Ontario, renowned for its dynamic economy, esteemed educational institutions, stunning natural scenery, and vibrant cities, remains a top choice for those looking to live and work in Canada. Every year, the province attracts a multitude of new residents, including many aspiring first-time homebuyers.
However, entering the Ontario housing market can be daunting. With the average home price in June 2024 hovering around $890,000, first-time buyers face significant financial challenges, including steep down payments and sizable mortgages.
Fortunately, there are several federal, provincial, and municipal programs designed to help ease the financial burden for first-time homebuyers. Here’s a rundown of the available options in Ontario.
Defining a First-Time Homebuyer in Ontario
In Ontario, you’re generally considered a first-time homebuyer if you’ve never owned a home or if you haven’t lived in a home owned by yourself or your spouse/common-law partner in the past four years. There are exceptions for individuals with disabilities or those who have recently gone through a marital or common-law relationship breakdown.
Keep in mind that the definition of a first-time homebuyer can vary depending on the specific program, so it’s essential to verify eligibility requirements before applying.
Federal Support Programs
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan is a federal initiative that allows first-time homebuyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plans (RRSPs) to contribute toward the down payment on a primary residence. Couples can withdraw up to $120,000 collectively.
It’s important to note that the withdrawn funds must be repaid to the RRSP within 15 years, with a minimum of 1/15th of the amount being repaid each year.
First Home Savings Account (FHSA)
The First Home Savings Account is a registered savings account similar to an RRSP or Tax-Free Savings Account (TFSA). Contributions are tax-deductible, and any investment earnings within the account are tax-free.
Annual deposits are capped at $8,000, with a lifetime contribution limit of $40,000.
GST/HST New Housing Rebate
The GST/HST New Housing Rebate allows homebuyers to recover a portion of the GST or the federal component of the HST paid on a newly constructed or substantially renovated primary residence.
Eligibility rules can differ based on the property type and location, so it’s crucial to review the specific criteria before applying.
Provincial Support Programs
Ontario Land Transfer Tax Refund
First-time homebuyers in Ontario may qualify for a full or partial refund of the provincial land transfer tax, which is typically part of the closing costs for purchasing property in Ontario.
To qualify, you must meet the following criteria:
- Be at least 18 years old
- Be a Canadian citizen or permanent resident
- Have never owned a home or any interest in a home globally
- Not be married to someone who owns or has an interest in a home anywhere in the world
- Occupy the home as your primary residence within nine months after purchase
Ownership of homes received as gifts or through inheritance is also considered.
Municipal Support Programs
Toronto First-Time Homebuyer Rebate
First-time homebuyers in Toronto can receive an additional tax rebate if they purchase a new or resale home within the city.
Homebuyers in Toronto typically pay two land transfer taxes—one to the province and one to the city. The Toronto first-time homebuyer rebate can cover up to $4,475 of the municipal portion of the land transfer tax, which is often included in closing costs.
The eligibility criteria for this rebate align with the provincial program, allowing potential applicants to benefit from both.
Simcoe County Affordable Homeownership Program
Simcoe County offers an Affordable Homeownership Program that provides down payment assistance of up to $50,000 to low-to-moderate income renter households. Unlike some programs, this one does not require applicants to be first-time homebuyers, as it aims to assist any current residents of Simcoe County who do not own property.
Kingston/Frontenac County Homeownership Assistance
In Kingston and Frontenac County, renter households with pre-tax incomes below $94,000, or $130,000 for two-person households, can apply for a forgivable loan to assist with a down payment on a primary residence valued at $500,000 or less.
Previous homeowners are not eligible for this program.
B-Home Program in Brantford
The B-Home program in Brantford provides down payment assistance to first-time homebuyers with a gross household income under $96,000. This assistance comes in the form of a forgivable loan worth 5% (up to $20,000) on homes valued at $400,000 or less within Brantford or Brant County.
Additional Programs
Habitat for Humanity
Habitat for Humanity is a non-profit organization dedicated to building multi-family homes in the Greater Toronto Area (GTA) and offering various supports for affordable housing. First-time homebuyers with low-to-moderate incomes might qualify for housing through Habitat GTA’s Homeownership Model or HomeStart program.
For more details on Habitat for Humanity’s initiatives, visit habitatgta.ca.
Ready to embark on your home-buying journey in Ontario? Explore our inventory of resale homes on our website and take the first step toward finding your dream home.