Buying your first home in Canada has never been easy, and with housing prices in many cities remaining elevated despite recent corrections, aspiring homeowners need every advantage they can get. The good news is that the federal and provincial governments have created a robust set of incentives specifically designed to help first-time buyers bridge the affordability gap.
In 2026, these incentives are more generous than they have been in years. From the relatively new First Home Savings Account to the expanded Home Buyers' Plan, the combined benefit of these programmes can be worth tens of thousands of dollars. This guide covers every major incentive available, how to qualify, and how to stack them for maximum benefit.
The First Home Savings Account (FHSA)
The First Home Savings Account, introduced in 2023, is arguably the most powerful tool available to aspiring Canadian homeowners. It combines the best features of the RRSP and TFSA into a single account: contributions are tax-deductible (like an RRSP), and withdrawals for a qualifying home purchase are completely tax-free (like a TFSA).
You can contribute up to $8,000 per year, with a lifetime limit of $40,000. Unused contribution room can be carried forward to the following year, up to a maximum of $8,000 in carry-forward room. So if you open the account but contribute nothing in year one, you can contribute up to $16,000 in year two.
The tax deduction alone makes the FHSA incredibly valuable. If you are in a 30% marginal tax bracket and contribute the full $8,000, you receive a $2,400 tax refund. Over five years of maximum contributions, you will have invested $40,000 of your own money but received $12,000 in tax refunds — effectively making your $40,000 down payment cost only $28,000 after tax savings. Plus, any investment growth inside the account is withdrawn tax-free.
To qualify, you must be a Canadian resident between 18 and 71, and you must not have owned a home (or lived in a home owned by your spouse) in the current year or any of the preceding four calendar years. Use our salary calculator to see your marginal tax rate and calculate the exact value of your FHSA deduction.
The Home Buyers' Plan (HBP): Expanded to $60,000
The Home Buyers' Plan allows you to withdraw funds from your RRSP tax-free to purchase or build a qualifying home. In 2024, the maximum withdrawal limit was increased from $35,000 to $60,000 per person. For a couple, that means up to $120,000 can be withdrawn from your combined RRSPs — a substantial down payment in many Canadian markets.
The catch is that you must repay the withdrawal to your RRSP over a 15-year period. Previously, repayments began two years after the withdrawal. Under the updated rules, the grace period has been extended to five years for withdrawals made after April 2024, giving buyers more time to get settled before repayments begin.
If you fail to make the required annual repayment (which is 1/15 of the withdrawn amount), the missed amount is added to your taxable income for that year. So while the HBP offers a powerful interest-free loan from your future self, it does require disciplined repayment. Use our RRSP calculator to model how HBP withdrawals and repayments affect your retirement savings trajectory.
Stacking the FHSA and HBP Together
Here is where the maths become truly powerful. You can use both the FHSA and HBP simultaneously for the same home purchase. This means a single buyer could potentially access $40,000 from the FHSA (tax-free, no repayment required) plus $60,000 from the HBP (tax-free, repayable over 15 years) for a total of $100,000. A couple buying together could access up to $200,000 through these two programmes alone.
In a city where the average home price is $600,000, $200,000 represents a 33% down payment — easily enough to avoid mortgage default insurance and secure the best available mortgage rates. Even in more expensive markets like Toronto or Vancouver, these programmes provide a substantial foundation. Check your mortgage affordability with our mortgage calculator to see how different down payment amounts affect your monthly payments.
The Home Buyers' Tax Credit and Land Transfer Tax Rebates
The federal Home Buyers' Tax Credit provides a non-refundable tax credit of $10,000, which translates to a $1,500 reduction in your federal tax bill (15% of $10,000). This credit is available to anyone who has not owned a home in the current year or any of the preceding four years.
Several provinces offer additional first-time buyer benefits. Ontario provides a land transfer tax rebate of up to $4,000 on qualifying home purchases. British Columbia offers a property transfer tax exemption for homes valued up to $500,000 (with partial exemptions up to $525,000). In Toronto, there is a separate municipal land transfer tax rebate of up to $4,475 on top of the provincial rebate. Alberta and Saskatchewan have no general land transfer taxes, making them more affordable for first-time buyers in this regard.
These credits and rebates can save you thousands of dollars on closing costs — money that many first-time buyers overlook during their budgeting process.
New Construction and GST/HST Rebates
If you are purchasing a newly built home, you may qualify for the GST/HST New Housing Rebate. This rebate returns a portion of the GST or HST paid on the purchase price. In 2024, the government temporarily enhanced the rebate for new rental construction, and certain enhanced provisions continue to apply.
For owner-occupied new homes, the federal rebate is 36% of the GST paid, up to a maximum rebate of $6,300, on homes valued up to $350,000 (with a phase-out up to $450,000). In provinces with the HST, there may be an additional provincial component. Use our GST/HST calculator to estimate the rebate you may be entitled to on a new home purchase.
Putting It All Together: A First-Time Buyer Strategy
The optimal strategy for an aspiring first-time buyer in Canada is to start planning years before your intended purchase. Open an FHSA as soon as possible and contribute the maximum $8,000 annually, investing the funds for growth. Simultaneously, build up RRSP savings that can be accessed through the HBP — and invest the FHSA tax refund into your RRSP for double the sheltering benefit.
When you are ready to buy, withdraw from the FHSA (tax-free, no repayment), make your HBP withdrawal from the RRSP (tax-free, 15-year repayment), claim the Home Buyers' Tax Credit, and apply for any provincial land transfer tax rebates. Then use our mortgage calculator and loan repayment calculator to compare different mortgage terms and payment frequencies.
The combined impact of these programmes is substantial — easily $10,000 to $20,000 or more in tax savings and rebates, on top of the ability to accumulate over $100,000 in tax-advantaged savings for your down payment. Canadian first-time buyers have more tools at their disposal than ever before. The key is starting early and using every available programme to its fullest.