First-Time Homebuyer Support Programs in Canada
There are three main incentive programs for first-time home buyers. Each program has different requirements to qualify as a first-time buyer. See the FAQ below for details.
- Land transfer tax rebates, which rebates some or all of the land transfer tax levied as part of your closing costs.
- The Government of Canada First-Time Home Buyer Incentive, which allows you to share part of your home's ownership with the government. You can find out more details in the Government Shared-Equity Incentive section below.
- The Home Buyers’ Plan, which allows you to withdraw up to $35,000 (since March 19, 2019) from your Registered Retirement Savings Plan (RRSP) without any penalties or taxes.
Land transfer tax rebates,
which rebates some or all of the land transfer tax levied as part of your closing costs
Frequently Asked Questions
Am I a first-time home-buyer?
Each province has their own definitions of a First-Time Home Buyer. Generally:
- You must be at least 18 years of age.
- You must be a Canadian citizen or permanent resident.
- You must occupy the property as your principal residence.
- You cannot have owned a home, or a stake in a home, anywhere in the world, at any time.
- Your spouse/common-law partner cannot have owned a home while they were your partner.
How do I claim the refund?
You may claim an immediate refund (or exemption from the tax) at the time of registration.
I did not claim a rebate at the time of registration. Am I still eligible?
Yes. You may have up to an 18 month period after the registration of your new home to apply for a refund.
Can I get a rebate if I am not a citizen or permanent resident of Canada?
Yes, in certain cases. After the purchase of a property, you have an 18-month window following registration to obtain a rebate. If you gain citizenship or permanent residency during this period, you can claim the full rebate amount.
What is land speculation tax?
The Non-Resident Speculation Tax (NRST), also known as land speculation tax, is a 15% tax on residential property in areas near Toronto.
The tax only applies to individuals who are not citizens or permanent residents of Canada. The specific region involved is known as the Greater Golden Horseshoe region, shown below.
Government Shared-Equity Incentive
The Government of Canada offers a First-Time Home Buyer Incentive program that allows you to share part of the ownership and costs of buying your home with the government. Under the program, the government will contribute an additional 5% or 10% of the home's price towards your down payment in exchange for the same amount of equity in your home. This can significantly reduce your interest payments and CMHC mortgage insurance premiums due to the larger down payment.
The government's share in your home will have to be repaid within 25 years or when you sell your home, whichever comes first. Any gains or losses in the market value of your home will be shared with the government. This is not a typical loan, and no interest will be charged.
Based on the information you have provided; you are eligible to apply for 5% of your purchase price in shared equity. This works out to a maximum of $25,000 in government incentives.
Frequently Asked Questions
Am I eligible for the program?
The program is only available for CMHC-insured mortgages. Therefore, you are automatically ineligible if
- your purchase price is $600,000 or above, or
- your down payment is at least 20% of your purchase price.
To qualify for a government shared-equity incentive,
- you must be a citizen or permanent resident of Canada,
- you or your partner must be a first-time home-buyer (see ‘Am I a first-time home-buyer?’ below), and
- your annual household income cannot exceed $120,000.
Even if you satisfy these criteria, there are limits on how much you can borrow depending on your annual household income. See "What is the borrowing limit, and how does it work" below. Other criteria may apply in special situations.
Only one spouse/common-law partner needs to meet the above requirements to qualify.
How long does the program last?
The program launched September 2, 2019, and will end either:
- after three years (September 2, 2022), or
- when a total of $1.25 billion of incentives have been granted,
whichever occurs sooner. Many experts expect the funding to go quickly, so it may be prudent to act as soon as possible.
How much do I qualify for?
- For existing, resale, or mobile/manufactured homes, you can apply for a 5% shared-equity incentive.
- For newly constructed homes, you have the option of applying for a 5% or a 10% shared-equity incentive.
Borrowing limits may apply in both of these cases. See "What is the borrowing limit, and how does it work" section below.
