Buying your first home in Canada: the FHSA, the HBP, the GST rebate, land transfer tax and your down payment
Every form of federal and provincial support for first-time buyers, with the official numbers: how much you can take out of your savings tax-free, what you can get back in tax, how much you need as a down payment, and why the bank may turn you down even when the payment looks affordable.
A first-time home buyer in Canada can stack support from four sources: a First Home Savings Account (FHSA) with a $40,000 lifetime limit, up to $60,000 withdrawn from an RRSP under the Home Buyers' Plan (HBP), a GST rebate of up to $50,000 if the home is newly built, and a land transfer tax exemption or refund in Ontario, British Columbia and Quebec. The minimum down payment is 5% of the first $500,000 of the purchase price. Each program has its own conditions, so this guide takes them one at a time.
This guide is general information, not financial or legal advice. Before you sign anything, talk to a licensed financial advisor and a real estate lawyer.
Who counts as a "first-time buyer"?
The legal definition isn't the everyday one. For the FHSA, the HBP and the federal GST rebate, you're a first-time buyer if you haven't lived, as your main home, in a home owned by you or your spouse or common-law partner in the current year or the previous four years. So someone who sold their home more than four years ago may qualify as a first-time buyer again.
The land transfer tax programs in Ontario, Toronto and British Columbia are stricter: you must never have owned a home anywhere in the world, at any time. A newcomer who owned an apartment in their home country may still qualify for the federal programs but not for the provincial rebates.
The FHSA: a tax deduction going in, tax-free coming out
The Tax-Free First Home Savings Account (FHSA) combines two advantages: what you contribute is deducted from your taxable income, and what you withdraw to buy a qualifying home isn't taxed. Your contribution room starts at $8,000 in the first year, and total deductions are capped at $40,000. Room you don't use in one year carries forward to the next, but the amount carried forward can't exceed $8,000.
- Who can open one: you must be resident in Canada, be between 18 (19 in some provinces) and 71, and be a first-time buyer under the definition above.
- How long it stays open: it closes on 31 December of the year of whichever comes first: the 15th anniversary of opening it, your 71st birthday, or the year after your first qualifying withdrawal.
- If you don't buy: you can transfer the balance to an RRSP with no immediate tax. If you withdraw it as cash instead, it's added to your taxable income.
- A qualifying withdrawal: requires a written agreement to buy, Form RC725 completed with the financial institution that holds the account, and the intention to live in the home within one year of buying it.
To compare the FHSA, TFSA and RRSP for your first dollar of savings, see our guide TFSA, RRSP or FHSA?
The Home Buyers' Plan: up to $60,000 from your RRSP, paid back later
The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP tax-free to buy or build a qualifying home. It's a loan from yourself to yourself: you must pay it back into your RRSP over 15 years, and any annual repayment you miss is added to your taxable income for that year.
If you make your first withdrawal between 1 January 2026 and 31 December 2028, repayments start in the fifth year after the year of withdrawal instead of the second. So if you withdraw in 2026, your first repayment year is 2031.
You can use the FHSA and the HBP together for the same home, as long as you meet the conditions of each one at the time you withdraw. One person could therefore access up to $100,000 from the two accounts combined, provided they've actually saved that much.
The GST rebate for first-time buyers: new homes only
In March 2026 the Canada Revenue Agency (CRA) began accepting applications for the new first-time home buyers' GST rebate, which also covers the federal part of the HST. A first-time buyer can get back up to $50,000: all of the federal tax if the home is worth $1,000,000 or less, a partial rebate that shrinks between $1 million and $1.5 million, and nothing at $1.5 million or above.
- The home: a new or substantially renovated home that you buy from a builder or build yourself, and that you're the first to live in. A resale home doesn't qualify.
- The dates: the purchase agreement must be signed on or after 20 March 2025 and before 2031, construction must start before 2031, and it must be substantially completed before 2036.
- The buyer: 18 or older, a Canadian citizen or permanent resident, and neither you nor your spouse or common-law partner has received this rebate before.
- How to apply: the builder may credit it against the price at closing. If they don't, you apply yourself through your CRA account or with Form GST190 (or GST191 if you're building your own home), usually within two years of taking ownership.
The CRA page also notes that Ontario offers first-time buyers a rebate of up to $80,000 on the provincial part of the HST. Check the details and conditions of that rebate with the Government of Ontario.
