overview of some of the most popular of those programs, including:

• The RRSP Home Buyers’ Plan (HBP)

• First-Time Home Buyers’ Tax Credit (HBTC)

• GST/HST new housing rebate

• First Home Savings Accounts (FHSA)

Down payment requirements for first-time buyers 

For most first-time home buyers, the biggest hurdle is usually saving for the down payment.

In Canada, home buyers must put down at least 5% of the purchase price for homes purchased that are less than $500,000. For homes between $500,000 and $1.5 million, the minimum down payment increases to 10% for the portion above the first $500,000. For properties above $1.5 million, the minimum down payment is 20% of the purchase price. 

If your down payment is less than 20% of the price of your new home, you’ll also have to get an insured mortgage, which can add anywhere from another 0.6% to 4.5% to the purchase price.

The amount of money you put toward your down payment can also affect the type of mortgage you get, and the interest rate you’ll have to pay. In general, the larger your down payment, the less interest you’ll pay on your mortgage.

1. The RRSP Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) is a federal program that lets eligible buyers withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to put towards their down payment when they buy or build a home for themselves, or for a relative with a disability. 

Anyone who’s never owned their primary residence before, or who hasn’t lived in a primary residence they (or their spouse or common-law partner) own in the last four calendar years, is eligible to take part in the program. Any amounts you withdraw don’t need to be paid back into your RRSP for up to 15 years. 

Couples can also both take part in the HBP at the same time if they buy or build a home together. This allows married or common-law first-time buyers to access up to $120,000 as a down payment on their first property.

2. First-Time Home Buyers’ Tax Credit (HBTC)

The First-Time Home Buyers’ Tax Credit (HBTC) is a non-refundable credit that gives first-time buyers a rebate of up to $1,500 on their income taxes when they, or their spouse or common-law partner, buy a home in Canada.

Also known as the Home Buyers’ Amount (HBA), the HBTC can help offset the costs of buying a whole range of eligible property types, from new and existing single-family and semi-detached homes, to condos, apartments, townhouses, housing co-ops and mobile homes.

3. GST/HST new housing rebate

For new builds, the federal government also offers a rebate on the GST/HST for anyone who buys a newly built or substantially renovated home as their primary place of residence. The rebate also applies when buying shares in a co-op or hiring a contractor to substantially rebuild or renovate your existing home.

Unfortunately, the GST/HST rebate only applies to homes with a fair-market value of $450,000 or less. But if your new home qualifies, you can receive a rebate of 36% of the GST charged on the home, up to a maximum of $6,300. 

The GST/HST rebate only applies to the federal part of the HST paid on a new home. 

The elected Liberal government has pledged to introduce a tax cut on new builds for first-time home buyers. This would apply for all new builds valued at or under $1 million.

4. First Home Savings Accounts (FHSA)

The First Home Savings Account (FHSA) is a registered savings plan that lets first-time buyers save up to $8,000 a year, tax free, to buy or build a home. For the purposes of the program, “first-time buyers” include anyone who hasn’t lived in a primary residence they (or their spouse or common-law partner) own in the last four calendar years.

As a savings vehicle, the FHSA combines the benefits of both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA).

Like an RRSP, contributions to your FHSA can be used as a deduction on your income taxes, to reduce the amount of tax you owe. But like a TFSA, the investments inside your FHSA also grow tax-free, so you won’t have to pay any tax when you withdraw the money to buy a property.

Once you open a FHSA, you can contribute the maximum annual amount for up to five years. This would allow a first-time buyer to save up to a lifetime maximum of $40,000 to put towards their down payment, or up to $80,000 in the case of a married or common-law couple.

You can also carry forward up to $8,000 from one year to the next, and you can keep your FHSA for up to 15 years before you have to use it to buy a home.

First-time buyers who take advantage of both an FHSA and the Home Buyers’ Plan (HBP) could withdraw up to $100,000 from their registered savings for a down payment without any tax implications. For a couple, the total amount would grow to $200,000.

Provincial programs

Provincial programs offer grants, rebates, tax credits and other programs to support home buyers, including first-time buyers. This includes programs like: 

• Ontario: Land Transfer Tax Refunds for First-Time Homebuyers