First-Time Home Buyer in Canada 2025: Every Program and Incentive Explained

Buying your first home in Canada is one of the largest financial decisions you will ever make — and the government offers a collection of programs designed to reduce the barrier. The challenge is that these programs have different eligibility rules, different tax implications, and interact with each other in ways that aren't always obvious. Used correctly, they can contribute well over $100,000 toward your first home purchase. Used incorrectly, they can create tax headaches that last years.

This guide covers every major first-time buyer program and incentive available in Canada for 2025: the First Home Savings Account, the Home Buyers' Plan, land transfer tax rebates, the First-Time Home Buyer's Tax Credit, CMHC mortgage insurance rules, and the mortgage stress test. Read through all of it — the programs are designed to work together.

Program 1: The First Home Savings Account (FHSA)

The First Home Savings Account is the most powerful first-time buyer tool the federal government has ever created. It combines two features that have never before appeared in the same account: contributions are tax-deductible (reducing your taxable income like an RRSP), and qualifying withdrawals to purchase a first home are entirely tax-free (like a TFSA). In effect, the government is subsidizing both your contribution and your withdrawal.

To open an FHSA, you must be a Canadian resident, at least 18 years old, and a first-time home buyer — meaning you have not owned a home that you lived in at any point during the current calendar year or in any of the preceding four calendar years. Note that your spouse's ownership history does not disqualify you; only your own is considered.

The annual contribution limit is $8,000. Unused annual room carries forward — but only by one year. If you contribute $5,000 in 2024, you can contribute up to $11,000 in 2025 ($8,000 for 2025 + $3,000 carried from 2024). Unused room beyond one year is lost, so opening the account as early as possible — even with a small contribution — starts the clock on room accumulation.

The lifetime contribution limit is $40,000. If you max out the FHSA over five years ($8,000 × 5) and are in a 40% marginal tax bracket, the deductions alone save you $16,000 in income tax. The withdrawal to purchase your home is then completely tax-free — meaning the full $40,000 plus all investment growth goes toward your home purchase with no tax consequence.

If you ultimately do not buy a home, the FHSA can be transferred to an RRSP or RRIF without affecting your RRSP contribution room. The account must be closed by December 31 of the year that is 15 years after it was opened, or by the end of the year you turn 71.

Program 2: The Home Buyers' Plan (HBP)

The Home Buyers' Plan allows first-time buyers to withdraw up to $60,000 from their RRSP without paying withholding tax at the time of withdrawal. This limit was increased from $35,000 in the federal 2024 budget, a significant improvement. If two qualifying buyers are purchasing together, each can withdraw $60,000 for a combined $120,000.

The catch is that HBP withdrawals are not free money — they are an interest-free loan from your future self. You must repay the withdrawn amount over 15 years, starting two years after the calendar year in which you made the withdrawal. For example, if you withdraw in 2025, repayments begin in 2027. Each year, 1/15th of the total amount must be repaid to your RRSP. If you miss a repayment in a given year, that year's required amount is added to your taxable income.

One important rule: the RRSP funds must have been in the account for at least 90 days before the withdrawal. You cannot rapidly dump money into your RRSP and immediately withdraw it under the HBP. This means you need to plan ahead — if you're planning to use the HBP in spring, the funds should ideally already be in your RRSP from the prior year.

FHSA vs HBP: Key Differences

Program 3: Land Transfer Tax Rebates

When you buy a home, most provinces charge a Land Transfer Tax (LTT) — a one-time tax based on the purchase price of the property. Several provinces and municipalities offer first-time buyer rebates that eliminate or reduce this cost.

Ontario

Ontario first-time buyers receive a rebate of up to $4,000 on provincial LTT. This covers the full tax on homes priced up to approximately $368,000. For homes above that, the rebate reduces (but doesn't eliminate) the LTT owing. Buyers purchasing in the City of Toronto also pay a separate municipal LTT and are eligible for an additional Toronto first-time buyer rebate of up to $4,475.

British Columbia

BC offers a First-Time Home Buyers' Program that exempts qualifying buyers from the Property Transfer Tax on homes valued up to $500,000. A partial exemption applies on homes valued between $500,000 and $525,000. At the $500,000 threshold, this saves buyers up to $8,000.

