First Time Home Buyer Incentives in Canada 2021

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There are three main incentive programs for first-time home buyers:

Land transfer tax rebates, which rebate some or all of your land transfer tax.
The Government of Canada First-Time Home Buyer Incentive, which allows you to share part of your home's ownership with the government.
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.
News
Update to the CMHC First-Time Home Buyer Incentive
On May 4th, 2021, the CMHC First-Time Home Buyer Incentive Program was expanded for buyers in the Toronto CMA, Vancouver CMA, and Victoria CMA. The new income eligibility threshold is now $150K (up from $120K) and the new home price limit is now 4.5 times household income (up from 4 times) for buyers in these three regions.

First Time Home Buyer Calculator

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You could qualify for...
Land Transfer Tax Rebate
$8,4758.48k
Shared-Equity Incentive
$25,00025k
Home Buyer's Plan (RRSP)
up to $35,00035k

First-Time Home Buyer Programs and Rebates in Canada

There are many programs available for first-time home buyers in Canada. They help make housing more affordable and accessible to many Canadians looking to buy their first home. While many regions may offer their own incentives, there are three programs that are accessible to most Canadians:

Programs like the Canada First-Time Home Buyer Incentive and the Home Buyers' Plan are available to Canadians nationwide. Others like land transfer tax rebates can vary by province and municipality.

Provincial First-Time Home Buyer Incentives

First-Time Home Buyer Land Transfer Tax Rebates by Province

Ontario

Ontario offers a land transfer tax refund of up to $4,000 for first-time home buyers.

British Columbia

BC requires its home buyers to pay a Property Transfer Tax (PTT) when purchasing a new home. The tax is valued at:

  • 1% on the first $200,000
  • 2% on the balance up to and including $2,000,000
  • 3% on the balance greater than $2,000,000
  • If the property is residential, a further 2% on the portion greater than $3,000,000

There are several conditions that would allow you to be exempt from this tax. Foreign buyers have to pay an additional 15% of the tax.

If you are a first-time home buyer, British Columbia offers a land transfer tax refund for properties worth below $500,000. The refund covers the full tax amount if your asking price is $475,000 or below. Otherwise, the refund is partial.

For more information, see the official regulations.

Québec

Quebec charges a Land Transfer Tax called the Welcome Tax that is different for Montreal but the same for the rest of Quebec. It increases to up to 1.5% for property valued over $258,600 and for Montreal increases up to 3.0% for property valued over $2,000,000.

The rates above are accurate for fiscal year 2020. You are exempt from the land transfer tax if your property is worth under $5,000, or if you are transferring the property to an immediate family member.

The Montreal Home Ownership Program provides financial assistance to first-time home buyers amongst other tax-exemption possibilities. You may qualify for both a land transfer tax rebate as well as a lump-sum subsidy when purchasing your first home in Montreal. For your convenience, we have provided the table below.

Home-Buyer Requirements Eligible Property Values Lump-Sum Payment Welcome Tax Refund
Single Buyer without Children Under $200,000 $2250
Household without Children (More than one buyer) Under $250,000 $2250
Households with minimum one child under 18 Under $280,000 (Increases up to $360,000 if property has more than 3 bedrooms)$5,000 (Increases up to $6,250 if property has living spaces of more than 1033 square feet) 100%
Households who already bought property prior to 2018 and has at least one child under 18Under $360,000 (Must have more than three bedrooms) 100%

Prince Edward Island

The PEI transfer tax exemption waives the property transfer tax for first-time home buyers. You must have resided in PEI for 183 consecutive days before purchasing your home, or have occupied your new purchased home for at least 183 consecutive days.

There is no limit on the purchase price for first-time home buyers to receive a refund. Prior to 2016, the purchase price limit to be eligible for the refund was $200,000.

Non-first-time home buyers are also exempt from PEI’s real property transfer tax if the cost of the property being transferred is below $30,000.

Calculate your first-time home buyer land transfer tax rebate.

Land Transfer Taxes

In most provinces, when you buy a home or property, you may have to pay a land transfer tax to the provincial government at the time of closing. The amount of tax is usually based on the property's value. Some cities including Toronto also charge a separate land transfer tax.

Your Land Transfer Tax Breakdown

For a $500,000 home in Toronto, Ontario, your land transfer tax would be:

Total Tax$4,475
Provincial Tax$6,475
Municipal Tax$6,475
Total Rebate$8,475
Calculate your land transfer taxes.

CMHC First-Time Home Buyer Incentive Statistics

September 1, 2019 to December 9, 2019

In its first three months, the CMHC First-Time Home Buyer Incentive (FTHBI) received a total of 3252 applications with the average incentive ranging between $11,000 to $29,000. Most applications were from Quebec followed by Alberta, both provinces with large populations and relatively cheap housing. Vancouver, on the other hand, had only 45 applicants, likely because the average home price in Vancouver (link to Vancouver housing market) was far above the incentive’s limit.

Provinces and TerritoriesRegionNumber of ApplicantsAverage Incentive Amount
Prince Edward Island Province 12 $18,000
Nova ScotiaHalifax 64 $15,000
Rest of Province 23
New Brunswick Province 60 $11,000
Newfoundland and Labrador Province 40 $16,000
QuebecMontreal 654 $15,000
Sherbrooke 53
Quebec City 237
Rest of Province 416
OntarioGreater Toronto Area 148 $20,000
Ottawa-Gatineau 135
Rest of Province 153
ManitobaWinnipeg 144 $18,000
Rest of Province 31
Saskatchewan Province 119 $19,000
AlbertaEdmonton 447 $24,000
Calgary 260
Rest of Province 102
British ColumbiaVancouver 45 $18,000
Victoria 5
Rest of Province 101
Nunavut Territory 0 $-
Northwest Territories Territory 1 N/A
Yukon Territory 2 $29,000
Source: CMHC Internal Documents

As part of their 2021 budget, the Liberals have announced an expansion to the FTHBI program that would significantly expand eligibility in the higher-priced regions of Toronto, Vancouver, and Victoria. The new proposal would increase the maximum eligible home price from about $505,000 to $722,000 for first-time homebuyers in these municipalities. The expansion is likely to take place in Spring 2021.

