All The Gov Incentives you can use to afford a home in Ontario

Buying your first home in Ontario can feel overwhelming, especially when you're trying to figure out how to afford it. But here's what most first-time buyers don't realize: the government actually offers substantial help through various programs, rebates, and savings accounts. We're not talking about small amounts—we're talking about potentially over $400,000 in combined support for couples buying in Toronto.

The challenge isn't that these programs don't exist. It's that most people don't know about them or understand how they work together. This guide breaks down every single government incentive available to Ontario first-time home buyers in 2025, in plain language you can actually use.

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The Biggest Change in 2025: Massive Rebates on New Homes

If you're buying a brand new home (not a previously owned one), 2025 brought some of the best incentives we've seen in years. The federal and Ontario governments introduced huge tax rebates that can save you tens of thousands of dollars.

Federal GST Rebate: Get Back Up to $50,000

When you buy a new home, you normally pay a 5% federal sales tax (GST). But if you're a first-time buyer purchasing a new home worth up to $1 million, the government will give you that entire 5% back. On a $1 million home, that's $50,000 back in your pocket.

This rebate starts to decrease for homes between $1 million and $1.5 million, but you still get some money back even at higher prices.

Simple rule: Buy a new home for your first property, and you can get up to $50,000 back from the federal government.

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Ontario HST Rebate: Get Back Up to $80,000

Ontario matched the federal program with an even bigger rebate. The province normally charges an 8% sales tax (the provincial part of HST) on new homes. For first-time buyers, Ontario will rebate that entire 8% on homes up to $1 million.

That's up to $80,000 back. Combined with the federal rebate, you're looking at $130,000 total savings on a $1 million new home.

Like the federal program, this decreases for homes between $1 million and $1.5 million, with a minimum $24,000 rebate maintained for higher-priced homes.

The catch: These rebates only apply to brand new homes or homes that have been majorly renovated. If you're buying a house that someone else lived in (called a "resale" home), these particular rebates don't apply. But don't worry—there are other programs that work for resale homes.

Timeline: These rebates apply to purchase agreements signed between May 27, 2025, and December 31, 2030. Construction must start before 2031 and finish before 2036.

Savings Accounts That Help You Save for a Down Payment

Before you can even buy a home, you need money for a down payment. The government has created special savings accounts that make it easier to save that money by giving you tax breaks.

First Home Savings Account (FHSA): Save $40,000 Tax-Free

Think of the FHSA as a special savings account designed specifically for buying your first home. Here's how it works:

You can put in up to $8,000 per year, with a lifetime maximum of $40,000. When you put money in, you get to deduct it from your taxes (like putting money in an RRSP). When you take the money out to buy a home, you don't pay any taxes on it (like a TFSA).

This double tax advantage makes it one of the best ways to save for a down payment. If you're in a 30% tax bracket and you contribute $8,000, you'll save $2,400 on your taxes that year. Then when you withdraw that $8,000 plus any growth, you pay zero taxes.

Who qualifies: You must be 18 or older, a Canadian resident, and haven't owned a home you lived in during the current year or the previous four years.

Home Buyers' Plan (HBP): Borrow from Your RRSP

If you already have money in an RRSP (retirement savings), you can borrow from it to buy your first home. You can take out up to $60,000 without paying taxes on it immediately. If you're buying with a partner, you can each take out $60,000—that's $120,000 combined.

The deal is simple: you withdraw the money tax-free, but you have to pay it back to your RRSP over 15 years. If you don't make your annual repayments, that amount gets added to your taxable income for that year.

Important timing note: If you withdrew money between January 1, 2022, and December 31, 2025, you get a three-year break before you have to start paying it back.

The trade-off: You're taking money out of your retirement savings. While you don't pay immediate taxes, you do miss out on potential investment growth in your RRSP during that time. Think carefully about whether this makes sense for your situation.

Tax Credits: Small But Easy Money

First-Time Home Buyer Tax Credit: Get $1,500 Back

This is a straightforward one. When you buy your first home, you can claim a tax credit worth up to $1,500 on your tax return for that year. It's not huge money, but it's easy to claim and every bit helps when you're dealing with the expenses of buying a home.

You qualify if you or your spouse haven't owned a home in the past four years. People who qualify for the Disability Tax Credit can claim this even if they've owned a home before.