Other Provinces

Prince Edward Island offers a rebate of up to $2,000 for first-time buyers. New Brunswick charges LTT but does not offer a first-time buyer rebate. Alberta and Saskatchewan do not charge provincial land transfer tax, so no rebate is needed. Quebec charges a Welcome Tax (taxe de bienvenue) but does not currently offer a provincial first-time buyer rebate, though some municipalities offer assistance programs.

Program 4: The First-Time Home Buyer's Tax Credit

The federal government offers a non-refundable First-Time Home Buyer's Tax Credit of $10,000, which translates to a tax saving of up to $1,500 (at the 15% federal tax rate). You claim it on your federal income tax return for the year you purchase the qualifying home.

To be eligible, you must be a first-time buyer and the home must be a qualifying home — meaning it must be registered in your name (or your spouse's name) and must be your principal place of residence by the end of the calendar year following the purchase. Persons with disabilities who purchase a more accessible home may also qualify, even if they are not first-time buyers.

Program 5: GST/HST New Housing Rebate

If you purchase a newly constructed home or substantially renovate an existing home, you may be eligible for a GST/HST New Housing Rebate. The rebate offsets part of the GST (or federal portion of HST) paid on a new home. For homes priced below $350,000, the maximum federal rebate is $6,300. A partial rebate is available on homes priced between $350,000 and $450,000. Homes above $450,000 do not qualify for the federal portion of the rebate.

Ontario and other HST provinces also offer a provincial portion of the new housing rebate, which has its own thresholds. These rebates apply at the time of purchase and are often factored into the builder's price.

CMHC Mortgage Insurance: What First-Time Buyers Need to Know

If your down payment is less than 20% of the purchase price, your mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC), or an approved alternative insurer (Sagen or Canada Guaranty). Mortgage insurance is not optional — it's a legal requirement for high-ratio mortgages in Canada.

As of 2024, CMHC-insured mortgages are available on homes priced up to $1.5 million (increased from $1 million). The premium is calculated as a percentage of your mortgage amount:

The CMHC premium is added to your mortgage balance and repaid over the amortization period (not paid upfront). On a $500,000 mortgage with 5% down, the premium is $20,000 — adding it to your mortgage increases monthly payments, but it also means you can enter the market sooner without waiting to save a 20% down payment.

The Mortgage Stress Test: Qualifying for Your Purchase

Before any lender will approve your mortgage, you must pass Canada's mortgage stress test, governed by the Office of the Superintendent of Financial Institutions (OSFI). The stress test requires you to qualify at the higher of: your contract rate plus 2%, or 5.25%.

This means if you negotiate a mortgage at 5.0%, you must demonstrate that you could afford payments at 7.0% (5.0% + 2%). The stress test applies to all federally regulated lenders, regardless of your down payment. It effectively reduces the maximum mortgage you qualify for compared to what you might expect based on current rates alone.

Minimum Down Payment Rules

Canada's minimum down payment rules are tiered by purchase price:

• 5% on the first $500,000 of the home's value
• 10% on the portion of the price between $500,000 and $999,999
• 20% on any home priced at $1,000,000 or more (CMHC insurance not available)

For a home priced at $750,000, the minimum down payment calculation is: 5% × $500,000 ($25,000) + 10% × $250,000 ($25,000) = $50,000 total minimum down payment.

Step-by-Step: The First-Time Buyer Process

1. Open an FHSA now — even a small contribution starts your carry-forward clock. Open one at your bank or brokerage immediately if you haven't already.
2. Build your RRSP — contribute regularly so HBP funds have been in the account at least 90 days before you need them.
3. Get mortgage pre-approval — know exactly what you can afford before you start viewing properties. A pre-approval locks in a rate for 90–120 days.
4. Engage a real estate agent — for a first-time buyer, having representation costs you nothing (the seller pays the commission in most provinces).
5. Make an offer — include conditions: financing, home inspection, and (where applicable) status certificate review for condos.
6. Complete a home inspection — even in competitive markets, don't waive the inspection lightly. It protects you from costly surprises.
7. Close the purchase — your lawyer will handle the title transfer, LTT payment (and rebate application), and mortgage registration.

Sources

• Canada Revenue Agency — First Home Savings Account (FHSA)
• Canada Revenue Agency — Home Buyers' Plan (HBP)
• CMHC — Mortgage Loan Insurance
• Ontario Ministry of Finance — Land Transfer Tax