5 FREE Incentives for First Time Home Buyers

Are you a First Time Home Buyer? Here are 5 incentives to help you own your first home.
By: Baron Alloway

Taking a step towards home ownership can seem a daunting task. There’s a pretty good reason; buying a home in Toronto is considered no easy feat. As likely likely the largest personal financial transaction you’ll make in your entire life, it’s important to take advantage of every financial opportunity provided you. Be sure to combine all of these for maximum savings! Here are five incentives available to First Time Home Buyers.

1. RRSP Home Buyer’s Plan

What is it?

The RRSP Home Buyers Plan allows a first time home buyer to withdraw up to $35,000 tax free from their Registered Retirement Savings Plan (RRSP), for the purposes of purchasing a “qualifying home”, repayable back into the RRSP over 15 years.

How does it work?

Use proof of intent to build or purchase a qualifying home in Canada to withdraw up to $35,000 from your RRSP without tax deduction. You must use the funds for the purchase of the property, and re-contribute within 15 years of withdrawal. Failure to repay may result in tax obligations on the funds withdrawn.

Who is eligible?


  • Be a Canadian resident
  • Have proof of intent to purchase or build a “qualifying home” (single family, semi detached, townhouse, condo, etc.) in Canada
  • Intend to occupy the home within 1 year of the date of purchase
  • Must not have owned a home within 4 years prior to the date of withdrawal. (in this case, deemed to be a “first time home buyer”)

For marriages or common law partnerships that have broken down:

  • Members of the partnership are eligible after 90 days from breakdown or separation
  • The principal residence from the partnership or marriage must be sold or otherwise disposed of within 2 years of the date of withdrawal.


CRA Website

2. CMHC Eco Plus Program

What is it?

The CMHC Eco Plus program helps make energy efficient and low carbon housing choices more affordable to Canadians. A buyer receives 25% of their mortgage loan insurance premium back with an energy efficient home.

How does it work?

Buyers required to purchase Mortgage Loan Insurance (usually with down payments less than 20%) are eligible for a 25% refund on their insurance premium. For a $500,000 purchase with 10% down, the insurance premium is 3.10%, or $13,950. A 25% refund equates to roughly $3,500.

Who is Eligible?

Natural Resources Canada (NRCan) Qualified Energy Advisors determine eligibility.  Purchasers of properties are eligible if the property:

  • Property has an eligible certificate
  • Property has tonnes/year Greenhouse Gas (GHG) rating within top 15% of the housing stock in lowest GHG emissions rating
  • Property has a gigajoules/year rating of at least 20% lower than “A Typical New House”


Find a NrCan Qualified Advisor

CMHC Website

Info on EnerGuide evaluations

3. Home Buyers Amount Tax Credit

What is it?

First Time Home Buyers can claim up to $5,000 on their income tax return.

How does it work?

On your income tax return, claim up to $5,000 on line 31270.

Who is Eligible?

The home must be an eligible home in Canada. Eligible homes are properties (single family, semi-detached, townhouse, condo, etc) located within Canada, and the purchaser must intend to reside in the space within 1 year of closing.

You must be considered a “first time home buyer” within the meaning of the Act to be eligible for this benefit. You must not have owned a home for the preceding four years prior to the year of claim.

If you purchase a home joint with your spouse, the total claim on line 31270 for both parties must not exceed the $5,000.


CRA Website

4. Ontario Land Transfer Tax Rebate

What is it?

The Ontario Government provides a rebate of Land Transfer Tax for First Time Home Buyers up to the first $4,000. The City of Toronto rebates the the municipal Land Transfer Tax up to the first $4,000.

This effectively means that no land transfer tax is payable for first homes up to $368,000

How does it work?

On closing, statutory declarations will be made in front of a lawyer or notary. These declarations will automatically reduce the amount of Land Transfer Tax payable at the time of closing. Source documents of proof of eligibility must be kept with you for a minimum of six (6) years following closing.

Who is eligible?

You must not have owned (or had beneficial interest) in a home anywhere in the world at any time. If you are purchasing a home with your spouse & one of you is ineligible, the rebate would be prorated to your share of the house (if 50/50, the rebate would only be $2,000).

If you were married to a homeowner, the previous owner must have disposed of the home on or before your date of marriage or common law.

5. First Time Home Buyer Incentive Program

What is it?

The First-Time Home Buyer Incentive is a shared-equity mortgage with the Government of Canada, which offers:

  • 5% or 10% for a first-time buyer’s purchase of a newly constructed home
  • 5% for a first-time buyer’s purchase of a resale (existing) home
  • 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

The shared equity component of the incentive means that the government shares in both the upside and downside of the property value, up to a maximum gain or loss equal to 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.


Government of Canada Website

Baron Alloway
Baron Alloway is the Broker of Record at Catalyst. As a trained engineer, Baron brings with him an extensive by-the-book amount of knowledge to the Real Estate World. Contact Baron today and have him help you buy or sell your next home.

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