How the New First-Time Homebuyer Incentives in Canada Can Help You Get into the Market Sooner

Buying your first home is a big step, and in today’s housing market, it can feel like an overwhelming challenge. However, recent updates to Canada’s first-time homebuyer incentives are designed to make the dream of homeownership a bit more attainable. Whether you're saving for your down payment or navigating rising home prices, these new incentives could help you get into the market sooner than you thought.

At Rowe Mortgage Solutions, we’re here to break down how these new incentives work and how you can use them to your advantage. With a little guidance, you’ll be well on your way to securing your first home in no time.

What Are the New First-Time Homebuyer Incentives?

Canada’s government has introduced a range of incentives aimed at making homeownership more accessible for first-time buyers. Here are the main ones you should be aware of:

1. First-Time Home Buyer Tax Credit (FTHBTC)

This non-refundable tax credit provides up to $750 to help first-time homebuyers offset costs associated with purchasing a home, such as legal fees and closing costs.

2. RRSP Home Buyers’ Plan (HBP)

The HBP allows first-time homebuyers to withdraw up to $60,000 from their RRSPs (or $120,000 for couples) to help with a down payment. With a 2-year grace period, withdrawals must be repaid in 15 years, making it a valuable way to leverage retirement savings for your first home.

3. First Home Savings Account (FHSA)

The FHSA is a registered savings plan combining the benefits of an RRSP and a TFSA to help first-time buyers save tax-efficiently for a home:

• Tax-Deductible Contributions: Contributions reduce your taxable income.

• Tax-Free Growth: Investment earnings grow tax-free.

• Tax-Free Withdrawals: Funds used to purchase a qualifying first home are tax-free.

• Contribution Limits: $8,000 per year, with a lifetime limit of $40,000. Unused contribution room carries forward.

• Eligibility: Canadian residents aged 18–71 who haven’t owned a home in the current year or the past four years.

• How it Works: Open an account with a financial institution offering FHSAs, contribute up to the annual limit, invest in eligible assets (mutual funds, bonds, GICs, publicly traded securities), and withdraw tax-free when purchasing your first home. Accounts expire after 15 years or by the end of the year you turn 71.

4. Property Transfer Tax (PTT) Exemptions in British Columbia

British Columbia offers several exemptions from the Property Transfer Tax (PTT), particularly for first-time homebuyers and purchasers of newly built homes.

First-Time Home Buyers’ Program

• Eligibility:

  • Canadian citizen or permanent resident who has lived in BC for at least one year immediately before the purchase.

  • Must never have owned a principal residence anywhere in the world.

• Property Value (registrations on or after April 1, 2024):

  • Full exemption: Up to $835,000

  • Partial exemption: $835,000–$860,000

• Property Size: Must be 0.5 hectares (1.24 acres) or smaller.

• Residency Requirement: Must be the buyer's principal residence for at least one year after purchase.

Newly Built Home Exemption

• Eligibility: Canadian citizen or permanent resident purchasing a newly built property for their principal residence.

• Property Value (registrations on or after April 1, 2024):

  • Full exemption: Up to $1,100,000

  • Partial exemption: $1,100,000–$1,150,000

• Property Type: Newly built houses, strata units, or co-operative housing.

• Residency Requirement: Must be the buyer’s principal residence.

How to Claim

To claim any exemption, submit the required documentation with your property transfer tax return. Most buyers work with a legal professional to file this on their behalf with the Land Title and Survey Authority of British Columbia (LTSA). Newly built home purchasers can also apply for a refund within 18 months of registration if they meet the criteria.

