2024 Canada First-Time Home Buyer's Guide - Programs & Incentives

Q: What is the maximum RRSP contribution amount for a first-time home buyer?

Using the RRSP Home Buyers’ Plan (HBP), someone saving for a home purchase can deposit up to 18% of their previous year’s income, or up to the year’s maximum RRSP contribution limit, whichever is higher. However, those using the HBP can only withdraw a maximum of $60,000 to use towards their home purchase.

Q: What is the FHSA limit in Canada?

Th e First Home Savings Account is an other program offered by the federal government to help first-time home buyers save a down payment. Savers can deposit up to $8,000 into their FHSA annually, up to a lifetime maximum of $40,000, however, withdrawals are not capped, meaning any income earned within the account can be accessed tax-free. Those who are saving up for a home purchase with a partner can each have an FHSA if they are both first-time buyers, up to a combined contribution limit of $80,000.

Q: What bank has FHSA in Canada?

As the First Home Savings Account was launched on April 1, 2023, and is available at all of Canada’s federally-regulated financial institutions.

Complete guide for first-time home buyers in Canada

Jamie David, Sr. Director of Marketing and Mortgages

October 2, 2024

Did you know:

As of December 15, 2024, all first-time home buyers in Canada will be able to extend their mortgage amortization period to 30 from the previous maximum of 25, regardless of whether they’re an insured or uninsured borrower.
The maximum purchase price for insured mortgages will also be expanded to $1.5 million, from the current $1 million, for all high-ratio borrowers including first-time home buyers.
Read more about these changes to amortizations and maximum insured down payment amounts on the Ratehub blog.

Being a first-time home buyer can be both exciting and stressful – but it also tends to be very expensive, especially if you don’t have any pre-existing assets to help you get a mortgage. After all, most first-time home buyers in Canada don’t have proceeds from the sale of a property to fund their first purchase! Fortunately, the Canadian government offers a number of first-time home buyer programs to ease the financial burden of breaking into the housing market.

This page includes all of the resources you'll need to get started on your home buying journey. Find out more about the RRSP Home Buyers’ Plan (HBP), tax credits and rebates, grants, and programs available in Canada in 2024, including the newest federal program, the First Home Savings Account. There are also some helpful links to our provincial first-time home buyer pages, where you can learn more about the various incentives and programs available at the provincial level.

You can get started with the helpful video below, and then read on for more information.

WATCH: How much mortgage can you afford?

First-time home buyers: Frequently asked questions

How do I qualify as a first-time home buyer in Canada?

To qualify as a first-time home buyer in Canada, you must meet the following criteria set out in the Income Tax Act:

You are a Canadian resident at the time you withdraw any funds from a registered government plan for the use of a first-home purchase
You must have not, at any time in the current calendar year or preceding four calendar years, lived in a home you owned, or jointly owned, or that your spouse or common-law partner owned or jointly owned.
However, you can regain your first-time home buyer status in the case your marriage or common-law relationship breaks down, as long as you have lived separate and apart from your former partner for at least 90 days, unless you start to live in a new principal residence with a new spouse or common-law partner during that time frame.

You can learn more about the definition of a First-Time Home Buyer on the federal government’s website.

How much do I need for a down payment as a first-time home buyer?

The amount you save for your home purchase down payment doesn’t depend on your status as a first-time home buyer. However, in Canada, home buyers must have a minimum percentage of the home’s purchase price on hand. The amount depends on how much the home costs:

If the purchase price is less than $500,000, the minimum down payment is 5%.
If the purchase price is between $500,000 and $1,499,999 (as of December 15, 2024), the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.
If the purchase price is $1,500,000 or more, the minimum down payment is 20%

What was the Canadian government incentive for first-time home buyers?

The First Time Home Buyer Incentive (FTHBI) was a program offered through the federal government that helped boost first-time home buyers’ down payments. It has been discontinued as of March 31, 2024. The FTHBI provided an interest-free loan of between 5% - 10% of the home’s total cost. This amount needed to be paid back within 25 years or when the home was sold, whichever came first. In exchange, the government shared the equity built up in the home; you’d pay back more if it appreciated in value, or less if it depreciated, up to a maximum gain or loss of 8% per annum.

