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Thinking about buying your first home in Toronto? You’re not alone—but with sky-high prices and stricter lending rules, it’s getting harder to make that dream a reality.
That’s why smart first-time buyers are looking beyond just owning their dream home. Some are house hacking to offset their mortgage. Others are renting where they love and investing where it makes sense.
In this guide, we’ll break down all the government incentives and tax rebates available in 2025, plus show you some smarter paths to ownership you might not have considered.
Quick Overview: What Help Can First-Time Home Buyers in Canada Get in 2025?
| Program | What You Get | Max Value |
|---|---|---|
| Home Buyers’ Plan (HBP) | Borrow from your RRSP tax-free | $60,000 |
| First Home Savings Account (FHSA) | Tax-free savings for buying a home | $40,000 |
| Land Transfer Tax Rebates | Rebates from Ontario + Toronto | Up to $8,475 |
| First-Time Home Buyers’ Tax Credit | Federal tax credit | $1,500 |
| Multi-Generational Home Renovation Credit | Tax credit for building a suite | Up to $7,500 |
| CMHC-Insured Mortgage | Buy with 5% down | Max home price: $1.5M |
| New Residential Rental Rebate (HST) | HST back on new rental builds | Up to 100% |
Canada Government Programs for First-Time Buyers
Canada Home Buyers’ Plan (HBP)
The Home Buyers’ Plan lets you borrow up to $60,000 tax-free from your Registered Retirement Savings Plan (RRSP) to use as a down payment on your first home.
Who qualifiies:
- You’re a first-time home buyer, which means:
- You did not live in a home you (or your spouse/common-law partner) owned in the last 4 full calendar years.
- So yes, you can technically qualify again if you’ve been out of homeownership for 4+ years.
- You must plan to live in the home as your principal residence within one year of buying it.
Key details:
- You have two years after withdrawal before repayment begins, and you must repay the full amount over 15 years in equal annual instalments. Missed payments are added to your taxable income for that year, so stay on top of it.
Canada First Home Savings Account (FHSA)
The FHSA is a powerful savings tool designed for first-time buyers under 40. You can contribute up to $8,000 per year, with a lifetime max of $40,000.
Who qualifies?
- You’re a first-time home buyer, which means:
- You did not live in a home you (or your spouse/common-law partner) owned in the last 4 full calendar years.
- So yes, you can technically qualify again if you’ve been out of homeownership for 4+ years.
- You must be a Canadian resident and under 40 years old when you open the account.
- Funds must be used to purchase your first home within 15 years or before you turn 71.
Why it’s powerful:
- Contributions are tax-deductible like an RRSP, reducing your taxable income.
- Withdrawals are tax-free when used to buy your first home, like a TFSA.
- If you don’t use the funds for a home, you can transfer to an RRSP or cash out with taxes applied.
Ontario & Toronto Land Transfer Tax Rebates
If you’re buying your first home in Ontario or Toronto, you can get rebates to help reduce upfront land transfer taxes.
Who qualifies?
- You must be a first-time home buyer (a different definition this time)— meaning:
- You have never owned a home anywhere in the world.
- Your spouse must also have never owned a home during your marriage or common-law partnership.
- You must move into the home and make it your principal residence within 9 months of closing.
- You must be at least 18 years old and a Canadian citizen or permanent resident, or become one within 18 months of closing.
Rebate amounts:
- Ontario Land Transfer Tax Rebate: Up to $4,000
- Toronto Municipal Land Transfer Tax Rebate: Up to $4,475 (Toronto charges an extra LTT on top of Ontario’s)
How to get it:
- You must apply at the time of registration of the property (usually through your lawyer).
- If you miss it, you can still apply for a refund within 18 months.
Tax Credits and Rebates
Canada First-Time Home Buyers’ Tax Credit (HBTC)
Just for buying your first home, you could get a $1,500 tax break from the federal government.
What is it?
The HBTC is a non-refundable tax credit designed to help first-time buyers with the costs of closing—think legal fees, inspections, and other upfront costs.
Who qualifies?
- You haven’t lived in a home you owned in the past 4 years.
- The home must become your primary residence within one year of purchase.
- You (or your spouse/common-law partner) must not have claimed the credit before.
How much can you get?
- You can claim 15% of up to $10,000 in qualifying expenses.
- That works out to a $1,500 federal tax credit.
Canada Multigenerational Home Renovation Tax Credit
If you’re adding a secondary suite for a family member, you could get up to $7,500 back at tax time.
What is it?
The Multigenerational Home Renovation Tax Credit helps offset renovation costs when building a self-contained unit for a qualifying relative—such as an aging parent or adult child with a disability.
Who qualifies?
- The new unit must be for a related family member, either a senior (65+) or someone with a disability.
- The suite must be a private living space with a separate entrance, kitchen, bathroom, and sleeping area.
- The relative must move in within 12 months of renovation completion.
