Ontario's First-Time Home Buyer Programs Compared

Buying your first home in Ontario is a major financial challenge, but thousands of dollars in government assistance are available if you know where to look. This guide breaks down the most powerful tools at your disposal, comparing the tax-advantaged First Home Savings Account (FHSA), the classic RRSP Home Buyers' Plan (HBP), and the immediate savings from Land Transfer Tax (LTT) Rebates. We'll explain how each program works, who is eligible, and how you can combine them to make your dream of homeownership a reality.

Here at 360Lending, our team specializes in creating personalized strategies that leverage these programs to their full potential. Understanding your options is the first step, so let's dive into the details.

The Big Two: Savings & Down Payment Tools

Before you can even think about closing costs, you need a down payment. This is where most first-time buyers focus their energy, and thankfully, it’s also where two of the most powerful federal programs come into play: the RRSP Home Buyers’ Plan (HBP) and the newer, very popular First Home Savings Account (FHSA).

1. The RRSP Home Buyers' Plan (HBP)

The HBP is the classic, long-standing program that has helped Canadians buy homes for decades. It’s a straightforward concept that lets you borrow from yourself.

What is it? The HBP allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to use towards the down payment on a qualifying home. The key benefit is that this withdrawal is not taxed, as long as you follow the repayment rules.

How does it work? An individual can withdraw up to $60,000 from their RRSP. If you’re buying a home with a partner who is also a first-time buyer, you can combine your withdrawals for a total of $120,000. The funds must have been in your RRSP for at least 90 days before you can withdraw them under the plan. After a grace period of about two years, you must start repaying the withdrawn amount to your RRSP over a period of 15 years.

The Brokerage Take: The HBP is a fantastic tool, especially for those who have been contributing to an RRSP through their employer for years. It’s a way to unlock savings that would otherwise be locked away until retirement. However, the repayment aspect is crucial. If you fail to make the minimum annual repayment, that amount gets added to your taxable income for the year. Our team can help you factor these future repayments into your overall budget to ensure your mortgage and HBP obligations remain manageable.

2. The First Home Savings Account (FHSA)

The FHSA is the new star of the show, and for good reason. Launched in 2023, it combines the best features of an RRSP and a Tax-Free Savings Account (TFSA) into one powerful account designed specifically for saving for a first home.

What is it? The FHSA is a registered savings account where your contributions are tax-deductible (like an RRSP), and your qualifying withdrawals to buy a first home are tax-free (like a TFSA). It's the best of both worlds.

How does it work? You can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. The tax deduction you get for contributing lowers your taxable income for the year, putting money back in your pocket at tax time. The money in the account can then be invested and grow tax-free. When you’re ready to buy a home, you can withdraw the entire amount—your original contributions plus all the investment growth—completely tax-free.

The Brokerage Take: For anyone who knows they want to buy a home in the next few years, opening an FHSA is a financial no-brainer. It’s essentially a government-supercharged savings account. The ability to combine it with the HBP is a game-changer. You can use your FHSA savings and withdraw from your RRSP under the HBP for the same home purchase, giving you access to a much larger down payment. We can work through the numbers to see how maximizing both of these accounts can dramatically accelerate your path to homeownership.

Learn more about home equity loans in Ontario

Check your eligibility in under 60 secs.

See How Much I Qualify For

The Closing Cost Lifeline: Tax Rebates & Credits

Securing the down payment is one thing, but many buyers are surprised by the closing costs—especially the Land Transfer Tax. In Ontario, this can be a significant expense, but again, there’s help available.

3. The Land Transfer Tax (LTT) Rebates

When you buy property in Ontario, you have to pay a provincial Land Transfer Tax. If you buy in Toronto, you’re hit with a second, municipal Land Transfer Tax. These taxes are calculated on a sliding scale based on the purchase price and can easily add up to tens of thousands of dollars. First-time buyer rebates are designed to provide significant relief from this cost.

What is it? A refundable tax credit that is applied directly against the Land Transfer Tax you owe on closing day. This isn’t a cheque you get later; it’s an immediate reduction of the amount you need to bring to your lawyer.

How does it work?

Provincial Rebate: The Ontario land transfer tax rebate provides a maximum credit of $4,000. This completely covers the provincial LTT on homes with a purchase price up to $368,333. For homes above that price, you receive the full $4,000 rebate and pay the remaining LTT balance.

Toronto Municipal Rebate: If you're buying in Toronto (anywhere with an "M" postal code), you get an additional municipal rebate of up to $4,475. This covers the full municipal LTT on homes up to $400,000.

