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Ontario first-time home buyer guide 2023

Last updated: May 16, 2023

If you’re a first time home buyer in Ontario, there are ways to improve your affordability and prepare for a competitive market such as applying for provincial and federal incentive programs and working with a mortgage advisor to help you avoid common mistakes.

Who qualifies as a first-time buyer in Ontario?

It’s important to understand what being a first time home buyer in Ontario means, especially if you are looking into applying to any of the provincial assistance programs.

You are considered a first-time home buyer in Ontario if, in the four-year period prior to a home purchase, you did not occupy a home that you or your current spouse or common-law partner owned. Keep in mind that this qualification might vary depending on the program you are applying for.

What are the ways to prepare as a first time home buyer in Ontario?

Becoming a homeowner is not always easy but there are ways to prepare yourself so that you can be ready to buy a property when the time comes. It’s important to set realistic expectations by understanding the market you are going into, and know what financial areas that you need to improve or focus on by speaking to a mortgage advisor.

Housing supply and prices

Have realistic expectations when it comes to housing prices and supply, especially in the area that you are looking to buy in. According to the Ontario Real Estate Association, there were fewer than 31,000 active residential listings in Ontario at the end of April 2023. Active listings were 3.5% below the five-year average and 29.1% below the 10-year average for the month of April. The average price of resale residential homes sold across the province in April 2023 was $911,078. Highly priced houses will require larger mortgages to finance them as well as larger minimum down payments.

Down payment and finances

In Canada, buyers must provide at least a 5% down payment on a home if it costs less than $500,000. If the property is more than $500,000, you will be required to have a larger down payment. This is a good time to speak to your mortgage advisor and strategize on ways to strengthen your overall finances before applying for a mortgage. Mortgage advisors also have connections with different lenders and can find you a better rate than most banks.

You can also use our qualifier tool to evaluate your ability to afford your target property.

Local real estate activity

Another key person to connect with is a reputable real estate agent for the area that you are interested in and let them know your goals and spending limits. They will look at recent sales activity and help you understand the market you want to get into and how competitive it is. They will help you feel prepared to buy your first home and explain what growth potential it has.

Are there first-time home buyer programs in Ontario?

Yes! There are several programs in Ontario that you can use if you are a first-time home buyer to help you save some money. Be sure to look into the qualifications before you apply.

Ontario Land Transfer Tax Refund

Land transfer tax is one of the biggest closing costs you will encounter. The refund will give back a maximum of $4,000 for homes that are priced at $368,000 or higher, as there is no land transfer tax on homes that are worth less than that.

To qualify:

  • The purchaser must be at least 18 years old.
  • The purchaser must occupy the home as their principal residence within nine months of the date of transfer.
  • The purchaser cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time.
  • If the purchaser entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home and the purchaser must be eligible for the Tarion New Home Warranty.

If you are married, your spouse’s property history can affect the size of your refund. If your spouse purchased or inherited a home before you got married, you may be able to claim a full or partial refund. However, if your spouse acquired a property while you are both married, neither of you will be eligible to claim the exemption, even if the next purchase is your first home.

Read more about the Ontario Land Transfer Tax Refund

Toronto First-Time Purchaser Rebate

First time home buyers can get additional tax relief on newly constructed or resale residential properties in Toronto. The qualifications are the same as the Ontario land transfer tax refund. The maximum amount you can claim is $4,475.

Read more about the Toronto First-Time Purchaser Rebate

Are there federal programs for first-time home buyers in Ontario?

The First-Time Home Buyer Incentive

If you are a Canadian first-time home buyer, you might be eligible to sign up for the First-Time Home Buyer Incentive (FTHBI) program, which provides financial assistance for first-time home buyers. The FTHBI is a shared equity program which allows first time home buyers to borrow up to 10% of the home value towards their down payment. This incentive will reduce the cost of borrowing by lowering your mortgage insurance and interest costs. The loan is interest-free, but if you’re approved, the government will own a portion of your home equity.

