Top 10 Home Buying Programs and Incentives for 2025
In September 2024, the Federal Government announced a number of changes to Canada’s mortgage system in the hopes of spurring more home construction and support first-time home Buyers.
With so many announcements coming in such a short span, it can all be very confusing to keep track of all the programs and incentives being rolled out at all levels of Government.
Here’s the top 10 home buying programs and incentives available as we begin 2025:
1. Increased Insured Mortgage Cap
The maximum price for insured mortgages has increased from $1 million to $1.5 million, opening the door for buyers in higher-priced markets like Toronto and Vancouver to qualify for high loan-to-value mortgage insurance with a smaller down payment. The rules for down payments remain the same:
- 5% on the first $500,000 of the purchase price
- 10% on the portion between $500,000 and $1.5 million
For example, buying a $1.5-million home now requires a $125,000 down payment—much less than the $300,000 needed for uninsured mortgages under the old rules.
2. Expanded 30-year amortizations
Eligibility for 30-year amortization periods on insured mortgages has been broadened to include all first-time homebuyers and purchasers of new builds, provided the loan-to-value ratio is 80% or higher.
First-time homebuyers must meet criteria such as not having owned a home in the last four years or having experienced a breakdown in a marriage or common-law relationship.
These reforms apply to all high-ratio mortgages on owner-occupied properties or those occupied by a close relative. The government confirmed that existing eligibility criteria for government-backed mortgage insurance will remain unchanged.
3. First Home Savings Account (FHSA)
Announced in the 2022 federal budget and launched in April 2023, the FHSA is a registered account that allows Canadians to save up to $8,000 per year, with a lifetime limit of $40,000, toward their first home.
Contributions and investment income are tax-deductible, and withdrawals for a home purchase are tax-free, making it a powerful tool to boost buying power.
4. Home Buyers’ Plan (HBP)
Introduced in 1992, the HBP has been a cornerstone program for first-time buyers, allowing them to make tax-free withdrawals from their RRSPs to fund a home down payment.
Originally designed with a $20,000 withdrawal limit, it has undergone several updates, including a recent increase in Budget 2024 to $60,000 per individual ($120,000 for couples).
Withdrawals must be repaid within 15 years, making it a longstanding and valuable tool to help Canadians enter the housing market.
5. Ontario Land Transfer Tax Rebate
Available to first-time buyers in Ontario, providing savings on land transfer tax costs.
For first-time home buyers, there is a maximum $4,000 tax rebate on the Ontario land transfer tax. This refund will cover the full tax for homes up to $368,000.
6. First-Time Home Buyers’ Tax Credit (HBTC)
Introduced in 2009 to assist first-time homebuyers with the costs associated with purchasing a home.
In December 2022, the federal government doubled the HBTC, allowing eligible first-time homebuyers to claim a non-refundable tax credit of up to $10,000, which equates to a $1,500 reduction in income tax payable.
7. GST/HST new housing rebate
Provides rebates for GST or HST on new-build homes, preconstruction purchases, or significant renovations, with the rebate amount based on the home’s purchase price.
Eligibility Criteria:
- New Construction: The home must be newly built or substantially renovated, and it must be intended to be the primary place of residence for the purchaser or a close relative.
- Primary Residence: The buyer must occupy the home as their primary residence within a reasonable time frame after purchase.
- Purchasers: Generally, this rebate is available to Canadian citizens or permanent residents. It can also be available to Canadian businesses in some circumstances.
Rebate Amounts:
- GST Rebate (for federal GST):
- You may receive a rebate of 36% of the GST paid on the first $350,000 of the home's purchase price, up to a maximum of $6,300.
- The rebate decreases gradually as the purchase price of the home exceeds $350,000, and it is not available for homes priced above $450,000.
- HST Rebate (for provinces that have harmonized sales tax):
- Ontario: The HST rebate consists of two parts: a federal rebate (36% of the GST portion) and a provincial rebate (75% of the Ontario portion).
You can apply for the GST/HST New Housing Rebate within two years of the home’s purchase or construction completion date.
For homes purchased from a builder, the rebate may be applied directly at the time of purchase.
8. Secondary Suite Loan Program
Provides loans to help homeowners create rental units within their properties. The government recently doubled the loan limit to $80,000. In addition, the loans will be offered at a 2% interest rate with a 15-year term.
9. Secondary Suites Refinancing Option:
Allows homeowners to refinance their mortgages to fund the construction of secondary suites.
This option helps existing homeowners leverage their property equity to add rental units, contributing to the housing supply.
10. Toronto’s Home Ownership Assistance Program (HOAP)
Toronto’s HOAP provides down payment assistance loans of up to $50,000 to assist with down payments, which are repayable upon the sale of the home.
Eligibility Criteria:
- First-time homebuyers: You must be purchasing your first home, meaning you haven’t owned a home anywhere in the last three years.
- Residency Requirement: Applicants must have lived in Toronto for at least one year prior to applying for the program.
Income Limits: There are household income limits. For example, applicants typically need to have a combined household income below a certain threshold (often around $120,000 annually, but this varies). The specific income limits may change year to year and depend on household size.
Property Price Limits: The home you intend to purchase must be within the Toronto city limits and meet specific price thresholds (e.g., homes typically must be valued at or below $500,000 to $600,000, but these limits can vary).
Mortgage Qualification: Applicants must be able to qualify for a mortgage with a financial institution based on their income, credit history, and other criteria.
The application process typically involves submitting an application through the City of Toronto’s website or through a designated program administrator. Make sure to check the program's specific deadlines and eligibility guidelines.