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.

Provincial Land Transfer Tax Calculators

Ontario Lic. #13115

Government of Canada First-Time Home Buyer Incentive Program

The Government of Canada offers a First-Time Home Buyer Shared Equity Incentive Program that shares part of the ownership and costs of buying your home with the government. Under the program, the government will contribute 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.

Frequently Asked Questions

Am I eligible for the program?

Higher limits apply for homes in the Toronto CMA, Vancouver CMA, or Victoria CMA. The limit for annual household income is increased to $150,000 and the maximum borrowing amount is increased to 4.5 times household income. This also means that your maximum borrow amount can be up to $675,000.

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 (If you are not living in Toronto CMA, Vancouver CMA, or Victoria CMA. ).

Even if you satisfy these criteria, there are limits on how much you can borrow depending on your annual household income. Other criteria may apply in special situations.

Am I a first-time home-buyer?

You qualify as a first-time home-buyer if you satisfy at least one of the following conditions:

  • you have never purchased a home,
  • you have gone through a breakdown of marriage or common-law partnership,
  • in the last four years, you have not occupied a home owned by you or your partner.

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.

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.

I am buying a mobile or manufactured home. Am I eligible?

Yes. However, you can only apply for the 5% shared-equity incentive option, even if the home is new.

Examples

John and his wife want to buy a newly constructed home for $400,000. They would qualify for 10% of the purchase price, or $40,000, under the shared-equity incentive program.

At a 3% interest rate, this would lower their monthly payment from $1,870 to $1,673, saving them nearly $200 per month, or $60,000, over the lifetime of the mortgage.*

Assuming they make the minimum 5% ($20,000) down payment, John and his wife would need to make between $95,000 and $120,000 in total to qualify.

*Assuming a 5-year fixed term with 25-year amortization and 5% down payment.

Marissa makes $80,000 a year, and has $60,000 saved up for a down payment.. To qualify for the shared-equity incentive, she can purchase a home worth up to $380,000.

She buys a resale condo for $360,000. Marissa is eligible for $18,000 from the Government of Canada First-Time Home Buyer Incentive, allowing her to take out a mortgage of only $282,000 plus insurance.

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.

Frequently Asked Questions

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 down payment. This can allow you to save significantly more for your down payment 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 down payment 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 down payment, 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.

Examples

Jessica and her husband want to buy a home in Toronto for $900,000, but only have $80,000 saved for a down payment. Assuming an interest rate of 3%, their monthly payment would normally be $4,036 per month.*

Jessica and her husband each withdraw $35,000 from their own RRSP account. In total, they make a down payment of $150,000, lowering their monthly mortgage payment to $3,649. That’s a savings of $387 per month, or $116,000 over the lifetime of their mortgage.

To repay the loan, they will need to make an annual payment of $4,667 for 15 years. No interest or tax is charged on the RRSP withdrawal.

*Assuming a 5-year fixed term with 25-year amortization.

Nathan purchased a home five years ago with the help of the RRSP Home Buyers’ Plan. He withdrew the maximum of $35,000, and has made the minimum $2,333 annual payment each year.

This year, however, Nathan can only afford to make a payment of $1,000. The missing $1,333 is filed as taxable income on his next return. Since his remaining balance is now larger than planned, his minimum payment increases to $2,481 starting next year. No other fees or penalties are charged.

GST/HST New Housing Rebate

If you have purchased a newly constructed or substantially renovated home, you may be eligible to reclaim the GST or federal part of the HST charged on the purchase of said property.

This incentive applies to:

  • purchasing from a builder or constructing your own home
  • renovations where at least 90% of the interior of the existing home has been removed or replaced
  • mobile and floating homes
  • conversion of non-residential property into a home
  • purchasing shares in a co-operative housing project

More terms and conditions apply. See the Government of Canada's website for additional eligibility criteria and information.

Home Buyers' Amount Tax Credit

The Home Buyers’ Amount is a $5,000 tax credit given to first-time home buyers. This tax credit is a non-refundable income tax credit on line 31270 of your tax return. This tax credit can be split between you and your spouse, but the amount cannot be greater than $5,000. Similarly, if more than one person is eligible for the tax credit for a qualifying home, only a maximum of $5,000 can be claimed by all claimants. Since non-refundable tax credits are claimed at a rate of 15%, the effective amount of the tax deduction is $750.

To qualify for the tax credit, you must be a first-time home buyer. A first-time home buyer is defined as someone who has not lived in a home owned either directly by you or your spouse/partner in the previous four years.

Homes that are eligible include both existing and new construction homes located in Canada, including single-family, semi-detached, townhouses, mobile homes, condominiums, and apartments. The home must be occupied as your principal residence within one year.

If you are not a first-time home buyer, you may still qualify for the Home Buyers' Amount. You can qualify if you are a person with a disability, where you are eligible for the disability tax credit and have filled out form T2201. You can also qualify for the tax credit if you purchased the home for a relative with a disability. The home being purchased must be made with the intention of it being more accessible for the person with the disability than their previous home.

Housing Markets Across Canada

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