Unlocking Major Savings: Incentives for First-Time Home Buyers

Buying your first home is exciting – and expensive. If you already have a home, you already know this. But, maybe you have adult kids looking to acquire their first place. If so, chances are they might be struggling with what feels like an uphill battle.  Either way, there is some good news. In Ontario, there are several government-backed programs designed to significantly ease the financial burden. Here’s a rundown of the key incentives, what they are, how they work, and what you should keep in mind when planning your purchase.

1. The Proposed Federal GST/HST Rebate for First-Time Buyers

The federal government has put forward legislation to introduce a new rebate for first-time home buyers that will eliminate or reduce the federal portion of the GST (5%) or the federal part of HST on newly built or substantially renovated homes.

Key details:

• Homes valued up to $1-million: eligible for 100% of the federal GST/federal HST portion,
  up to a maximum benefit of $50,000.
• Homes valued between $1-million and $1.5-million: rebate gradually phases out. For
  example, a $1.25-million home might get ~50% of the max rebate (~$25,000) under the
  “linear phase-out.”
• Homes valued at or above $1.5-million: no rebate.
• Applies if the purchase or agreement is entered into on or after May 27, 2025, and
  before 2031, with construction beginning before 2031 and substantially completed
  before 2036.
• To qualify as a first-time home buyer under this rebate: The buyer must be at least 18
  years of age, a Canadian citizen or permanent resident, and you (or your
  spouse/common-law partner) must not have lived in a home you owned (or jointly
  owned) as a primary residence in the calendar year of purchase or during the previous 4
  calendar years.

What this means in practice:

If you qualify and buy a brand-new home from a builder in Ontario for $1-million or less, you
could save up to ~$50,000 via this rebate. That’s significant cost relief right off the bat for a first
home.

Important caveats:

This is proposed legislation, not yet fully in force. The official rules and forms remain
pending.

• It applies to new homes or substantially renovated homes, not typical resale homes.
  That limits its applicability.
• Make sure your Agreement of Purchase & Sale (APS) meets the “on or after May 27,
  2025” criterion (if you want to qualify); an older APS might disqualify you.
• Read more about this proposed program here: Government of Canada

2. The Proposed Ontario Provincial HST Rebate for First-Time Buyers

Building on the federal move, the province of Ontario has announced a proposed rebate of the full 8% provincial portion of HST for first‐time home buyers purchasing new or substantially renovated homes valued up to $1-million.

Highlights:

• If fully enacted, the provincial portion of HST (8%) would be entirely rebated for eligible first-time buyers on new builds up to $1-million.
• Together with the federal rebate (if eligible), the total potential savings could approach $130,000 on a $1-million home (i.e. full relief of the 13% HST/GST) according to some industry estimates.
• Applies to APS entered on or after May 27, 2025, with further construction/completion timeline requirements similar to the federal rebate.

What to watch:

• This is a proposed program – legislation still required for full enactment.
• Only new or substantially renovated homes qualify (not standard resale homes).
• The value cap and phase-out for homes up to $1-million but less than $1.5-million might apply – similar to the federal structure.
• Because builders may build the rebate into the purchase price, you’ll want to check your APS for any clause that assigns your rebate to the builder. Some buyers on forums noted clauses that transfer future rebates to builder.
• Read more about this proposed program here: Government of Ontario

3. Ontario First-Time Buyer Land Transfer Tax (LTT) Rebate

Even the provincial land transfer tax (LTT) is less expensive for first-time buyers in Ontario.

Key facts:

For transfers on or after Jan 1, 2017, qualifying first-time home buyers get a refund of up
to $4,000 of the provincial LTT.

• For homes valued up to about $368,000, the rebate may cover the full provincial LTT amount. If you buy a more expensive home, you still receive up to the $4,000 maximum, but will owe any provincial LTT applicable to homes valued over ~$368,000. Read more about the provincial LTT here: Ontario Land Transfer Tax Rebate
• In the City of Toronto, there’s a separate municipal land transfer tax (MLTT). First-time home buyers may qualify for a rebate up to $4,475 for the municipal portion. Read more about the Toronto MLTT here: Toronto Land Transfer Tax Rebate

Eligibility criteria (provincial LTT rebate):

• The buyer must be at least 18 years old, occupy the home as principal residence within 9 months, and must never have owned a home or interest in a home anywhere in the world (regardless of whether it was your principal residence) – and your spouse/common-law partner must not have owned either  while married to you.
• Important distinction: The “first-time” definition here is different from some federal programs (i.e. the Home Buyers’ Plan (HBP)). See section below.