- The credit applies only to owner-occupied homes.
How much can you get?
- Claim 15% of up to $50,000 in eligible renovation costs.
- That’s a $7,500 non-refundable tax credit.
Canada / Ontario HST Rebate For Owner-Occupied New Builds
Bought a brand-new home, condo, or built your own? You could qualify for a partial HST rebate—even if you’re a first-time buyer or not.
What is it?
If you’re living in the home as your primary residence, the federal and provincial governments offer rebates on the HST you paid on:
- Newly built homes and condos
- Owner-built homes
- Substantial renovations or conversions of non-residential space into a home
Who qualifies?
- You (or an immediate family member) must live in the home as a primary residence.
- The purchase price must be under $450,000 for the full federal rebate (partial rebate up to $500K).
- Applies to new builds and major renovations.
How much can you get?
- Up to $6,300 federal rebate
- Additional Ontario rebate up to $24,000 (depending on the purchase price)
Canada / Ontario HST Rebate for New Residential Rental Properties
If you’re building or substantially renovating a new rental unit, you may qualify to get back some—or all—of the HST you paid.
What is it?
The New Residential Rental Property Rebate (NRRPR) allows investors to recover HST when buying or building new rental housing or converting non-residential property into a rental.
Who qualifies?
- You must be the builder or buyer of a new or substantially renovated rental unit.
- The home must be intended as a long-term residential rental (not Airbnb or short-term).
- A signed lease agreement is usually required within 1 year of closing or substantial completion.
- Applies to individual investors and some corporations.
How much can you get?
- You could recover up to 36% of the federal HST (5%), and possibly a portion of the provincial HST.
- In some cases, you can get back 100% of the total HST paid if you have a purpose-built rental building with four or more units.
Insured Mortgage Programs for First-Time Buyers, Renovators & Investors in Canada
Whether you’re buying your first home, adding a legal suite, or building a multi-unit rental, mortgage insurance can help you borrow more with less down. But it doesn’t mean anyone can qualify — you’ll still need to meet income and debt rules, and in most cases, the cost of insurance is added to your mortgage.
Low Down Payment Mortgage (Insured by CMHC, Sagen, or Canada Guaranty)
Buy your first home with as little as 5% down
If your home is priced under $1.5 million, you can qualify for an insured mortgage that allows you to buy with just 5–10% down.
Quick Facts:
- Minimum down payment:
- 5% on the first $500,000
- 10% on the portion between $500K–$999,999
- Max home price: $1.5 million
- Must be owner-occupied
- Minimum credit score: typically 680+
- Mortgage insurance premium is added to your mortgage — you don’t pay it upfront
- You must still qualify based on income (lender will use your gross income, debts, and current rates)
Refinance For Renovations or Adding a Legal Suite
Use your home’s completed value to refinance up to 90%
If you’re adding a legal basement apartment or converting a home to a duplex or triplex, you may be able to refinance up to 90% of the post-renovation value — with mortgage insurance from CMHC, Sagen, or Canada Guaranty.
Ideal for:
- Legal suite conversions
- Duplex or triplex upgrades
- Value-add renovations to boost equity
How It Works:
- Applies to principal residences
- Max loan: typically based on $2M completed value
- Mortgage insurance premium is again rolled into the mortgage
- You must qualify based on your personal income, just like any regular mortgage
- Lenders assess value through appraisals and renovation scope
CMHC MLI Standard & MLI Select (Purpose-Built Rentals, 5+ Units)
Go bigger with long-term rental investments
If you’re developing or refinancing a 5+ unit residential rental, both CMHC’s MLI Standard and MLI Select programs qualify — and both base approval on the property’s Debt Coverage Ratio (DCR), not your personal income.
The big difference?
- MLI Select offers premium discounts when your building meets affordability, energy efficiency, and accessibility standards. You can get up to 95% loan-to-value and amortizations up to 50 years.
- MLI Standard carries higher premiums. You can get up to 85% loan-to-value with this program.
Both are solid choices for long-term investors, developers, and anyone focused on multi-family rental strategies — but MLI Select saves you money if you qualify for the incentives.
Bonus: Smarter Ways to Own in Toronto in 2025
We know ownership isn’t one-size-fits-all anymore. Here are two strategies more first-time buyers are using to make it work.
Rent Where You Love, Invest Where It Makes Sense
Instead of trying to own in a high-demand neighbourhood where homes barely cash flow (if at all), do this:
Rent in the area you actually want to live in — maybe it’s downtown, maybe it’s close to work, lifestyle, or transit.
Then buy a property where the numbers work — usually outside the core, where you can get multi-units and better value.
Example:
For example, someone rents a condo downtown for $2,300/month.
Instead of buying a cramped 1-bedroom in the same area — which would cash flow negative even when fully rented out — they bought a bungalow in midtown Toronto with two self-contained rental units.
