First-time homebuyer in Canada? The foundations may shock you

For those who’ve been poking across the thought of shopping for your first house in Canada, you’ve most likely seen that “first-time homebuyer” doesn’t all the time imply what you assume it does. Totally different applications, federal and provincial, outline it in several methods, and that may make issues complicated quick.

We work with quite a lot of purchasers who get tripped up by this. Somebody will inform me they’re a first-time homebuyer as a result of they’ve by no means purchased a house in Canada, solely to find inheritor earlier house abroad disqualifies them from a key profit right here. Or, on the flip facet, somebody who owned a apartment years in the past doesn’t notice they could nonetheless qualify for sure first-time purchaser applications once more below the fitting circumstances.

So let’s break it down. Right here’s how “first-time homebuyer” is outlined throughout three main applications Canadians usually depend on: the Ontario Land Switch Tax Rebate, the RRSP Residence Consumers’ Plan (HBP), and the First Residence Financial savings Account (FHSA).

How does Ontario outline a first-time homebuyer for the land switch tax rebate?

For those who’re shopping for property in Ontario, the land switch tax (LTT) rebate might be the primary program you’ll hear about. It might prevent as much as $4,000 on the provincial land switch tax, and one other $4,475 on the Toronto municipal land switch tax in case you’re shopping for within the metropolis.

However the eligibility guidelines listed here are strict.

The never-ever rule

To qualify:

• You should be no less than 18 years outdated
• You need to have by no means owned a house or any curiosity in a house anyplace on the planet
• You need to dwell within the house as your principal residence inside 9 months of the acquisition
• And, right here’s the kicker, your partner or common-law accomplice should additionally by no means have owned a house whilst you’ve been collectively

That final level journeys up quite a lot of {couples}. In case your accomplice owned a house earlier than you bought collectively, you’re within the clear. But when both of you owned a property whereas in a relationship with the opposite, even when it was abroad, you’re disqualified.

I’ve needed to ship that disappointing information greater than as soon as. It’s a harsh line, however that’s the rule.

Actual property lawyer Maria Berenbaum notes:

“The newest addition is {that a} purchaser should be both a Canadian Citizen or have Everlasting Resident standing. We had a file lately the place spouses purchased a home together- they’re each first time homebuyers however she doesn’t have her PR but so that they received solely half the rebate. As soon as she will get her papers she will be able to apply for the rebate inside 30 days of getting a affirmation of residency, very brief window of alternative.”

Maria went on to say she usually hears feedback like, “How would they know if I owned one thing again in X? The reply is all authorities companies are inter-connected. Subsequently, when they’re making use of for immigration and put of their utility that they owned a house again house, it could set off a re-assessment, along with penalties.”

How does the RRSP Residence Consumers’ Plan outline a first-time homebuyer?

The HBP is a well-liked choice for patrons who wish to faucet into their RRSP financial savings, as much as $60,000 per couple, to assist with a down cost.

Fortunately, this program is extra forgiving than the LTT rebate.

The four-year look-back rule

To qualify:

• You need to not have lived in a house that you just (or your partner/common-law accomplice) owned within the present yr or the 4 previous calendar years
• You want a signed settlement to purchase or construct a qualifying house
• You need to intend to make that house your principal residence inside one yr
• You should be a resident of Canada on the time of the withdrawal and whenever you purchase the house

So sure, you’ll be able to technically qualify once more even in case you’ve owned property earlier than. So long as you (and your present partner or accomplice) haven’t lived in an owned house in that four-year window, you should still be eligible.

I name this the “contemporary begin” clause. It’s notably helpful for individuals who offered a house years in the past and have been renting since.

How does the First Residence Financial savings Account outline a first-time homebuyer?

The FHSA is the brand new child on the block, and truthfully, it’s a game-changer. It combines the tax perks of an RRSP and a TFSA, and allows you to contribute as much as $40,000 towards your first house buy.

However, just like the HBP, it additionally makes use of a model of the four-year lookback rule.

Just like HBP, however tied to possession and occupancy

To open and use an FHSA:

• You should be between 18 and 71 years outdated and a Canadian resident
• You need to not have owned or collectively owned, or lived in, a qualifying house within the calendar yr earlier than you open the FHSA or in the course of the earlier 4 calendar years
• This rule additionally considers property owned by your partner or common-law accomplice that you just lived in

The FHSA’s definition of a first-time homebuyer is nearly equivalent to the HBP’s, however there’s one nuance: the timing begins earlier than the account is opened. Meaning you must meet the definition on the time you open the FHSA, not simply whenever you use it.

That is essential. We inform our purchasers: in case you’re even considering about shopping for your first house within the subsequent few years, open your FHSA sooner quite than later, even with a minimal contribution, to start out that eligibility clock.

How do the definitions evaluate?

Let’s stack them facet by facet so you’ll be able to see the place issues align, and the place they don’t.

The important thing takeaway? The LTT rebate is the strictest. HBP and FHSA are extra versatile, particularly in case you’ve taken a break from homeownership or lately separated from a accomplice who had a house.

Our recommendation

Don’t assume you might be (or aren’t) a first-time purchaser till we actually have a look at the small print. Every program performs by its personal guidelines, and timing, relationship historical past, and previous possession all matter.

Right here’s what we suggest:

• Discuss to a mortgage skilled early: They will stroll you thru every of those definitions based mostly in your private historical past
• Open your FHSA early if there’s any probability you’ll purchase within the subsequent few years. You’ll be glad you probably did
• Be trustworthy with your self (and your accomplice) about your possession historical past, even that trip property from 15 years in the past may depend
• Don’t depart cash on the desk. We’ve seen purchasers qualify for advantages they didn’t know they had been entitled to, and others miss out as a result of they made assumptions

Does first-time purchaser standing matter for mortgage functions?

Truly, for an insured mortgage, it can matter if you’re a primary time homebuyer.

Repeat patrons are eligible for a 30-year amortization with mortgage insurance coverage solely when buying newly constructed properties.

First-time homebuyers are eligible no matter whether or not they’re shopping for a brand new or resale house.

Repeat patrons buying resale (present) properties will not be eligible for a 30-year amortization with mortgage insurance coverage—the utmost stays 25 years in these instances.

Whether or not you’re shopping for your very first house or simply your first shortly, realizing which applications you qualify for can prevent hundreds, and make your homeownership journey a lot smoother.

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Final modified: September 11, 2025