First-Time Buyer Programs In Ontario

Buying your first home in Toronto can feel like a maze of rules, acronyms, and closing costs. You want a clear plan that stretches your savings without slowing your timeline. In this guide, you’ll learn how Ontario and Toronto first-time buyer programs work, how to combine them, and what steps to take so your funds are ready for your offer and closing day. Let’s dive in.

What “first-time buyer” means

Most programs use a common test. You are considered a first-time buyer if you have not owned a home that you or your spouse or common-law partner occupied as a principal residence in the past four years. Some programs also require Canadian residency, age 18 or older, and that you intend to live in the home as your primary residence.

Confirm your status early. This affects your access to tax-advantaged savings and potential rebates on closing.

First Home Savings Account (FHSA)

How FHSA works

The FHSA is a registered account designed for first-time buyers. You can contribute up to 8,000 dollars per year, to a lifetime maximum of 40,000 dollars. Contributions are tax-deductible, and qualifying withdrawals for a first home are tax-free. Track your annual room, since unused room and timing matter when you are planning a purchase.

Who qualifies

You must be a Canadian resident, at least 18, and meet the first-time buyer test. The account has a maximum lifespan and closing rules, so confirm deadlines before you start withdrawals. Both partners can open their own FHSAs and use their funds for the same purchase.

How Toronto buyers use it

In Toronto, FHSA funds can cover a meaningful portion of a minimum down payment on many condos and some townhomes. It is less likely to cover a full down payment on detached homes. Use your FHSA alongside other savings and programs to reach your target price point and timeline.

RRSP Home Buyers’ Plan (HBP)

Key rules

The HBP lets you withdraw up to 35,000 dollars from your RRSP for a qualifying home purchase. Each eligible buyer can use their own 35,000 dollar limit. You must repay the withdrawn amount to your RRSP over 15 years, starting the second year after you withdraw. RRSP funds generally need to be in the account at least 90 days before you take them out under the HBP.

When HBP makes sense

Think of the HBP as an interest-free loan from your future self. It helps when you have RRSP savings but need to boost your down payment now. Repayments are not tax-deductible, so build your repayment plan into your budget to avoid tax surprises later.

Practical timing tip

If you plan to use the HBP, check the 90-day rule, confirm your repayment schedule, and coordinate with your lender and lawyer. You want all documents ready well before closing.

Mortgage default insurance basics

When it is required

Mortgage default insurance is required when your down payment is less than 20 percent of the purchase price. It is not available for homes priced at or above 1,000,000 dollars, where the minimum down payment is 20 percent.

Who provides it and what it costs

Insurers include the public insurer CMHC and private insurers Sagen and Canada Guaranty. Premiums are a percentage of the mortgage amount and are higher when you put less down. Most buyers add the premium to the mortgage, which increases the amount you finance and total interest paid over time.

Toronto impact

In the GTA, many first-time buyers use 5 to 10 percent down. Factor the insurance premium into your affordability, since it changes your monthly payment and the total cost of borrowing.

Toronto land transfer tax and rebates

Two taxes for Toronto buyers

If you buy in the City of Toronto, you will pay both the Ontario Land Transfer Tax and a separate Municipal Land Transfer Tax. These costs are due at closing and are based on your purchase price.

First-time buyer rebates

Ontario and the City of Toronto each offer a first-time buyer rebate program. If you qualify, the rebates can reduce or eliminate a portion of your provincial and municipal land transfer taxes. Rules and maximums can change, so confirm current eligibility and caps with your lawyer before closing.

How to claim at closing

Your real estate lawyer typically files the rebate on your behalf at closing. Claiming then helps you avoid paying the full tax up front and waiting for a refund.

How to stack programs

FHSA + HBP

You can use both programs for the same purchase if you meet each set of rules. Each partner can draw on their own FHSA and their own HBP, which can significantly increase your available down payment funds.

• FHSA lifetime per person: up to 40,000 dollars.
• HBP per person: up to 35,000 dollars.
• Two qualifying buyers could access up to 150,000 dollars combined, if they have the savings and meet all rules.