Fully rented, that bungalow brings in enough income to cash flow $800/month after all expenses and the mortgage. That extra income now helps offset the cost of their own rent downtown.
So even though they don’t live in what they own, they’re still building equity, generating monthly cash flow, and living exactly where they want. That’s what smart, numbers-first ownership looks like today.
Check out the video below where Laryssa breaks down the exact strategy she’s using herself:
House Hack: Use Rental Income to Offset Your Living Expenses — In the Same Home
You buy a multi-unit home — like a bungalow with a basement suite — live in one unit, and rent out the others to help cover the mortgage. This is what we call “house hacking”.
The benefits?
You pay less tax on rental income since you’re living there.
You get the capital gains tax exemption on the portion you live in when you sell.
And part of what you’re paying monthly isn’t lost — it’s going toward your mortgage paydown and building equity.
Of course, it’s not perfect:
You’ll likely have to live with tenants.
You may not get your dream neighbourhood right away.
But the numbers often make it well worth it.
Example: House Hacking a Bungalow in Toronto
Let’s say you buy the same bungalow in the example before for $800,000 with two units. You live in the basement and rent out the main floor.
- Total expenses & mortgage (mortgage, tax, utilities): ~$3,800/month
Add Main floor rent income: $2,600/month
Net monthly cost to you: $1,200 (after rent is collected)
If you live in the main unit and rent the basement for less (rental income $2,000 / month), your net monthly cost jumps to $1,800.
Either way, both can help you reduce your monthly living expenses so that you can grow wealth more strategically in today’s market.
FAQ: First-Time Home Buyers in Canada
Q: Do I have to buy a home to live in to use the FHSA or HBP?
A: Yes, in both cases, you must intend to live in the home within one year of buying it. These programs are meant to help you buy a principal residence—not an investment property.
Q: Can I use both the FHSA and RRSP Home Buyers’ Plan?
A: Yes, you can use both together to boost your down payment. Just make sure you meet the eligibility rules for each.
Q: What counts as a “first-time home buyer”?
A: It depends on the program. But in most cases — like the Home Buyers’ Plan or First Home Savings Account — you’re considered a first-time home buyer if you haven’t owned a home (or lived in a home owned by your spouse or common-law partner) in the last 4 years. Always check the specific program rules — each one has slightly different criteria.
Q: What if I buy with someone who isn’t a first-time buyer?
A: It depends on the program. For the Ontario and Toronto Land Transfer Tax rebates, if you’re buying with a spouse or common-law partner, both of you must qualify as first-time buyers to get the rebate. If either of you has owned a home and lived in it while together, you won’t be eligible for any portion of the rebate — not even your share. If you’re not spouses, you may be able to claim a partial rebate based on your percentage of ownership, as long as you personally qualify. For the HBP and FHSA, eligibility is based on the individual. You can still use these programs even if your partner doesn’t qualify — as long as you meet the first-time home buyer criteria. The HBTC is a personal, non-refundable tax credit. This means your eligibility is based on your own circumstances, not your co-buyer’s. If you meet the criteria — primarily, that you haven’t owned a home in the past four years — you can claim the full $1,500 credit, even if your buying partner doesn’t qualify.
Q: Can I buy a rental property with first-time buyer incentives?
A: Not directly. Most incentives require you to live in the home yourself. But you can house hack—live in one unit and rent out the rest.
Q: What’s the minimum down payment for a home in Toronto?
A: You need at least 5% down for homes under $500,000. For anything between $500,000–$1.5M, it’s 5% on the first $500K and 10% on the rest. Homes over $1.5M require 20% down—no CMHC insurance allowed.
Q: What do mortgage approvals require, and how are they calculated?
A: Mortgage approval depends on your income, debts, credit score, and the property’s value. Lenders use two main ratios:
-
Gross Debt Service (GDS) Ratio: This is your housing costs (mortgage payments, property taxes, heating, and 50% of condo fees) divided by your gross monthly income. Ideally, it should be under 39%.
-
Total Debt Service (TDS) Ratio: This includes your housing costs plus other debts (car loans, credit cards, etc.) divided by your gross income. It should be under 44%.
Lenders also consider your credit history, down payment size, and the mortgage stress test — which requires you to qualify at a higher interest rate than your actual mortgage rate, usually around 7% or the Bank of Canada’s benchmark rate, whichever is higher. This ensures you can handle rate increases.
If your numbers don’t fit these criteria, approval can be tough. Knowing this upfront saves you headaches and wasted time.
Q: Are all first-time buyer programs income-tested?
A: Some are. For example, CMHC’s First-Time Buyer Incentive has income limits. Others, like the FHSA and HBP, are not income-tested.
Q: What if I already used the Home Buyers’ Plan before?
A: You may be able to use it again if your previous withdrawal is fully repaid and you meet the first-time buyer definition again. But you can’t have more than one active withdrawal at a time.
Want to see what’s possible for you? Book a strategy session with us here.
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