If you’re like most Canadians, buying a home is probably one of the biggest investment you’ll ever make. But for first-time home buyers, just saving up enough money for the down payment can take years or even decades to accomplish.
Thankfully, Canada’s federal and provincial governments offer several different programs designed to support first-time home buyers by offsetting some of the costs associated with buying a home, and helping them purchase their first property.
Down payment requirements for first-time buyers
For most first-time home buyers, one of the biggest hurdle is usually saving for the down payment. In Canada, the required down payment amount is determined by the purchase price of the home as follows:
First-time home buyers naturally pour their energy into saving for a down payment. But the full cost of buying a home goes beyond that. Closing costs, land transfer taxes, legal fees, and other expenses, it can be a lot to absorb all at once. That’s where the financial programs available to first-time buyers can make a real difference. When you understand what’s out there and combine those programs strategically, you can often get into a home sooner than you think, with less saved up front than you expected.
If your down payment is less than 20% of the price of your new home, you’ll also have to get an insured mortgage, which can add anywhere from 0.6 to 4.5% to the purchase price.
The amount of money you put toward your down payment can also affect the type of mortgage you get, and the interest rate you’ll have to pay. In general,the larger the down payment, the less interest you’ll pay on your mortgage
Once you have a clear picture of your down payment, your next step should be to get pre-approved for a mortgage. RBC’s online pre-approval can be completed in a few easy steps and will provide you with your mortgage amount and interest rate with no impact to your credit score or commitment to proceed. A pre-approval is helpful to have prior to house hunting as you can act quickly on a property you want to buy when you already know what you can afford.
The RRSP Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) is a federal program that lets eligible buyers withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to put towards their down payment when they buy or build a home for themselves, or for a relative with a disability.
Anyone who’s never owned their primary residence before, or who hasn’t lived in a primary residence they (or their spouse or common-law partner) own in the last four calendar years, is eligible to take part in the program. Any amount you withdraw must be repaid within 15 years to remain tax-free.
Couples can also both take part in the HBP at the same time if they buy or build a home together. This allows married or common-law first-time buyers to access up to $120,000 as a down payment on their first property.
First-Time Home Buyers’ Tax Credit (HBTC)
The First-Time Home Buyers’ Tax Credit (HBTC) is a non-refundable credit that gives first-time buyers a rebate of up to $1,500 on their income taxes when they, or their spouse or common-law partner, buy a home in Canada.
Also known as the Home Buyers’ Amount (HBA), the HBTC can help offset the costs of buying a whole range of eligible property types, from new and existing single-family and semi-detached homes, to condos, apartments, townhouses, housing co-ops and mobile homes.
GST/HST new housing rebate
For new builds, the federal government also offers a rebate on the GST/HST for anyone who buys a newly built or substantially renovated home as their primary place of residence. The rebate also applies when buying shares in a co-op or hiring a contractor to substantially rebuild or renovate your existing home.
The HST rebate on new homes is a program that can significantly improve a homebuyer’s cash flow, not just at the time of purchase, but for years to come. By reducing the overall amount that needs to be financed, it lowers monthly mortgage payments and has a meaningful, lasting impact on a client’s financial well-being.
Unfortunately, the GST/HST rebate only applies to homes with a fair-market value of $450,000 or less. But if your new home qualifies, you can receive a rebate of 36% of the GST charged on the home, up to a maximum of $6,300.
The GST/HST rebate only applies to the federal part of the HST paid on a new home. But some provinces also offer a similar rebate on the provincial portion of the tax.
As of March 2025, the GST on new builds for first-time home buyers has been eliminated. The full rebate, worth up to $50,000, applies to new builds valued at or under $1 million, with a partial, graduated rebate available on homes between $1 million and $1.5 million.
Buying a pre-construction home from a builder or building your own home comes with different financing options and processes that you can learn about here.
First Home Savings Accounts (FHSA)
The First Home Savings Account (FHSA) is a registered savings plan that lets first-time buyers save up to $8,000 a year, tax free, to buy or build a home. For the purposes of the program, “first-time buyers” include anyone who hasn’t lived in a primary residence they (or their spouse or common-law partner) own in the last four calendar years.
As a savings vehicle, the FHSA combines the benefits of both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA).
Like an RRSP, contributions to your FHSA can be used as a deduction on your income taxes, to reduce the amount of tax you owe. But like a TFSA, the investments inside your FHSA also grow tax-free, so you won’t have to pay any tax when you withdraw the money to buy a property.
Once you open a FHSA, you can contribute the maximum annual amount for up to five years. This would allow a first-time buyer to save up to a lifetime maximum of $40,000 to put towards their down payment, or up to $80,000 in the case of a married or common-law couple.
You can also carry forward any unused contribution room, up to a maximum of $8,000, but only to the following year,; it doesn’t accumulate beyond that. And if you’re not quite ready to buy, you can keep your FHSA open for up to 15 years.
First-time buyers who take advantage of both an FHSA and the Home Buyers’ Plan (HBP) could withdraw $100,000 or more (in the event that their FHSA investments increase in value) from their registered savings for a down payment without any tax implications. For a couple, the total amount doubles to $200,000 or more.
A First Home Savings Account is a great way to grow your savings tax-free while also reducing your taxable income, stretching your savings further and getting you into you first home sooner. As a first-time homebuyer this program is essential to minimize the financial stress of buying your first home.
Provincial and territorial programs
Several provinces, territories and municipalities also offer their own grants, rebates, tax credits and other programs to support home buyers, including first-time buyers. This includes programs like:
To find out which assistance programs and incentives are available in your area, check the housing section of your provincial or territorial government website, and contact your local municipal office or connect with a Mortgage Specialist near you.
How the pros can help
For most first-time buyers, simply navigating your way through all these different programs can be a daunting prospect. So if there’s anything you’re not sure about, why not ask Eileen or Jessee?
In addition to answering your questions and pointing you towards the programs you may be eligible for, they can walk you through each and every step of the home buying process, and help you find a home that perfectly fits your needs, your preferences—and budget.
