Buying your first home is an exciting milestone, but it can also feel financially overwhelming. Between saving for a down payment, covering closing costs, and qualifying for a mortgage, every dollar counts.

The good news is that both the federal and provincial governments offer several programs designed to make homeownership more affordable for first-time buyers. From tax-free savings accounts to land transfer tax rebates and mortgage changes, these incentives can significantly reduce the cost of buying your first home.

Here’s a guide to the programs every first-time buyer should know.

One of the Best Ways to Save for Your First Home

The First Home Savings Account (FHSA) combines some of the best features of both an RRSP and a TFSA.

Contributions are tax deductible, while investment growth and qualifying withdrawals used to purchase your first home are tax free.

If you’re planning to buy within the next several years, this account can become one of the most valuable tools available.

Key Benefits

✔ Save up to $40,000 tax-free
✔ Contributions remain available for up to 15 years
✔ Carry forward unused contribution room (up to $8,000 annually)
✔ Investment growth is completely tax-free
✔ Reduce your taxable income
✔ Can be used alongside the Home Buyers’ Plan

Who Qualifies?

Generally, you may qualify if you:
• Are at least 18 years old (or the age of majority in your province)
• Have a valid Social Insurance Number
• Have not owned and lived in a home during the current year or the previous four calendar years

For many buyers, the FHSA should be one of the first savings accounts they consider opening.

Learn More: Click here for more info

Help Offset Your Closing Costs

Buying a home comes with several upfront expenses beyond the purchase price. To help offset these costs, the federal government offers the First-Time Home Buyers’ Tax Credit. Eligible buyers may claim a 15% income tax credit on eligible closing costs.

Potential Benefit

• Credit applies to up to $5,000
• Maximum tax savings of approximately $750

To qualify, neither you nor your spouse or common-law partner can have owned and lived in another home during the year of purchase or the previous four calendar years. The credit must be claimed in the year your home is purchased.

Learn More: Click here for more info

More Flexibility for Homes Under $1.5 Million

The insured mortgage limit has increased from $1 million to $1.5 million. Previously, buyers purchasing homes over $1 million needed a minimum 20% down payment. With the new limit, eligible buyers may purchase homes under $1.5 million using:
• 5% on the first $500,000
• 10% on the remaining balance up to $1.5 million

For many buyers in the Greater Toronto Area, this change makes higher-priced homes more accessible.

Can I use both an FHSA and the Home Buyers’ Plan?

Yes. Many first-time buyers use both programs together to maximize their available funds for a home purchase.

Do I qualify for land transfer tax rebates if I’m buying in Toronto?

Eligible first-time buyers purchasing within the City of Toronto may qualify for both the Ontario and Toronto rebates.

Do all of these programs apply to every buyer?

No. Each program has its own eligibility requirements, limits, and conditions. It’s important to review the details before relying on any specific incentive.

Which program should I take advantage of first?

For buyers who have time to save, opening an FHSA early is often one of the most effective strategies because of its tax advantages and tax-free growth potential.