What is the maximum RRSP contribution amount for a first-time home buyer?

What is the FHSA limit in Canada?

The First Home Savings Account is another program offered by the federal government to help first-time home buyers save a down payment. Savers can deposit up to $8,000 into their FHSA annually, up to a lifetime maximum of $40,000, however, withdrawals are not capped, meaning any income earned within the account can be accessed tax-free. Those who are saving up for a home purchase with a partner can each have an FHSA if they are both first-time buyers, up to a combined contribution limit of $80,000.

What bank has FHSA in Canada?

Programs for first-time home buyers in Canada

Here are some of the main first-time home buyer programs you should be aware of. Have a look at this video, and then read on to learn more.

UPDATE: As of March 31, 2024, the First-Time Home Buyer Incentive will be discontinued. Read our blog post Federal government cancels the First Time Home Buyer Incentive to find out more.

WATCH: First-Time Home Buyer Programs in Canada: What you need to know

First Home Savings Account

The First Home Savings Account is a new savings vehicle that was announced in the 2022 federal budget, and became available as of April 1, 2023. It combines features from both TFSAs (Tax Free Savings Accounts) and RRSPs (Registered Retirement Savings Plans), but has advantages over both. Your contributions to your First Home Savings Account (FHSA) are tax-free, and you don't have to pay yourself back when you take out money from your first home account to purchase your first home.

Account holders can contribute up to $8,000 annually to the account, with room rolling forward if they don’t use it all during the calendar year, up to a lifetime maximum of $40,000. Partners who are saving for a first home together can each have an FHSA, with a combined total room of $80,000. As well, savers can combine the funds saved in the FHSA with those saved in the Home Buyers’ Plan when it comes time to purchase their home.

In order to access the First Home Savings Account, account holders must have entered into an agreement to purchase a home. Alternatively, the funds can be transferred into an RRSP at any time, without tax penalty. Overall, the account can be kept open for 15 years, or until you purchase your first home (it must be closed within the year of entering into an agreement of purchase and sale).

The First Home Savings Account came into effect as of April 1, 2023, and is now widely available at all of Canada’s federally regulated financial institutions. You can learn more about the First Home Savings Account on our blog and in this informative video on our YouTube channel.

RRSP Home Buyers' Plan

If you haven’t purchased a home within the last four years (or lived in a spouse’s home in the same timeframe), you may qualify for the RRSP Home Buyers' Plan (HBP).

The HBP isn't a credit or rebate. Instead, it allows first-time home buyers to use their tax-sheltered savings in a Registered Retirement Savings Plan (RRSP) for their down payment. As a first-time home buyer, the HBP lets you withdraw up to $60,000 for your down payment, which must be repaid into your RRSP within 15 years. There are some additional conditions to be aware of, and there's a risk you may cannibalize your long-term savings by using funds from your RRSP today – be sure to do your research before using this program. As well, the money must be in your RRSP at least 90 days before the purchase of your house.

The RRSP Home Buyers' Plan is advantageous for Canadians because, generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt, but you must start repaying the amount borrowed from the RRSP five years after you buy, in annual instalments over the 15-year timeline. Failure to make an HBP repayment will result in that portion of the funds being earmarked as taxable income for that tax year.

Recent changes to the RRSP Home Buyers' Plan

On April 11, 2024, the federal government announced an expansion to the withdrawal limit for the RRSP Home Buyers’ Plan, to $60,000 from $35,000. This went into effect on April 16, 2024. This is the second time the withdrawal limit has been increased since it was introduced in 1992; it was last updated from a limit of $25,000 in 2019.

The new measure also extended the amount of time home buyers have before they need to start making repayment instalments, to five years from two, for those who make HBP withdrawals between January 1, 2022, and December 31, 2025.

Check out our blog to learn more about the government’s announcement.

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Land Transfer Tax Rebate

Some Canadian provinces charge a land transfer tax when you buy a house. This is generally between 0.5% and 2.0% of the purchase price of the property, and represents the largest closing cost you'll have to pay. In an effort to help first-time home buyers, several provinces rebate some or all of this tax if you're eligible.