What is the borrowing limit, and how does it work?
Your borrowing limit is four times your annual household income. Your total borrowing amount (mortgage principal + shared-equity incentive) cannot exceed this limit. The CMHC mortgage insurance premium does not count towards the limit.
No partial incentives are given. The only options are 5% and 10% shared-equity.
How much do I need to pay back?
The amount you owe depends on the future fair-market value of your property at the time of repayment. You will need pay 5% or 10% of your property's value, depending on which incentive program you applied for. No interest is charged in either case and both gains and losses are shared proportionally with the government.
When do I need to pay back the incentive?
You must pay back the incentive within 25 years or if the property is sold, whichever occurs first. You must pay the amount in one full lump-sum payment.
There are no prepayment fees or penalties for an early payment. If you believe your property's value will rise in the future, paying early may allow you to benefit from owning a greater share of the home's price appreciation.
RRSP Home Buyers’ Plan
As of March 19, 2019 (as part of Budget 2019), the Home Buyers’ Plan will allow first-time home buyers to withdraw up to $35,000 tax-free from their registered retirement savings plan (RRSP) to buy or build a home. The amount must be repaid over a period of 15 years.
This is a recent increase over the previous limit of $25,000.
Do I qualify for the Home Buyers’ Plan?
You must meet the following criteria to qualify for the Home Buyers’ Plan:
- You must be a resident of Canada at the time of withdrawal.
- You must be the owner of the RRSP(s) from which the withdrawals are made.
- Your RRSP contributions must have stayed in the RRSP for at least 90 days before withdrawal.
- Neither you nor your spouse/common-law partner can have owned the relevant home for more than 30 days.
- Neither you nor your spouse/common-law partner can have owned another home in the last four years.
If you have a disability, the last requirement is waived. Additional requirements may apply in special cases.
What's the benefit of the Home Buyer's Plan?
The Home Buyer's Plan allows you to withdraw before-tax contributions to your RRSP for your downpayment. This can allow you to save significantly more for your downpayment than you would be able to with after-tax income.
For example, if you are in a 40% tax bracket and plan to save $10,000 towards your future downpayment every year, that $10,000 is equivalent to approximately $16,667 of before-tax income. With an RRSP, you would be able to contribute the full before-tax income amount to your future downpayment, allowing you to save 66% more from each paycheck compared to saving in a typical after-tax account.
You can find out more on RRSPs and the March 2nd contribution deadline with our Guide to RRSPs.
Is the withdrawal limit per person or per household?
The withdrawal limit is per-person. Each spouse/common-law partner has their own, separate withdrawal limit. If you are married or in a common-law relationship, you can withdraw a total of $70,000.
Note that only the person registered as the owner of an RRSP can withdraw from it under the program. Each spouse will need to have their own RRSP account to take advantage of the increased limit. There are also additional limitations regarding contributions to both individual and spousal RRSPs where contributions have to be made at least 90 days before the first withdrawal.
How do I make a withdrawal?
You must submit a Form T1036 to your financial institution for each withdrawal you wish to make.
How many withdrawals can I make?
You can make an unlimited number of withdrawals within one calendar year up to a total of $35,000. Withdrawals made during January of the following year are also tax-exempt. Because of this, we recommend either a single withdrawal or to start withdrawing early within the year.
When do I need to repay my withdrawals?
You have up to 15 years to repay the amount withdrawn to your RRSP. Repayments start the calendar year after the withdrawal is made. Each year, the Canada Revenue Agency (CRA) will send you a Home Buyers’ Plan statement of account listing your remaining balance and minimum payment.
If you make more than your minimum payment, your later minimum payments will be reduced. You may repay the full loan amount at any time without penalty.
How do I make a repayment?
To make a repayment under the Home Buyers’ Plan (HBP), you need to make a contribution to your RRSP and designate a portion of the contribution as an HBP repayment. You may make this designation on line 246 of Schedule 7 when filing your next tax return.
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