Timing and documents

• Coordinate FHSA withdrawals and HBP authorizations early, so your lender and lawyer have proof of funds.
• Follow the HBP 90-day rule for RRSP contributions before withdrawal.
• Keep statements, IDs, job letters, and pay stubs ready for your mortgage application.

When to be cautious

Avoid using the HBP if you are unsure you can handle the 15-year repayment. Do not rely on FHSA lump-sum contributions right before closing, since annual caps limit how much you can add in one year. Blend these programs with a realistic savings plan so your monthly budget stays healthy after you move in.

Toronto price examples (illustrative)

Condo at 600,000 dollars

• Minimum down payment: 5 percent on the first 500,000 dollars plus 10 percent on the remaining 100,000 dollars. That totals 35,000 dollars.
• An FHSA could cover the full minimum down payment for many buyers. HBP funds can help with closing costs and a small buffer for expenses after closing.

Townhouse at 900,000 dollars

• Minimum down payment: 5 percent on the first 500,000 dollars plus 10 percent on the remaining 400,000 dollars. That totals 65,000 dollars.
• A two-buyer plan that combines FHSA and HBP can often reach this amount if both buyers have contributed over time.

Detached home at 1,400,000 dollars

• Minimum down payment: 20 percent, or 280,000 dollars. Mortgage insurance is not available at or above 1,000,000 dollars.
• FHSA and HBP can lower the cash you need to bring, but you will still need significant additional savings or equity.

Closing costs to budget

Beyond your down payment, budget for land transfer tax, legal fees, title insurance, adjustments, HST on some new builds, appraisals, and inspections. First-time buyer land transfer tax rebates help, but they may not eliminate your entire tax bill depending on the price.

First-time buyer planning checklist

• Confirm first-time buyer status using the four-year non-ownership test.
• Open and fund your FHSA. Track annual and lifetime limits.
• Review your RRSP for HBP. Ensure funds meet the 90-day rule before withdrawal.
• Get a mortgage pre-approval. Ask for insured versus uninsured scenarios and how the premium changes your payment.
• Map your down payment sources. Include FHSA, HBP, savings, and gifts, then align withdrawal timing with your closing date.
• Prepare documents. Gather IDs, employment letters, pay stubs, tax returns, and bank and investment statements.
• Engage your real estate lawyer early. Plan for land transfer tax rebates and closing adjustments.
• Speak with a tax professional or planner. Optimize FHSA contribution timing and set a realistic HBP repayment plan.

Common pitfalls to avoid

• Treating the HBP like a grant. It must be repaid over 15 years, and missed repayments are taxable.
• Waiting to fund your FHSA. Annual caps limit last-minute deposits, so start early.
• Forgetting mortgage insurance costs. Premiums increase the mortgage amount and total interest paid.
• Underestimating closing costs in Toronto. Rebates help, but you should still build a buffer.

Next steps

If you map these programs to your budget early, you can compete with confidence on the right home. Focus on contribution timing, documentation, and a clean pre-approval, then build a closing plan that captures every eligible rebate. When you are ready to move from planning to action, connect with a local team that knows Toronto and the West GTA and can guide your timeline, offer strategy, and closing.

Start your conversation with Brian Peterson to build a first-time buyer plan tailored to your budget and goals.

FAQs

Can I combine FHSA and HBP for the same Toronto purchase?

• Yes. Many buyers use both, and both spouses can use their own entitlements. Coordinate timing so withdrawals and documentation are ready before closing.

Will using HBP or FHSA affect my mortgage approval?

• Lenders focus on income and debt ratios. HBP repayments are not usually counted as debt in qualification, and FHSA funds are treated like other down payment savings. Confirm specifics with your lender.

How much does mortgage default insurance add if I put 5 percent down?

• Premiums vary by down payment tier. Ask your lender for the exact premium percentage and to show how adding it to the mortgage affects your monthly payment.

How do I claim the Toronto first-time buyer land transfer tax rebate?

• Your lawyer typically files the claim at closing. Confirm eligibility, caps, and documentation requirements with your lawyer before your completion date.