Land transfer tax: what you can get back in Ontario, Toronto, BC and Quebec
Land transfer tax is paid once, when the home is registered in your name, and your mortgage doesn't cover it. It's one of the biggest costs first-time buyers overlook.
| Where | What a first-time buyer gets | Key conditions |
|---|---|---|
| Ontario (provincial tax) | A refund of up to $4,000, meaning no tax on the first $368,000 of the price | You've never owned a home anywhere in the world, you're a citizen or permanent resident, you move in within 9 months, and you claim the refund within 18 months |
| Toronto (municipal tax, MLTT) | A rebate of up to $4,475, on top of the provincial refund | Much the same conditions: no previous ownership anywhere, move in within 9 months, claim within 18 months |
| British Columbia | An exemption on the first $500,000 of the price: in full if the fair market value is $835,000 or less, and partial up to $860,000 | Citizen or permanent resident, lived in BC for 12 consecutive months or filed two income tax returns there in the last 6 years, and never owned a principal residence anywhere |
| Quebec (the "welcome tax") | A refundable tax credit of up to $5,875 | For homes bought on or after 1 January 2026, by someone who hasn't lived in a home owned by them or their spouse in the year of purchase or the previous four years |
An Ontario example: on a $600,000 home, the provincial tax under the official brackets comes to $8,475. Subtract the $4,000 refund and a first-time buyer pays $4,475. If the home is within the City of Toronto, there's also a municipal tax, which in turn is reduced by up to $4,475.
In Quebec, the new credit covers the first $5,000 of the tax in full, then a quarter of the amount above that, up to a maximum of $875. The Quebec government has announced that advance payment will be available from October 2026 when the amount owed is over $1,000. Rates vary from one municipality to another, so ask your notary to estimate the tax before you sign. You'll find more about the province on our Quebec page.
The minimum down payment and CMHC insurance
The minimum down payment in Canada depends on the purchase price:
- $500,000 or less: 5% of the price.
- Between $500,000 and $1.5 million: 5% of the first $500,000 and 10% of the portion above it.
- $1.5 million or more: 20% of the price.
If your down payment is under 20%, you must have mortgage default insurance, such as insurance from CMHC. The federal government raised the price cap for insured mortgages from $1 million to $1.5 million on 15 December 2024. Since that date, first-time buyers and anyone buying a newly built home can spread the loan over 30 years, which lowers the monthly payment.
| Loan-to-value ratio | CMHC premium on the total loan |
|---|---|
| Up to 65% | 0.60% |
| 65.01% to 75% | 1.70% |
| 75.01% to 80% | 2.40% |
| 80.01% to 85% | 2.80% |
| 85.01% to 90% | 3.10% |
| 90.01% to 95% | 4.00% |
Example: on a $600,000 home, the minimum down payment is $35,000: $25,000 on the first half-million and $10,000 on the remaining $100,000. That leaves a $565,000 loan, about 94% of the value, so the insurance premium is 4.00%, or $22,600, which is usually added to the mortgage.
In Ontario, Quebec and Saskatchewan, however, provincial sales tax applies to the insurance premium, and that tax can't be added to the mortgage: you pay it in cash at closing.
The stress test: why you can be turned down even if the payment fits your budget
Being able to afford the payment at the rate you're offered isn't enough. For uninsured mortgages from federally regulated lenders, the lender checks whether you could keep paying at the "minimum qualifying rate": the higher of your contract rate plus 2% or 5.25%. The Office of the Superintendent of Financial Institutions (OSFI) confirmed this rule in January 2026.
So if you're offered 4.5%, the bank will test you at 6.5%. Insured mortgages also have a stress test set by the federal government, so ask your lender directly which rate they'll test you at.
Your credit history affects both approval and the rate you get. If you're new to Canada, start building your credit score at least a year before you start house hunting.
What to do, in order, before you start looking
- Open an FHSA now, even if you can't put much in yet. Contribution room starts in the year you open the account, not before.
- Work out a realistic down payment: your FHSA balance, what you could withdraw under the HBP, and your cash savings.
- Add the closing costs: land transfer tax after any refund, the tax on the insurance premium if your province charges it, legal or notary fees, and the home inspection. Plan for them in your budget.
- Get a mortgage pre-approval so you know what price the stress test will accept.
- Work with a licensed real estate agent and a real estate lawyer. You'll find some in our real estate agents directory and our lawyers directory.
If you're looking for Sharia-compliant financing, see our guide to halal mortgages in Canada.
Frequently asked questions
Can I use an FHSA as a temporary resident?
To open an FHSA you need to be resident in Canada for tax purposes, not a permanent resident. But the GST rebate and the land transfer tax refunds in Ontario, Toronto and BC require you to be a citizen or permanent resident.
I owned an apartment in my home country. Am I still a first-time buyer?
For the federal programs (the FHSA, the HBP and the GST rebate), what matters is whether you lived in a home you owned in the current year or the previous four years. The Ontario, Toronto and BC rebates, however, exclude anyone who has ever owned a home anywhere in the world.
Does the GST rebate apply to a resale home?
No. It's only for a new or substantially renovated home, and you must be the first person to live in it after construction.
Can my spouse and I both use an FHSA?
Each eligible person has their own account and their own limit. To open one, your spouse or partner must not have owned a home that you lived in together during the same period.
When do I claim the Ontario land transfer tax refund?
It's usually claimed when the home is registered, and your lawyer normally handles it. If it's missed, you have 18 months from the registration date to claim it through the Ontario Ministry of Finance portal.