Mortgage Basics

What are the Ontario First-Time Home Buyer Incentives?

What are the Ontario First-Time Home Buyer Incentives?
Written by
  • Tvine Donabedian
| 10 March 2023
Reviewed, 3 May 2024

Table of contents

    As the most populous province in Canada, Ontario has a super hot market with some of the highest real estate prices across the country. From the GTA to smaller towns and cities, first-time buyers face many challenges, such as low supply, rising interest rates, and sky-high prices – no wonder home ownership can seem unattainable. 

    Luckily, programs and incentives are available to first-time home buyers so you can secure your first home and save money in the process. These programs and incentives include the Land Transfer Tax Refund and The Home Buyer’s Plan. Below you will find ways to save money when you purchase your first home in Ontario.

    Receiving a Land Transfer Tax Refund in Ontario as a First-Time Buyer

    The land transfer tax (LTT) refund applies only to the provincial land transfer tax portion. This amount is applied to the tax payable. This refund applies to both new builds and resale homes in Ontario. 

    Ontario provides first-time buyers with a land transfer tax refund of up to $4000. You will pay no land transfer taxes if your first home is less than $368,000. If the purchase price exceeds $368,000, you will receive a maximum refund of $4000.

    There are, however, some limitations to this incentive. You must be 18 or older to qualify. The purchaser must occupy the home as a primary residence within 9 months of purchase. The purchaser couldn’t have previously owned or had an interest in an eligible home anywhere in the world. The refund will be reduced (or, in the case of spouses, eliminated) if one (or more) of the purchasers is not considered a first-time homebuyer. You must apply for your refund within 18 months of your closing date. Typically, your solicitor will apply for this credit on your behalf at the time of closing.

    What’s the differences between Toronto vs other Ontario cities?

    Homes purchased in Toronto are subject to an additional municipal land transfer tax. It’s important to note that homes purchased elsewhere in the province are only subject to the provincial land transfer tax. The City of Toronto supports first-time home buyers through the Toronto Municipal Land Transfer Tax (MLTT) Rebate. This rebate allows first-time homebuyers in Toronto to save up to $4475 on the municipal land transfer tax. 

    The Toronto land transfer tax applies to new builds and resale homes and, like the provincial refund, has the same limitations as the Ontario land transfer tax refund. In addition, you must be a Canadian citizen or permanent resident of Canada or expected to become either within 18 months of purchasing your home to qualify.

    Here’s what to expect as a First Time Home Buyer in Ontario

    Ontario has one of the most competitive markets in the country. As a first-time homebuyer in Ontario, there are a few things you will want to keep in mind when searching for a home. Be prepared for competition. Many regional markets in Ontario are red hot, making it an extremely competitive landscape for first-time homebuyers. Assessing your budget and familiarizing yourself with the many incentives Ontario offers to first-time buyers is a great way to get a head start on your home-buying journey. 

    The Qualifications as a First-Time Home Buyer in Ontario

    To qualify as a first-time home buyer in Ontario, you must be a Canadian citizen or permanent resident of Canada at the time of purchase or plan to become one within 18 months. You and your partner (legal spouse) could not have previously been on title of another property in Canada or elsewhere to be considered first-time buyers. Additionally, some programs, like the land transfer tax refund, require that you are at least 18 years of age to qualify.    

    Let’s Review the First-Time Home Buyer Programs in Ontario 

    First-time buyers face many challenges, with Ontario remaining one of the most competitive housing markets with ever-increasing prices and the rising cost of living. The Federal and Provincial governments have rolled out programs and rebates designed to make purchasing a home more affordable. Below we will explore the three most recognized and widely available programs. 

    The Home Buyer’s Plan

    The Home Buyer’s Plan (HBP) allows you to withdraw up to $60,000 from your RRSPs toward your down payment. This tax-free withdrawal can be repaid over 15 years through repayments to your RRSPs. If the minimum amount each year is not paid back, it will be added to your income and taxed at your marginal tax rate. Those with a spouse can withdraw up to $60,000 each ($120,000 combined) from their RRSPs under this plan. To qualify, you must be a Canadian resident when you withdraw the funds from your RRSP. Neither you nor your spouse could have owned or had an interest in a property previously in Canada or elsewhere. You must also intend to occupy the home as your principal residence within one year after purchase or build. 

    Land transfer Tax Rebate

    When you purchase a home in Ontario, you pay a land transfer tax. First-time homebuyers may be eligible for a rebate of all or part of those taxes. The maximum rebate is $4000 and is applied on qualifying homes over $368,000 meaning the total amount will be discounted by $4000. No net land transfer tax would be due for homes under the $368,000 purchase price, as the rebate will cover the full portion.

    In Toronto, your home purchase comes with an additional municipal land transfer tax (MLTT); however,  first-time buyers may be eligible for an MLTT rebate of up to $4475.  All rules, conditions and calculations for the MLTT mirror those of the provincial LTT.

    Finally, Here Are Some Trending Cities & Neighborhoods for First-Time Home Buyers

    Ontario has many well-established cities beyond Toronto that have unique charm while still providing excellent access to amenities. As property prices have begun to show signs of decreasing in Ontario, these popular cities have also seen some significant price shifts. Below we will explore 5 Ontario cities that ranked amongst the top 10 of Canada’s best small cities. 

    Location Average Price January 2022 Average Price January 2023 % Change
    Kingston $594,200 $538,300 -9.4%
    Niagara Region $762,900 $629,100 -17.5%
    Kitchener- Waterloo $924,600 $705,100 -23.7%
    Hamilton-Burlington $1,012,700 $809,000 -20.0%
    Guelph $953,100 $800,900 -16.0%

    Wrapping it all up 

    As an aspiring first-time homebuyer in Ontario, you’re likely no stranger to the often competitive nature of the market. Familiarizing yourself with the various programs and incentives available for first-time buyers can ensure you’re ready when it comes time to purchase your first home. These incentives offer financial relief, allowing you to use the money saved for important things – like furnishing your new home! By taking advantage of the savings offered by programs such as the Home Buyers Plan (HBP) and applicable Land Transfer Tax (LTT) Rebates, you can save a substantial amount of money – making your dream of home ownership a reality.