5. GST Rebate for First-Time Home Buyers on New Construction Homes (NEW – 2025)

As of May 2025, the federal government introduced a GST rebate that eliminates or reduces the Goods and Services Tax (GST) on qualifying newly built homes for first-time buyers. (Government of Canada, May 2025)

Here’s how it works:

• Full GST Rebate: For new homes valued up to $1 million

• Partial Rebate: For homes valued between $1 million and $1.5 million

• No Rebate: Homes above $1.5 million do not qualify

• Applies to newly constructed homes, self-builds, and co-operative housing

Eligibility:

• Must be a Canadian citizen or permanent resident

• Must be a first-time homebuyer

• Home must be used as your principal residence

• Applies to agreements signed on or after May 27, 2025, with construction beginning before 2031

This rebate can save buyers up to $50,000 on a new home, encouraging affordability and supporting Canada’s housing supply goals.

How Do These Incentives Help You Buy Your First Home?

The impact of these incentives can be significant, depending on your situation. Let’s break down how each incentive could help you get into the market sooner:

1. Reduced Out-of-Pocket Costs: The First-Time Home Buyers’ Tax Credit (HBTC) provides a non-refundable tax credit of up to $1,500, lowering your federal income tax and giving you extra funds to cover upfront homebuying expenses such as legal fees, closing costs, title insurance, and home inspections. This credit is claimed on your tax return (line 31270 of the T1) and can be combined with other programs like the HBP and FHSA for even greater savings.
2. Using Your RRSP to Fund the Down Payment: The Home Buyers’ Plan (HBP) allows eligible first-time buyers to withdraw up to $60,000 from their RRSP (or $120,000 for couples) tax-free for a home down payment, as long as the funds are repaid over 15 years. Key benefits include:

• Faster Homeownership: Access funds sooner without waiting to save a full down payment.

• Interest-Free “Loan”: Unlike other borrowing options, the withdrawal is interest-free.

• Flexible Repayment: Annual repayments start two years after withdrawal (for withdrawals between 2022 and 2025), and missed payments are added to taxable income.

Combined Benefits: Together, the HBTC and HBP reduce upfront costs, improve cash flow, and provide tax advantages, making homeownership more achievable and financially manageable for first-time buyers.

Eligibility: Who Can Take Advantage of These Programs?

Not everyone will qualify for these incentives, so it’s important to know the requirements. Here’s what you need to know:

• First-Time Home Buyer Tax Credit (FTHBTC): You must be a first-time homebuyer (meaning you haven’t owned a home in the past four years) and intend to live in the home as your primary residence.

• RRSP Home Buyers’ Plan (HBP): You must be a first-time homebuyer, and the funds must be used toward the purchase of your first home. The withdrawal must be repaid to your RRSP over 15 years.

If you meet these criteria, you’re on the right track to take full advantage of these incentives. Book a consultation with Cody Rowe to see how these programs fit into your home-buying strategy.

How to Use These Incentives to Your Advantage

Now that you understand the basics of each incentive, here are some tips to help you maximize these opportunities:

1. Combine the Incentives: You don’t have to choose just one! Many first-time homebuyers can take advantage of multiple programs. For example, you can use the First-Time Home Buyer Incentive alongside the RRSP Home Buyers' Plan to reduce your down payment burden.

2. Plan Your Budget: Before diving into the home-buying process, it’s important to plan your budget carefully. These incentives can help reduce upfront costs, but they don’t eliminate all expenses. Make sure you’re aware of the total cost of purchasing your home, including closing costs, property taxes, and potential home repairs.

3. Work with a Mortgage Broker: Navigating these incentives can be tricky, and it’s crucial to ensure you’re getting the best possible terms for your situation. A mortgage broker like Cody Rowe can help you assess your eligibility, determine the best combination of incentives for your needs, and ensure your home purchase stays within budget.

At Rowe Mortgage Solutions, we proudly serve homebuyers in Victoria, Vancouver, and the surrounding areas in British Columbia. If you’re looking to take advantage of these first-time homebuyer incentives and want personalized advice, we’re here to guide you every step of the way.

Ready to learn more about how the new first-time homebuyer incentives can work for you? Contact us today to discuss your options. Reach out to Cody at codyrowe@dominionlending.ca to schedule your consultation and start your journey toward homeownership.