Land Transfer Tax: The Hidden Cost (And How to Avoid It)

When you buy a home in Ontario, you have to pay a "land transfer tax"—basically a tax for transferring property ownership from the seller to you. This can be thousands of dollars, and it often surprises first-time buyers because it's due on closing day.

Here's how the tax works: The government charges different percentages based on your home's price. For a $600,000 home, you'd normally pay about $8,475 in provincial land transfer tax. If you're in Toronto, you'd pay another $8,475 in municipal land transfer tax—so $16,950 total.

That's a lot of money to come up with on top of your down payment and other closing costs.

Ontario Land Transfer Tax Rebate: Get Up to $4,000 Back

The good news: first-time buyers in Ontario get a rebate of up to $4,000 on the provincial land transfer tax.

If your home costs $368,000 or less, this rebate covers the entire provincial tax. If your home costs more than $368,000, you get the maximum $4,000 back, which reduces (but doesn't eliminate) your tax bill.

Important: Ontario's definition of "first-time buyer" is stricter than the federal government's. You must have never owned a home anywhere in the world—not just "not in the past four years." If you owned a condo in another country ten years ago, you don't qualify for Ontario's land transfer tax rebate.

You also need to be a Canadian citizen or permanent resident, and you must move into the home as your primary residence within nine months.

Toronto Municipal Land Transfer Tax Rebate: Get Another $4,475 Back

If you're buying in Toronto, there's an extra benefit. Toronto charges its own municipal land transfer tax on top of the provincial one (yes, you read that right—Toronto buyers pay tax twice).

But Toronto also offers first-time buyers a rebate of up to $4,475 on the municipal portion. Combined with the provincial rebate, that's $8,475 total in land transfer tax savings.

Bottom line for Toronto buyers: On that $600,000 home that would normally cost $16,950 in combined land transfer taxes, you'd get $8,475 back, reducing your actual cost to $8,475.

30-Year Mortgages: Lower Monthly Payments (But There's a Catch)

As of December 15, 2024, first-time buyers can spread their mortgage payments over 30 years instead of the previous maximum of 25 years. This only applies if you're putting down less than 20% (which requires mortgage insurance).

Why this matters: Longer payment periods mean lower monthly payments.

Let's use a real example. Say you have a $500,000 mortgage at 5% interest:

• 25-year mortgage: $2,922 per month
• 30-year mortgage: $2,684 per month
• Monthly savings: $238

That $238 per month can make the difference between qualifying for a mortgage or not, or it can simply make your budget more comfortable.

The downside: You pay significantly more interest over the life of the loan. That same $500,000 mortgage costs:

• 25 years: $376,600 total interest
• 30 years: $466,240 total interest
• Extra cost: $89,640

Think of it this way: you're trading lower monthly payments now for paying almost $90,000 more over time. It's a valid choice if you need the cash flow flexibility now and expect your income to increase, allowing you to make extra payments later. But understand what you're giving up.

Putting It All Together: A Real Example

Let's say you're a couple buying a brand new $1 million home in Toronto in 2025. Here's what you can access:

Immediate rebates and savings at purchase:

• Federal GST rebate: $50,000
• Ontario HST rebate: $80,000
• Ontario land transfer tax rebate: $4,000
• Toronto municipal land transfer tax rebate: $4,475
• Total immediate savings: $138,475

Down payment help:

• First Home Savings Account (both of you): $80,000 ($40,000 each)
• Home Buyers' Plan (from both RRSPs): $120,000 ($60,000 each)
• Total accessible capital: $200,000

Tax credit:

• First-Time Home Buyer Tax Credit: $1,500

Grand total available to you: $339,975

For a single person buying the same home, you'd have access to $269,975 total.

This completely changes the math on affordability. A $1 million home with $138,475 in immediate rebates effectively costs you $861,525. If you've saved $80,000 in your FHSAs and can access $120,000 from your RRSPs, you have $200,000 for a down payment—20% of the effective price—without even needing to qualify for mortgage insurance.

Important Things to Know

Who Qualifies as a "First-Time Buyer"?

For most federal programs, you're considered a first-time buyer if you and your spouse/partner haven't owned a home in the current year or the previous four years. So if you sold a home five years ago, you'd qualify again.

For Ontario's land transfer tax rebate, the rule is stricter: you can never have owned a home anywhere in the world, ever.

