First-time home buyer programs in Canada include federal incentives like the Home Buyers' Plan and the First Home Savings Account, plus provincial land transfer tax rebates and mortgage insurance rules. This guide explains the general mechanics without quoting specific amounts, since limits and thresholds change.
First-time home buyer programs in Canada are offered by the federal government, provinces, and territories. They include tax-advantaged savings and withdrawal plans, land transfer tax rebates, down payment assistance, and mortgage loan insurance rules. Because program limits and eligibility criteria change, this guide explains how these programs generally work and directs you to official sources for current amounts.
| Program category | What it generally does | Who provides it | Where to find details |
|---|---|---|---|
| Federal savings and withdrawal plans | Allows tax-free or tax-deductible saving or withdrawal of funds for a home purchase | Federal government (Canada Revenue Agency) | FCAC mortgage resources |
| Federal mortgage loan insurance | Required for down payments under 20% with federally regulated lenders; protects the lender | CMHC or private insurers | CMHC website |
| Provincial land transfer tax rebates | Refunds or exempts part of the provincial land transfer tax for eligible first-time buyers | Provincial governments | Provincial finance ministry |
| Provincial down payment assistance | May offer loans, grants, or matched savings to help with a down payment | Provincial housing agencies | Provincial housing programs |
| Municipal programs | Some cities offer property tax rebates or affordable housing initiatives | Municipal governments | Local housing office |
Federal programs: savings and withdrawals
The two main federal programs for first-time buyers are the Home Buyers' Plan (HBP) and the First Home Savings Account (FHSA). The HBP allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. You generally must repay the withdrawn amount to your RRSP over a defined period; if you do not, the unpaid amount is added to your taxable income for that year. The FHSA is a registered account that combines features of an RRSP and a Tax-Free Savings Account (TFSA). Contributions are generally tax-deductible, and qualifying withdrawals for a home purchase are tax-free. Both programs have annual and lifetime limits set by the Canada Revenue Agency, and the definition of a first-time buyer applies. You must also intend to occupy the home as your principal residence within one year of buying. The FHSA is designed to be used within a specific time frame after opening, and you must be a Canadian resident. Both programs require you to be a first-time buyer as defined by the program, which generally means you have not owned a home in a certain period. For official details, see the Financial Consumer Agency of Canada's mortgage resources.
Provincial and territorial incentives
Provinces and territories offer their own programs. Common types include land transfer tax rebates or exemptions, which reduce the provincial tax payable when you buy a home. For example, Ontario has a land transfer tax rebate for eligible first-time buyers, and British Columbia offers a property transfer tax exemption. Other provinces may provide down payment assistance in the form of interest-free loans or grants. The maximum amounts and eligibility rules vary widely by province and can change with each provincial budget. Some programs target specific groups, such as teachers, nurses, or veterans. Because these programs are administered provincially, you should check the website of your provincial finance ministry or housing agency for current details. There is no single national database, so it is important to verify the rules for the province or territory where you plan to buy. Some rebates apply only to newly built homes, while others apply to resale homes; the distinction matters when you are house hunting. Some provinces also offer a refund of the provincial portion of the HST on new homes, which can benefit first-time buyers even if it is not exclusive to them.
Mortgage loan insurance for first-time buyers
In Canada, federally regulated lenders must require mortgage loan insurance when the down payment is less than 20% of the home price. This insurance protects the lender if the borrower defaults. It is provided by Canada Mortgage and Housing Corporation (CMHC) or private insurers such as Sagen and Canada Guaranty. The insurance premium is a percentage of the mortgage amount and is typically added to the mortgage balance, though it can be paid upfront. First-time buyers with a low down payment also have to meet the mortgage stress test, which requires qualifying at a higher interest rate than the contract rate. The stress test applies to all federally regulated lenders, even if you have a co-signer. For more information on mortgages and insurance, see the Financial Consumer Agency of Canada.
How co-signing interacts with first-time buyer programs
A co-signer can help a first-time buyer qualify for a larger mortgage or a better rate by adding their income and credit history to the application. However, co-signing has implications for both parties. The co-signer is legally responsible for the debt if the primary borrower defaults. More importantly for first-time buyer programs, if the co-signer is added to the title of the home, they may be considered a homeowner. That can affect their own eligibility for first-time buyer programs in the future, because many programs require that you have not owned a home in a specified period. Some programs also require all borrowers on the mortgage to be first-time buyers. Before you co-sign, it is important to understand these rules. For general information about co-signing, see what it means to be a co-signer. You can also read about the Financial Consumer Agency of Canada's loans page for broader borrowing considerations.
Common mistakes to avoid
- Assuming you automatically qualify for every program. Each program has its own definition of "first-time buyer" and its own eligibility rules.
- Forgetting that program limits change. Amounts and thresholds are updated periodically, often in federal or provincial budgets.
- Not checking whether a co-signer will lose their own first-time buyer status. If they go on title, they may be treated as a homeowner.
- Ignoring the mortgage stress test. Even with a co-signer, you must qualify at the higher stress-test rate.
- Overlooking the repayment rules for the Home Buyers' Plan. If you fail to repay the required amount, it becomes taxable income.
- Using a loan payment calculator only for the mortgage principal. Remember to include property taxes, insurance, and maintenance. Try our loan payment calculator to estimate payments.
- Assuming bad credit will not affect the mortgage. If you have credit challenges, review resources like our guide to bad credit loans to understand your options.
- Not budgeting for closing costs, such as legal fees, appraisal fees, and title insurance, which can add up quickly.