What this means for you:

Even if you aren’t buying a new build (so you miss the GST/HST rebates above), you still get meaningful savings via reduced land transfer tax. This could translate to thousands of dollars staying in your pocket rather than going to tax.

4. The Home Buyers’ Plan (HBP) – RRSP Withdrawal Program

Another key federal program, the HBP allows first-time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) tax-free (for now) to put toward their home purchase or construction.

Highlights:

• You can withdraw up to $60,000 if you're buying by yourself, or $120,000 if you’re a couple.
• The withdrawal is tax-free at the time of withdrawal, but you must repay it to your RRSP over a 15 year period starting two years after the withdrawal.
• To qualify you must not have lived in a home you owned, or jointly owned, as your principal residence in the current calendar year or in the 4 preceding calendar years.
• Read more about the HBP here: Home Buyers' Plan (HBP)

Why this matters:

This program gives you access to registered savings for purposes of a home purchase without triggering an immediate tax obligation. That’s a major advantage if you have RRSP savings and want to turn them into a down payment or reduce your mortgage amount.

Putting It All Together – And What It Means For You

Here’s a simplified overview of how these incentives might work in concert for a first-time home buyer in Ontario:

1. Decide & qualify: Make sure you meet the “first-time home buyer” definition for each program you’re targeting (they differ between federal/provincial/municipal programs).
2. Check property type: If you’re buying a new build or substantially renovated property, you may be eligible for the GST/HST rebates (federal and provincial). If it’s a resale home, you’ll rely on land transfer tax rebates and the HBP, but might not qualify for the GST/HST new-home rebates.
3. Understand timing & conditions: For the GST/HST rebates, the APS must be entered on or after May 27, 2025, (and before 2031) in order to qualify. Construction must begin and complete within specific windows.
4. Down payment planning: Use the HBP to pull RRSPs tax-free (up to $60,000/$120,000) to boost your down payment or reduce mortgage size.
5. Closing cost savings: Factor in the LTT rebate (up to $4,000 in Ontario and up to $4,475 in Toronto) when costing your closing day budget.
6. Review your contract/APS: Especially with new-builds, watch for clauses where the builder might claim your rebate on your behalf thus transferring the benefit to them, not you.
7. Watch legislation status: The GST/HST rebates and some provincial incentives are still only at that proposal stages, so stay informed, verify the current status of these programs before relying on them, and ensure you meet all eligibility/condition requirements.

Why These Incentives Matter – Especially Now

In Ontario’s housing market, affordability continues to be a major concern. According to multiple sources, even with price softening in some segments, first-time buyers face steep prices, high mortgage burdens and elevated closing costs. The incentives above are designed to lower the entry cost (down payment, closing costs, and tax burden) and give first-time buyers a stronger footing.

• The federal GST/HST rebate could eliminate ~$50,000 in tax on a qualifying new home – a meaningful amount that can influence how big a mortgage you take out or the size of the home you buy.
• The Ontario provincial rebate when combined could push the total savings up toward ~$130,000 (on a new build priced up to $1-million), which is a dramatic shift for buyers in high-priced markets.
• The LTT rebate helps reduce closing cost shock (often tens of thousands of dollars).
• The HBP boosts how much you can pull together for a down payment, which can reduce the amount borrowed and the resulting borrowing cost (and stress that goes with making those payments).

Together, these incentives can improve affordability, create equity sooner, and reduce financing risk for first-time buyers.

Final Takeaway

If you’re a first-time home buyer in Ontario – especially looking at a new build – you may be able to stack multiple incentives: pulling RRSP savings via the Home Buyers’ Plan, capturing the land transfer tax rebate, and (if eligible) benefiting from federal and provincial rebates on GST/HST taxes. The result: a materially lower upfront cost and potentially smaller mortgage or better mortgage terms.

That said, due diligence is essential. Confirm eligibility, check dates, read your APS carefully, and consult with your Realtor, mortgage professional, financial planner, accountant, and/or real estate lawyer to stay up-to-date on the latest legislation and programs.

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