The Brokerage Take: This is the most immediate and tangible relief you'll get. A combined rebate of up to $8,475 for a Toronto buyer is a massive savings on your closing costs. Your real estate lawyer will handle the application for these rebates as part of the closing process. As a brokerage, we ensure our clients are aware of this benefit early on so they can budget their closing costs accurately. It often means thousands of dollars they thought they needed are freed up for other things, like furniture or a moving fund.

4. The Home Buyers' Amount (HBA)

This is a simpler, smaller benefit that every first-time home buyer should know about.

What is it? A non-refundable federal tax credit. It’s designed to help offset some of the general costs associated with a home purchase, like legal fees and inspection costs.

How does it work? When you file your taxes for the year you purchased your home, you can claim a $10,000 amount. As a non-refundable credit, it reduces the amount of federal tax you have to pay. For most people, this works out to $1,500 in actual tax savings.

The Brokerage Take: While it’s not as impactful as the other programs, it’s essentially free money. It’s a simple claim to make on your tax return, and it’s a nice bonus to receive during your first year of homeownership when cash flow can often be tight.

The Discontinued First-Time Home Buyer Incentive

You may still see articles online or hear people talking about the First-Time Home Buyer Incentive, often shortened to FTHBI. It’s important to know that this program is no longer active.

What was it? The FTHBI was a shared-equity mortgage program where the government would contribute 5% or 10% towards the down payment of a first home. In return, the government would own a 5% or 10% stake in the home's value. When you sold the home, you would have to repay the same percentage of the current market value.

Current Status: The federal government officially discontinued the program in the spring of 2024. No new applications are being accepted.

The Brokerage Take: While well-intentioned, the FTHBI was often complicated and not the right fit for many buyers in appreciating markets like Ontario, as the repayment amount would grow along with the home’s value. Its discontinuation simplifies the landscape of available programs, allowing buyers to focus on the more straightforward and beneficial options like the FHSA and HBP.

Putting It All Together: A Strategic Comparison

So, how do you choose? The best part is, you often don't have to. The most effective strategies involve combining these programs. Here’s a simple breakdown of each tool and who it's best for:

The First Home Savings Account (FHSA)

This is a dedicated savings account with a key feature that is unmatched: tax-deductible contributions and completely tax-free withdrawals for a home purchase. You can save up to a maximum of $40,000 (plus any investment growth), making this the ideal tool for virtually everyone starting to save for their first home.

The RRSP Home Buyers' Plan (HBP)

Think of this as a loan from yourself. It allows you to access up to $60,000 per person from your existing retirement savings, tax-free. This program is best for individuals who already have an established RRSP balance and want to use those funds to boost their down payment.

The Land Transfer Tax (LTT) Rebates

This is a direct closing cost credit, providing up to $8,475 in immediate savings for buyers in Toronto. Its key feature is that it reduces the cash you need on closing day, rather than being a rebate you wait for. This is a must-have for every eligible first-time buyer in Ontario.

The Home Buyers' Amount (HBA)

This is a simple tax credit that provides a benefit of $1,500 back in your pocket when you file your taxes. It’s a nice bonus for every first-time buyer that helps offset minor purchasing costs after the fact.

Example Scenario:

Imagine a couple buying their first condo in Toronto for $600,000. Here’s how they could stack the benefits:

Down Payment: They’ve each maxed out their FHSAs ($40,000 each = $80,000) and they both have $30,000 in their RRSPs to use via the HBP ($30,000 each = $60,000). Their total down payment from these programs is $140,000.

Closing Costs: Their total Land Transfer Tax would normally be $16,950. With the combined provincial and municipal land transfer tax rebate of $8,475, they only need to pay $8,475.

Tax Time: The following spring, they each claim the Home Buyers' Amount on their tax returns, getting a combined $3,000 back from the government.

By strategically using these programs, they were able to assemble a large down payment, cut their closing costs nearly in half, and get a tax refund. This is the power of understanding how these tools work together.

First-Time Home Buyer Programs in Ontario

Navigating the various first time home buyer programs ontario offers can seem complex, but each one is designed with a singular goal: to make your dream of homeownership more attainable. From building your down payment faster with the powerful FHSA to getting immediate relief on closing day with the LTT rebates, there is real, tangible financial help available.

The key is to move beyond simply knowing these programs exist and develop a personalized strategy that works for you. This involves looking at your current savings, your income, and your homeownership timeline. A conversation with a mortgage professional can make all the difference, turning a confusing list of options into a clear, actionable plan. If you're ready to start exploring your path to homeownership, our team at 360Lending is always here to help talk about how these tools can work for you.

Get Personalized Advice

with an Award-Winning Mortgage Broker

4.9 from 812 reviews

Schedule My Call