First-Time Homebuyer Guide for Canada: Programs, Incentives, and Steps

Buying your first home in Canada involves more moving parts than most people expect - federal savings programs, tax rebates, down payment tiers, and mortgage qualification rules all interact with each other. This guide walks through the current federal incentives available to first-time buyers, the steps to get from budgeting to closing, and how these programs can be combined.

Step 1: Determine Your Budget and Down Payment

• Calculate your income, expenses, debts, and savings to set a realistic mortgage range, and include property taxes, insurance, utilities, and condo fees (if applicable) in your monthly budget - not just the mortgage payment itself.
• Canada uses a tiered minimum down payment system: 5% on the portion of the price up to $500,000, plus 10% on any portion between $500,000 and the insured mortgage cap of $1.5 million. Above $1.5 million, a conventional 20% down payment is required and mortgage default insurance is not available.
• If your down payment is below 20%, you'll need mortgage default insurance from CMHC, Sagen, or Canada Guaranty, which is a one-time premium (typically 2.8%-4.0% of your mortgage amount) added to your loan balance - not paid in cash upfront.
• First-time buyers and buyers of newly constructed homes can access a 30-year insured amortization (versus the standard 25-year maximum), which lowers monthly payments but increases total interest paid over the life of the loan. This typically carries a small premium surcharge.

Model your specific numbers - including the CMHC premium and amortization choice - with our CMHC Insurance Calculator and Affordability Calculator.

Step 2: Understand the Federal Programs Available to You

As of mid-2026, five federal tools are commonly available to first-time buyers, and several can be combined on the same purchase:

• Home Buyers' Plan (HBP): Withdraw up to $60,000 tax-free from your RRSP ($120,000 for a couple where both partners qualify) toward a down payment. The amount must be repaid into your RRSP over 15 years, starting the second year after withdrawal; missed repayments are added to your taxable income for that year.
• First Home Savings Account (FHSA): Contribute up to $8,000 per year, to a lifetime maximum of $40,000. Contributions are tax-deductible like an RRSP, and qualifying withdrawals for a first home are completely tax-free, with no repayment requirement - unlike the HBP.
• First-Time Home Buyers' GST/HST Rebate: A newer program that received Royal Assent on March 12, 2026. It provides a rebate of up to $50,000 on the GST (or federal portion of HST) for first-time buyers of newly constructed or substantially renovated homes. Homes priced at or below $1 million qualify for the full rebate; the rebate phases out on a straight-line basis for homes between $1 million and $1.5 million (for example, a $1.25 million home is eligible for roughly $25,000), and homes at or above $1.5 million don't qualify. The rebate applies to agreements entered into on or after March 20, 2025, and only to new construction, not resale homes.
• First-Time Home Buyers' Tax Credit: A non-refundable federal tax credit, claimed on your tax return for the year you purchase your first home.
• Provincial programs: Many provinces offer their own land transfer tax rebates or rebate programs that can stack on top of federal incentives - these vary significantly by province, so check your specific provincial rules.

The HBP and FHSA can be used together on the same purchase: a single first-time buyer can access up to $100,000 in tax-advantaged funds ($60,000 HBP + $40,000 FHSA), and a couple where both partners qualify for both programs can access up to $200,000 combined. For new construction specifically, the GST/HST rebate is a separate benefit on top of these savings tools, since it reduces the purchase price itself rather than funding your down payment.

Current Federal Programs at a Glance

The table below summarizes the federal programs available to first-time buyers, current as of mid-2026.

Note: Some provinces, including Ontario, have proposed additional first-time buyer HST or land transfer tax rebates that would stack on top of these federal programs. As of this writing, several provincial proposals had not yet received Royal Assent - confirm current status directly with your provincial government before budgeting around them.

Step 3: Get Pre-Approved, Choose a Location, and Avoid Common Pitfalls

• Compare rates from banks, credit unions, brokers, and online lenders. Pre-approval defines your realistic budget, strengthens your offers, and may hold a rate for a set period while you shop.
• Every insured mortgage is stress-tested at the higher of your contract rate plus 2%, or 5.25% - meaning your real qualifying rate is often higher than the rate you're actually offered.
• Research your target neighbourhood's local prices, property taxes, inventory levels, and proximity to work, schools, and transit before committing - local conditions vary significantly even within the same city.
• Don't assume RRSP funds are immediately available for the HBP: contributions need to be in your RRSP for at least 90 days before an HBP withdrawal to be deductible, so plan ahead.
• Budget separately for closing costs (typically 1-4% of the purchase price), which are on top of your down payment and aren't covered by any of the programs above.

Frequently Asked Questions for First-Time Homebuyers

Bottom Line

First-time buyers in Canada currently have access to a meaningful stack of federal programs - the HBP, FHSA, GST/HST rebate, and tax credit - that can substantially reduce the cash needed at closing, particularly for new construction. The specifics matter though: eligibility rules, repayment terms, and price thresholds vary by program, and provincial rules add another layer on top. Confirm your specific eligibility with the CRA, a mortgage professional, or a real estate lawyer before finalizing your budget.

To understand land transfer tax specifically, see our guides to land transfer tax in Ontario and land transfer tax in Alberta. For the renting-versus-buying decision, see our rent vs. buy guide.

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