You can receive a rebate on some of the land transfer tax you pay if you live in British Columbia, Ontario or Prince Edward Island. Home buyers in the City of Toronto are also eligible to receive a rebate on the city’s land transfer tax, in addition to the provincial rebate.

Here are the maximum rebates for the four rebates:

City of Toronto: $4,475
Ontario: $4,000
British Columbia: $8,000
Prince Edward Island: $2,000

First Time Home Buyers' Tax Credit

The First Time Home Buyers' Tax Credit, introduced in the 2009 federal budget, allows first-time home buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections and other similar closing costs. The First Time Home Buyers' Tax Credit is a non-refundable credit and was valued at $750 until the 2022 budget was passed, which increased the credit amount to $1,500.

GST/HST New Housing Rebate

The GST/HST New Housing Rebate offers money back to Canadians who buy a newly-built home, substantially renovate an existing home, or rebuild a home that was destroyed due to fire. In all three cases, an individual will incur GST/HST on their purchase. The GST portion of a new home purchase or renovation can be rebated to all Canadians who qualify. It's not exclusively available to first-time home buyers, but it's regularly used by first-time home buyers that are buying newly-built homes.

This rebate applies to the federal component of this tax, but some provinces also have their own version of this rebate, which reimburses buyers a portion of the provincial component.

Other tax incentives for Canadian homeowners

Homeownership in Canada can be financially challenging; to help offset some of these costs, the federal government offers a number of tax incentives for homeowners. While some are specifically for first-time home buyers – such as the First Time Home Buyers’ Tax Credit and Land Transfer Tax Rebate – others can be utilized by anyone who owns their home. These include:

Multigenerational Home Renovation Tax Credit (MHRTC)

The MHRTC is designed to make it more affordable for multiple members of the same family to live together in one dwelling. This credit offers a refund for eligible expenses for renovations that create self-contained secondary units, such as “in-law suites”. Up to $50,000 can be claimed for each completed qualifying renovation during the taxation year, with a credit of 15% of costs, up to a maximum of $7,500 for each claim.

Home Accessibility Tax Credit

The HATC is a non-refundable tax credit for renovations that make the home accessible for those with disabilities. The alterations must be created to allow an individual to be mobile or functional within the dwelling, gain access to the building, or reduce their risk of harm within it. The HATC has an annual expense limit of $20,000, with a tax credit up to $3,000, and can be claimed by eligible or qualifying individuals.

Tax obligations for homeowners

Principal residence tax exemption

A big perk for homeowners in Canada is that they do not need to pay capital gains when selling their principal residence. However, in order to qualify for the exemption, those selling their home must report the sale to the CRA, and designate it as their principal residence when filing their personal income tax return. This must be done the year the home is sold.

However, those who own a secondary property, including cottages and investment homes, will be subject to capital gains tax when the home is sold, or passed down through the estate. As of April 16, 2024, the capital gains tax rate for individuals in Canada increased to 66.7% for those with more than $250,000 in capital gains per year. Under this new structure, the first $250,000 of capital gains will be taxed at a rate of 50%, with the remainder taxed at the new two-thirds inclusion rate.

Check out our blog on the latest changes to capital gains tax in Canada.

Underused housing tax

Introduced in January 2022 to help address the nation’s housing shortage, the federal government now requires an annual federal tax of 1% on the ownership of vacant or underused housing. While the tax “generally applies to foreign national owners” of Canadian real estate, some Canadian homeowners – such as those who own a property as part of a partnership, or as trustee of a trust, may need to file a UHT return. However, there are some exemptions which homeowners can see if they qualify for using the CRA’s self-assessment tool.

Residential property flipping rule

First introduced in the federal government’s 2022 budget, this is a new deeming rule that requires taxpayers to own a property for at least 365 consecutive days in order to claim the principal residence exemption or 50% capital gains inclusion. Properties that are sold earlier than this timeframe will now be considered “flipped” properties – defined as buying and selling a residential property within a short time period to realize a profit – and their proceeds will now be taxed fully as business income. This also applies to rental properties, as well as “assignment sales”, where the rights to purchase a property change ownership before its official sale closing. However, there are some exemptions – homeowners can visit the CRA’s website to learn more.

