Programs, incentives, and the complete step-by-step process for first-time buyers in 2025.
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Open KOHO Free — Code 45ET55JSYAThe CRA defines a first-time home buyer as someone who has not owned a home in the calendar year of purchase or in any of the four preceding calendar years. Importantly, this means you can qualify as a first-time buyer again after a 4-year gap — a provision that helps divorced individuals or those who previously owned but sold.
For couples or common-law partners buying together, both individuals must independently qualify as first-time buyers to access all the incentives (particularly the RRSP Home Buyers' Plan).
| Program | Benefit | Key Rules |
|---|---|---|
| First Home Savings Account (FHSA) | $8,000/yr, $40K lifetime tax-free savings | Must be first-time buyer, resident, age 18+ |
| RRSP Home Buyers' Plan (HBP) | Withdraw up to $60,000 tax-free | Must repay over 15 years or pay tax |
| 30-Year Insured Amortization | Lower monthly payments | First-time buyers, new construction (Aug 2024) |
| First-Time Home Buyers' Tax Credit | Up to $1,500 tax credit | Applies to qualifying home purchase year |
| Land Transfer Tax Rebates | Up to $4,000 in Ontario, $8,475 in Toronto | Provincial/municipal, varies by location |
The First Home Savings Account (FHSA), launched in April 2023, is the most powerful savings tool available to first-time buyers. You can contribute up to $8,000 per year and $40,000 lifetime. Contributions are tax-deductible (like an RRSP), and qualified withdrawals for a first home purchase are completely tax-free (like a TFSA). This combination — deduction on the way in, no tax on the way out — makes the FHSA the most efficient savings vehicle ever created for Canadian homebuyers.
Unused contribution room carries forward one year. You can hold the FHSA for up to 15 years before having to close it or transfer it to an RRSP/RRIF. You can combine FHSA funds with RRSP Home Buyers' Plan withdrawals for a single purchase — maximizing your down payment from tax-sheltered savings.
The RRSP Home Buyers' Plan allows first-time buyers to withdraw up to $60,000 from their RRSP (as of 2024 — increased from the previous $35,000 limit) to fund a home purchase. Two partners buying together can each withdraw $60,000, for a combined $120,000. The withdrawal is not taxed at the time of withdrawal, but you must repay it to your RRSP over the following 15 years. If you miss a repayment in any year, that year's repayment amount is added to your taxable income.
The RRSP HBP still requires that the funds sit in your RRSP for at least 90 days before withdrawal. Contributing funds specifically to use the HBP is a common strategy, though some financial advisors caution against removing long-term retirement savings.
As of August 1, 2024, first-time buyers purchasing new construction homes can access insured mortgages with 30-year amortizations — previously capped at 25 years for insured mortgages. A longer amortization means lower monthly payments, which helps buyers qualify for more and manage monthly cash flow. The tradeoff is paying more interest over the life of the mortgage. For a $600,000 mortgage at 5%, extending from 25 to 30 years reduces monthly payments by approximately $185 but adds roughly $60,000 in total interest over the full amortization.
The minimum down payment in Canada depends on the purchase price:
Any down payment under 20% requires CMHC, Sagen, or Canada Guaranty mortgage default insurance. The premium ranges from 2.80% to 4.00% of the mortgage amount and is typically added to the mortgage balance.
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