As of February 2025, several significant updates have been made to assist first-time home buyers in Canada, particularly in Ontario. Here’s a comprehensive overview:
1. Discontinuation of the First-Time Home Buyer Incentive (FTHBI)
The federal government’s First-Time Home Buyer Incentive, which provided a shared-equity loan to reduce monthly mortgage payments, ceased accepting applications on March 21, 2024, with no new approvals granted after March 31, 2024.
2. Enhancements to the Home Buyers’ Plan (HBP)
The HBP now allows first-time buyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plans (RRSPs) to purchase or build a qualifying home. Additionally, withdrawals made between January 1, 2022, and December 31, 2025, benefit from an extended grace period, with repayments starting the fifth year following the withdrawal.
3. Updates to the First Home Savings Account (FHSA)
Introduced in 2023, the FHSA combines features of TFSAs and RRSPs, allowing tax-deductible contributions and tax-free withdrawals for home purchases. For 2025, the annual contribution limit has increased to $10,000, with a lifetime cap of $50,000.
4. Introduction of 30-Year Amortization for Insured Mortgages
Effective August 1, 2024, first-time home buyers purchasing newly built homes with less than a 20% down payment can opt for a 30-year amortization period on insured mortgages, reducing monthly payments.
5. Increase in Insured Mortgage Purchase Price Cap
As of December 15, 2024, the federal government raised the cap on insured mortgages from $1 million to $1.5 million, enabling buyers to purchase homes up to this amount with a minimum 5% down payment.
6. Ontario-Specific Programs
- Land Transfer Tax Rebate: First-time buyers in Ontario can receive a rebate of up to $4,000 on provincial land transfer tax. In Toronto, an additional municipal rebate of up to $4,475 is available.
- First-Time Home Buyers’ Tax Credit (HBTC): This non-refundable tax credit offers up to $1,500 to help offset closing costs.
These updates aim to make homeownership more attainable for first-time buyers by providing enhanced financial support and flexible mortgage options.
Written by:
Tanya Fernandes
Owner | Broker
