Federal Programs Overview
The Canadian federal government offers several programs designed to help homebuyers — particularly first-time purchasers — enter the market. While some of these programs have evolved over time, understanding what's available can save you thousands of dollars.
First-Time Home Buyer Incentive (FTHBI)
The FTHBI is a shared-equity program where the government contributes 5% or 10% of the home's purchase price toward your down payment, reducing your mortgage amount and monthly payments. In exchange, the government takes an equity stake in your property and receives the same percentage back when you sell (based on the home's value at that time) or after 25 years.
Key qualifications:
- Household income must not exceed $120,000 (or $150,000 in Toronto, Vancouver, and Victoria)
- Your mortgage plus the incentive cannot exceed 4x your household income (4.5x in Toronto)
- You must be a first-time buyer or meet the program's definition of a qualifying buyer
The program has limitations. In Toronto's market, the income and purchase price caps restrict eligibility for many buyers. Run the numbers with your mortgage broker to determine if you qualify and whether the shared equity makes financial sense for your situation.
GST/HST New Housing Rebate
If you're buying a newly built home or substantially renovated property, you may be eligible for the GST/HST New Housing Rebate. In Ontario, this can return a portion of the HST paid on the purchase — up to $24,000 for the federal portion and up to $24,000 for the provincial portion. The rebate phases out as the purchase price increases above $350,000 (federal) and $400,000 (Ontario).
For new construction purchases, the builder typically includes the HST in the purchase price and applies for the rebate on your behalf. Confirm this with your builder and lawyer before signing.
Home Accessibility Tax Credit
If you or a family member qualify for the Disability Tax Credit, the Home Accessibility Tax Credit allows you to claim up to $20,000 in eligible renovation expenses for a 15% non-refundable tax credit (up to $3,000 in tax relief). Eligible renovations include ramp installation, walk-in bathtubs, widened doorways, and other accessibility improvements.
Home Buyers' Tax Credit
A straightforward $10,000 non-refundable tax credit available to first-time homebuyers. At the 15% federal rate, this saves you $1,500. Both you and your spouse can claim it if you both qualify, though the total claim cannot exceed $10,000 combined. Claim it on Line 31270 of your tax return.
Provincial Programs to Combine
Ontario's Land Transfer Tax rebate (up to $4,000 for first-time buyers) and Toronto's Municipal LTT rebate (up to $4,475) stack on top of federal programs. A first-time buyer using the FHSA, HBP, LTT rebates, and federal tax credits can access tens of thousands of dollars in combined support. Work with your accountant or financial advisor to maximize every available benefit.