Buying your first home is an exciting milestone, but it’s also a big financial commitment. Fortunately, in 2025, both federal and provincial governments in Canada are offering new and updated incentives to make homeownership more accessible for first-time buyers. Whether you’re saving for a down payment, looking for lower borrowing costs, or reducing closing expenses, these programs can help.
Here’s everything you need to know about the incentives available in Ontario and across Canada this year.
Federal Incentives for First-Time Home Buyer’s
1. First Time Home Buyer’s Incentive (FTHBI)
The First Time Home Buyer’s Incentive is a shared equity mortgage program designed to make homeownership more affordable. Under this program, the government offers:
- 5% for resale homes
- 5% or 10% for newly constructed homes
In return, the government shares in the home’s future value—whether it increases or decreases. As of 2025, updates to the program include an increase in eligible household income limits, which now go up to $150,000 annually, and a raised maximum purchase price cap to approximately $700,000 in high-cost areas like Toronto and Ottawa (Canada Mortgage and Housing Corporation).
Why It Matters: This incentive can reduce monthly mortgage payments significantly, making it easier for first time home buyer’s to manage their finances.
2. Home Buyers’ Plan (HBP)
The HBP allows first time home buyer’s to withdraw up to $35,000 from their RRSPs (Registered Retirement Savings Plans) to use as a down payment, tax-free. Couples can combine their withdrawals for a total of $70,000.
What’s New in 2025: The government has introduced more flexibility, allowing participants to repay the withdrawn amount over 20 years instead of the previous 15 years, easing repayment pressures (Government of Canada).
3. Tax-Free First Time Home Buyer’s Savings Account (FHSA)
Launched in 2023, the FHSA is gaining traction in 2025. This program allows you to save up to $40,000 for your first home, combining the tax advantages of an RRSP and a TFSA. Contributions are tax-deductible, and withdrawals for qualifying home purchases are tax-free.
Why It Matters: Unlike the HBP, there’s no need to repay the amount withdrawn from an FHSA, making it an excellent tool for long-term savings.
Provincial Incentives for Ontario Home Buyers
1. Land Transfer Tax Rebate
In Ontario, first time home buyer’s are eligible for a land transfer tax (LTT) rebate of up to $4,000. For buyers purchasing in Toronto, where a municipal land transfer tax also applies, an additional rebate of up to $4,475 is available.
Example: If you’re buying a $500,000 home in Toronto, you would pay approximately $12,475 in land transfer taxes. With the combined rebates, you could reduce this to just $4,000.
Why It Matters: This rebate significantly reduces closing costs, which are often a hurdle for first-time buyers (Ontario Ministry of Finance).
2. Affordable Housing Programs
The Ontario government has introduced new affordable housing initiatives in 2025, including grants for low- and moderate-income buyers. These grants provide up to $10,000 for down payment assistance in select regions, such as Hamilton and Windsor.
Why It Matters: These programs make it easier for first time home buyer’s to enter the market, especially in cities with more affordable housing options.
Updates and New Opportunities in 2025
1. Greener Homes Grant for Energy-Efficient Properties
The federal Greener Homes Grant is now available for first time home buyer’s purchasing energy-efficient properties. Grants of up to $10,000 can be used for improvements like insulation, windows, and heat pumps.
Why It Matters: Homes with energy-efficient features not only qualify for grants but also offer long-term savings on utility bills (Natural Resources Canada).
2. Reduced CMHC Insurance Premiums
As of 2025, the Canada Mortgage and Housing Corporation (CMHC) has reduced its mortgage insurance premiums for first-time buyers with down payments of less than 20%. For example, a buyer putting down 5% on a $400,000 home could save over $1,000 in premiums.
Why It Matters: Lower premiums mean more money stays in your pocket to cover moving costs or future expenses.
How to Maximize These Incentives
- Start Saving Early: Open an FHSA as soon as possible to take advantage of its tax benefits.
- Work with a Realtor: A knowledgeable Ontario realtor can help identify properties that qualify for specific incentives.
- Plan for Closing Costs: Use the LTT rebate and other provincial incentives to reduce upfront expenses.
- Consult a Financial Advisor: Make the most of programs like the HBP and Greener Homes Grant by planning your finances strategically.
Real-Life Example
Let’s say you’re a first-time buyer earning $120,000 annually, purchasing a $600,000 home in Hamilton. Here’s how these incentives could help:
- FTHBI: Reduce your mortgage by $30,000, lowering monthly payments.
- HBP: Use $35,000 from your RRSP for the down payment.
- FHSA: Withdraw $20,000 tax-free for additional costs.
- LTT Rebate: Save $4,000 on land transfer taxes.
Combined, these incentives could save you tens of thousands of dollars, making homeownership much more affordable.
Final Thoughts
First time home buyer’s in Ontario have more support than ever in 2025. By taking advantage of these federal and provincial incentives, you can reduce the financial barriers to owning your first home. From shared equity programs to tax-free savings accounts, there are numerous opportunities to make your dream of homeownership a reality.
For more details on these programs, visit Canada.ca or the Ontario Ministry of Finance. Ready to take the first step? Start exploring your options and work with professionals to maximize these benefits!
