First-Time Homebuyer Incentives You Need to Know in 2025

Purchasing your first home is an exciting milestone, but it can also feel overwhelming—especially when considering the high costs of buying property in Ontario. Thankfully, there are several first-time homebuyer incentives designed to help make the process more affordable and accessible. These programs can provide you with financial assistance, tax benefits, and support, allowing you to step into the housing market with more confidence.

In this blog, we’ll explore the first-time homebuyer incentives available in Ontario in 2025, including government programs, rebates, and grants that can significantly reduce the barriers to homeownership.

1. What is a First-Time Homebuyer Incentive?

A first-time homebuyer incentive is a financial program or benefit designed to help individuals or families purchasing their first home. These incentives aim to reduce the financial burden of buying a home by offering lower down payments, subsidies, tax rebates, or even assistance with mortgage payments.

Whether you're looking to buy a condo in Toronto, a detached house in Mississauga, or a townhome in Scarborough, these programs can make your homeownership dream more achievable.

2. The First-Time Home Buyer Incentive (FTHBI)

One of the most well-known and widely utilized programs for first-time homebuyers in Ontario is the First-Time Home Buyer Incentive (FTHBI). This is a shared-equity mortgage program offered by the federal government that reduces the amount of money you need to borrow, ultimately lowering your monthly mortgage payments.

How Does It Work?

• Shared-Equity Model: The government provides a 5% or 10% down payment for your home, which is a shared equity investment. In return, the government holds a stake in your property, meaning when you sell your home, you’ll need to repay them the same percentage of your home's sale price.
• Eligibility: This program is available to first-time homebuyers with a combined household income of $120,000 or less. The price of the home must be less than $500,000 for the 5% incentive, and up to $600,000 for the 10% incentive.

This incentive makes it easier to buy a home with a smaller down payment, reducing the financial strain of the initial purchase.

3. The Home Buyers’ Plan (HBP)

Another valuable program available to first-time homebuyers in Canada is the Home Buyers' Plan (HBP). This plan allows you to borrow up to $35,000 from your Registered Retirement Savings Plan (RRSP) to help with the purchase of your first home. If you’re purchasing with a spouse or common-law partner, each person can withdraw up to $35,000, for a total of $70,000.

Key Benefits:

• Tax-Free Withdrawal: The money you withdraw from your RRSP is tax-free, provided it’s repaid within 15 years.
• Repayment Terms: You must repay the amount borrowed within 15 years, with a minimum annual repayment of 1/15th of the total amount.

Using your RRSP for your down payment can provide a significant boost when buying your first home, allowing you to access more funds upfront.

4. Land Transfer Tax Rebate

In Ontario, first-time homebuyers are eligible for a Land Transfer Tax Rebate to help offset the cost of the land transfer tax. This rebate can reduce the tax you pay when you buy a home, depending on the price of the property.

Eligibility:

• Up to $4,000 Rebate: For properties that cost up to $368,000, first-time buyers can receive a rebate of up to $4,000 on the land transfer tax.
• Additional Rebate: If you buy a property in Toronto, you may also be eligible for an additional rebate of up to $4,475 on the municipal portion of the land transfer tax, further lowering your overall costs.

This is a substantial financial break that can help first-time homebuyers save money, especially in a high-demand market like Ontario.

5. First-Time Homebuyer Tax Credit

The First-Time Homebuyer Tax Credit (HBTC) is a federal tax credit that provides a one-time rebate for eligible homebuyers. As of 2025, the credit remains at $5,000, which can result in a $750 tax refund.

Eligibility:

• You must be a first-time homebuyer, meaning you haven’t owned a home in the past four years.
• The home you purchase must be located in Canada and must be intended for use as your primary residence.

This tax credit is easy to apply for and can help ease the burden of upfront costs associated with buying a home.

6. Ontario New Housing Rebate

First-time homebuyers purchasing a newly built home in Ontario may be eligible for the Ontario New Housing Rebate. This rebate helps reduce the HST you pay on a newly constructed home, which can be a significant cost savings.

How It Works:

• New Homes: First-time buyers can claim up to $24,000 in rebates on the HST paid for new homes purchased in Ontario.
• Eligibility: The property must be your primary residence, and it must be a newly constructed home, including single-family homes, condos, and townhomes.

This rebate provides a substantial reduction in taxes when purchasing a brand-new home.

7. Other Programs to Consider

In addition to the above incentives, there are a few other programs worth noting for first-time buyers in Ontario:

Municipal Programs:

Some municipalities offer additional incentives, such as down payment assistance programs, low-interest loans, or grants. It’s important to check with your local city or town to see if there are any programs available in your area.

Green Home Buyer Incentives:

In an effort to promote environmentally friendly home ownership, some provinces and municipalities offer incentives for first-time homebuyers purchasing energy-efficient homes or homes built using sustainable materials.

8. How to Maximize These Incentives

To get the most benefit from the first-time homebuyer incentives in Ontario, consider the following tips:

• Start Early: Begin researching and applying for these incentives well in advance of your home purchase. Some programs, like the HBP, require specific documentation, and others may have application deadlines.
• Get Pre-Approved: Before purchasing a home, get pre-approved for a mortgage to understand how much you can afford and ensure you qualify for the incentives.
• Consult a Realtor: A real estate professional familiar with first-time homebuyer incentives can help guide you through the process and ensure you don’t miss out on any programs available.

9. Conclusion: Unlock Your Path to Homeownership in 2025

As a first-time homebuyer in Ontario, navigating the process of purchasing a home can be challenging, especially with the high cost of living in cities like Toronto and Ottawa. However, with the help of various first-time homebuyer incentives, you can make homeownership more affordable.

From down payment assistance and tax credits to rebates on land transfer taxes and new homes, these programs can significantly reduce the financial burden and bring you closer to your goal of owning a home. Be sure to take advantage of the incentives available in 2025 and consult with real estate professionals and mortgage brokers to make the most of your opportunities.