Down Payment Requirements

The amount you need for a down payment depends on the home's price:

• Homes under $500,000: minimum 5% down
• Homes $500,000 to $1.5 million: 5% on the first $500,000, then 10% on the rest
• Homes over $1.5 million: minimum 20% down

When you put down less than 20%, you need mortgage default insurance. This insurance protects the lender if you can't make payments, and it costs you extra (usually added to your mortgage), but it allows you to buy with a smaller down payment.

New Home vs. Resale: Which Should You Choose?

The big GST/HST rebates ($130,000 combined) only apply to newly built homes. This creates a significant financial advantage for new construction.

But new homes usually cost more than comparable resale homes in the same area. You need to do the math for your specific situation.

Example: A new home costs $950,000, while a similar resale home costs $850,000.

• New home with rebates: $950,000 - $130,000 = $820,000 effective cost
• Resale home: $850,000

In this case, the new home is actually cheaper after rebates, plus you get modern building standards, warranties, and no immediate renovation needs.

But new homes can have downsides: longer wait times before you can move in, less room to negotiate on price, and you can't see exactly what you're getting if buying pre-construction.

Run the numbers for your specific situation. Don't just assume new is always better because of the rebates.

The Programs That Work for Resale Homes

If you're buying a resale home (a house someone else has lived in), you won't get the big GST/HST rebates. But you still qualify for:

• First Home Savings Account: $40,000 tax-free savings
• Home Buyers' Plan: $60,000 from your RRSP
• Land transfer tax rebates: up to $8,475 in Toronto
• First-Time Home Buyer Tax Credit: $1,500
• 30-year mortgage option (if putting down less than 20%)

That's still substantial help—just not the six-figure savings available on new construction.

When Can You Use These Programs?

The enhanced GST/HST rebates are available for purchases signed between May 27, 2025, and December 31, 2030. That gives you a five-year window, so you don't need to rush if you're not financially ready yet.

The other programs (FHSA, HBP, land transfer tax rebates) don't have end dates—they're ongoing programs that will likely continue for years.

You Must Live in the Home

All these first-time buyer programs require that you actually live in the home as your primary residence. You can't use them to buy investment properties or vacation homes. Most programs require you to move in within nine months of purchase.

Check Your Local City Too

This guide covers federal, Ontario provincial, and Toronto programs. But many other Ontario cities and towns have their own additional programs for first-time buyers. Before you buy, check if your target city offers anything extra—you might find property tax breaks, grants, or other incentives on top of what's covered here.

What No Longer Exists

You might hear people mention the "First-Time Home Buyer Incentive" where the government would contribute 5-10% of your purchase price. That program ended in March 2024—it's no longer available, so don't include it in your planning.

Making Your Decision

Understanding these programs is crucial, but don't let them rush you into buying before you're ready. Buying a home is one of the biggest financial decisions you'll make. These incentives make it more affordable, but you still need to be prepared for:

• Monthly mortgage payments you can comfortably afford
• Property taxes (ongoing annual cost)
• Home insurance (required by your lender)
• Maintenance and repairs (things break and need replacing)
• Condo fees if applicable (can be $300-$800+ per month)
• Utility bills
• An emergency fund for unexpected expenses

The incentives reduce your entry costs significantly, but they don't eliminate the ongoing financial responsibility of homeownership. Make sure you're ready for both.

Your Action Plan

If you're serious about buying your first home in Ontario, here's what to do:

Step 1: Open a First Home Savings Account today and start contributing. Even if you're not buying for a couple years, you want this money growing tax-free as soon as possible.

Step 2: Determine your timeline. When do you realistically want to buy? This helps you figure out how much to save and whether you should focus on new construction (for the big rebates) or resale.

Step 3: Calculate what you can afford using mortgage calculators. Factor in your down payment savings, potential HBP withdrawal, and the rebates you'll qualify for based on new vs. resale.

Step 4: Get pre-approved for a mortgage. This tells you exactly how much lenders will give you based on your income, debts, and down payment.

Step 5: Work with a real estate agent who can help you navigate the market and ensure you're claiming all available incentives at purchase.

Step 6: When you're ready to buy, make sure your lawyer knows you're a first-time buyer so they can process all the rebates and credits you're entitled to.

The government has made substantial help available for first-time home buyers in Ontario. The difference between people who successfully buy and people who keep renting often isn't income—it's knowledge of what's available and how to use it strategically.

Now you have that knowledge. What you do with it is up to you.

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