You can use our first-time home buyer calculator to calculate whether the FTHBI program will be beneficial to you.

In order to qualify, you must meet the government’s definition of a first-time home buyer:

  • You plan on purchasing your first home that you will occupy as your primary residence
  • You’ve recently experienced a breakdown of a marriage or common-law partnership. This applies even if you don’t meet the other first-time home buyer requirements
  • You’re not living in a home that you or your current spouse or common-law partner owned in the previous 4-year period

Read more about the FTHBI

The Home Buyers’ Plan

The Home Buyers’ Plan allows you to withdraw up to $35,000 tax free from your RRSP, to help purchase or build a home for yourself or a related person with a disability. Normally contributions to an RRSP are taxed at your marginal income rate and are subject to early withdrawal fees if taken out before you turn 60. If you are buying a home with a partner, they can also withdraw up to $35,000, allowing you a total of $70,000. In order to keep this RRSP withdrawal tax-free, you need to pay back the funds within a 15-year period.

To qualify:

  • Be a first-time buyer.
  • Be a resident of Canada from when you withdraw the funds until your home is bought or built.
  • Intend to use the home as your principal residence within a year of buying or building it.

Read more about The Home Buyers’ Plan

Local homeownership programs and other grants

Here are a few other programs and grants that are available in some Ontario municipalities. Although these aren’t specifically for first-time home buyers, you might be able to apply if you meet certain criterias.

  • The GST/HST new housing rebate is a tax rebate available for buyers of new housing builds or substantially renovated homes from a builder. This rebate is only available if the home is your primary residence and the value of the home is less than $450,000. If you are eligible for this rebate you will receive back the federal portion of the tax paid for your home.
  • The Greener Homes Grant is a federal grant for homeowners who put in specific renovations in their home including insulation, windows, doors, and heating systems. The grant is a rebate of up to $10,000 towards the cost of your renovations. There are more details on the government page but these grants are specifically incentivizing renovations that reduce energy use or increase your home’s efficiency, such as air sealing, insulation, replacing windows and doors or installing a heat pump.
  • Simcoe County’s Homeownership Program provides a loan of up to 10% of the purchase price for down payment purposes. If you live in the home for 20 years, the loan is completely forgiven. Keep in mind that if you sell before then, you’ll have to repay the loan in full plus a percentage of the capital gains. Eligible properties must be valued at $593,879 or less; eligible participants must be renters earning a gross household income of a maximum of $103,200.
  • The Region of Waterloo, including Waterloo, Kitchener and Cambridge, offers eligible residents a 5% loan they can use for a down payment on properties worth $506,000 or less. To be eligible, your household income needs to be $101,300 or less, and you must have resided in the region for at least the last 12 months.
  • Renter households in Kingston or the surrounding County of Frontenac that earn a pre-tax income lower than $91,000 can apply for a forgivable loan to help build their down payment. The loan is worth up to 10% of the purchase price of a home priced at $440,000 or less.
    The Affordable Homeownership program in Chatham-Kent offers applicants earning a gross household income of $80,100 or less 10% of the purchase price of a home, up to a maximum of $25,000. The funds are delivered as a 20-year, interest-free loan. There are similar programs in Brantford, Dufferin County and the District of Muskoka.
  • Low-to-moderate income families in the Greater Toronto Area can also apply for housing through Habitat for Humanity, which builds multi-unit properties across the city.

Are there any other Ontario first-time home buyer tips?

Aside from exploring different programs and grants, here are a few other tips to help you on your homeownership journey.

Keep an eye on the market that you are looking at to see if competition is increasing or easing.
Create a budget and stick to it so that you can keep your savings for a down payment on track.
Have realistic expectations and don’t be discouraged if you can’t buy right away. You can try again when buying a home fits more comfortably into your budget.

Follow a home buying guide to ensure that you don’t miss any important steps.
Always get help from a real estate and mortgage professional. They can help you avoid common mistakes and make the process much more simple and hassle free.