First Time Home Buyer Incentives in Ontario

Everything you need to know about the Home Buyer Incentives in Ontario that can help you save!

Home Buyer Savings

If your planning to purchase your first home, there are some new exciting changes in the world of mortgages that should help more individuals become home owners in 2025. The following is a general guide to the various incentives that first time home buyers can take advantage of in the new year. Remember, buyers will need to assemble a team of professionals to help them in their home buying journey, so this area is where your mortgage specialist will really shine.

Read on Buyers, I broke it all down for you.

1. Home Buyer Plan for First Time Buyers (HBP)

The Home-Buyers Plan allows first-time buyers to withdraw money from their RRSP's to buy or build a qualifying home.

The money is NOT taxed, but you have to pay it back in 15 years, starting 2 years after you withdraw it.

*You can withdraw a maximum of $60,000 dollars.

*The home MUST be a principal residence, (meaning you live there).

*In Ontario a first-time homebuyer is someone who has NOT owned a home in the last 4 years, this rule also includes your spouse/partner if you are purchasing the home together.

*There are some exceptions and special cases such as, a separation or someone with a disability, so be sure to check if those rules apply to you in you are unsure.

For more information head to the CRA website: Linked below.

CRA Canada

2. First Home Savings Account (FHSA)

The First Home Savings Account is a tax-free way to save up to $40,000 toward your first home. Contributions are tax-deductible, and any withdrawals made from the FHSA for purchasing a home are also tax-free. This savings account will help buyers build up their down payment more easily.

*Yearly contribution is $8,000.

*If you don't max the amount out every year, $8,000 can be carried forward for next years contribution.

*Maximum participation period of 15 years in this program, so you need to transfer the money and close the account after 15 years to avoid being taxed.

*The home MUST be a principal residence. (FHSA cannot be used for an investment property).

*Must move into the home one year after purchasing it.

*If you withdraw funds for any reason other than buying your first home, you'll be taxed on withdrawals.

3. Land Transfer Tax Refunds for First Time Buyers

When you purchase a home in Ontario you pay land transfer tax when you take possession of the property. *If you live in the city of Toronto you pay an additional municipal land transfer tax.

Ontario Land Transfer Tax Refund: Max of $4,000.

City of Toronto Refund: Max of $4,475.

*If the person your buying with has owned a home before, the amount of your refund will be reduced.

4. First Time Home Buyer Tax credit

The government created this credit to assist first time buyers with the various costs associated with their home purchase.

FTHB Tax Credit is a $10,000 non-refundable income tax credit that results in up to $1,500 in federal tax relief.

To qualify for this credit:

*The home MUST be your principal residence.

*The person you buy with must also be a first time home buyer.

*You did not live in a home owned by you or your spouse for the previous four years.

5. Canada Mortgage and Housing Corporation Insurance (CMHC)

The Canadian Housing and Mortgage Corporation provides mortgage loan insurance so buyers can enter the market with less than 20% down on a home.

*As of December 15, 2024 CMHC will provide insured loans for properties up to 1.5 million for qualifying buyers.

CMHC down payment snapshot:

Homes priced up to $500,000=Minimum of 5% down.

$500,000-$1.5 million = Minimum 10% down.

Example: A $850,000 property= Minimum DP of $60,000.

6. 30 Year Amortization for First Time Buyers

Another change coming into effect on December 15th will be that insured first time buyers will be able to amortize their mortgages for 30 years, instead of 25.

This will allow buyers to benefit from lower monthly payments, and possibly qualify for a bigger mortgage than they could previously, by spreading repayment back over a longer period of time.

Example: Lets do some Real Estate Math!

Lets look at a $700,000 mortgage, and apply a 4.5% interest rate.

25 Year Amortization= $3,874/month VS. 30 Year Amortization= $3,530/month

*That's a $344 difference, approx. 9% lower monthly payment when stretching out the mortgage term.

*Main takeaway: Your mortgage payments will be lower with a 30 year amortization (roughly 9% lower), you will pay more interest long term. Versus, with a 25 year amortization, you will have a higher monthly payment, but you will pay less interest.

For CMHC related questions, click the link below.

CMHC Website

Whatever your situation, I would advise ALL first time home buyers to consult with a qualified mortgage specialist before making any financial decisions.