Accommodation sharing

Accommodation sharing refers to renting out part or all of a residential property – including both primary and secondary residences – usually for a short term of time, and often through a third-party website such as AirBnB. Any income obtained from accommodation sharing must be reported to the CRA, and is subject to income tax. The CRA will usually consider the income to be from a rental property if basics such as heat, laundry, utilities and parking, are provided. However, if the property rental includes services such as cleaning, meals, and security, the CRA may instead define the income to be self-employed business income.

Accommodation sharing homeowners may also be subjected to taxation at the provincial or municipal level, for example, Toronto’s Municipal Accommodation Tax (MAT), which charges 6% of the listing price and cleaning fee.

Property owners can learn more on the federal government's website.

More information for first-time home buyers

Below are some other general tips on how to buy a house as a first-time home buyer in Canada. Check the links in each section for more information on any of these topics.

What are the criteria for first-time home buyers in Canada?

To qualify for the various federal and provincial first-time home buyer tax credits and programs in Canada, there are a number of criteria that need to be met. Each program has a different set of criteria. However, there are a number of criteria pertaining to age, citizenship status, recency of home purchase, and home occupancy that are generally similar among them. For federal programs such as the First Time Home Buyers’ Tax Credit and the RRSP Home Buyers’ Plan, the following apply:

You must be at least 18 years of age
You must be a Canadian citizen or permanent resident
The property/home you bought must be in Canada
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
You must intend to live in the home as your primary residence within one year of purchase

Make sure to read the information on our site about the various federal and provincial first-time home buyer programs and incentives to get more specific eligibility information.

Down payment

For first-time home buyers, the down payment is probably the main thing you'll need to think about for your first purchase. In Canada, you must put down a minimum of 5% as a down payment for homes less than $500,000. If the purchase price is between $500,000 and $1.5 million (as of December 15, 2024), you'll need 10% on the amount between $500,000 and $1.5 million. For houses over $1.5 million, the minimum down payment is 20%.

Mortgage default insurance

Mortgage default insurance, also sometimes known as CMHC Insurance (although CMHC is just one of three mortgage default insurance providers in Canada), may seem like a strange concept, but it’s relatively straightforward. If you have a down payment of less than 20% of the home’s value, you must purchase mortgage default insurance. But this doesn’t act as insurance for you. Rather, it protects your lender in case you don’t make your mortgage payments. It’s designed to make financial institutions comfortable with lending to individuals who don’t have a large down payment.

Mortgage insurance is calculated as a percentage of the value of the mortgage amount, and , as of December 15, 2024, also depends on the length of your amortization.

For those with an amortization of 25 years, If your down payment is between 5% to 9.99%, the mortgage insurance will represent 4% of the mortgage amount. For down payments of 10% to 14.99%, the mortgage insurance will cost 3.10%. And for down payments of 15% to 19.99%, mortgage insurance costs 2.8%.

For those who extend their amortization length to 30 years (an option available to all first-time home buyers as of December 15, 2024), a 20-basis-point (0.2%) is added to each tier.

LTV Ratio	25-Year Amortization	30-Year Amortization
80.01% - 85%	2.80%	3.00%
85.01% - 90%	3.10%	3.30%
90.01% - 95%	4.00%	4.20%

Source: Canada Mortgage and Housing Corporation

Mortgage default insurance isn’t available for homes with a purchase price of more than $1.5 million. As a result, anyone buying a house in excess of this amount must have at least 20% as a down payment on their purchase.

Provincial first-time home buyer programs

Most first-time home buyer programs are found at the federal level, but there are several provinces that have their own programs as well (along with the land transfer tax rebates we mentioned earlier). Quebec, for example, offers an additional tax credit (max $750) to first-time homebuyers.

To properly understand what you'll be eligible for in your province, it's worth speaking to a mortgage broker near you - consultations are free. Below are all of our provincial first-time home buyer pages, where you can find detailed, province-specific information.

First-time home buyer education topics

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