Home Buyer Incentives & Programs: A Practical Guide

Introduction

Buying a home comes with significant upfront costs — down payment, closing costs, and taxes. Fortunately, there are several buyer incentives and government-backed programs designed to reduce these costs and make ownership more accessible, especially for first-time buyers.

This guide explains the most common home buyer incentives, how they work, who they’re for, and how to use them strategically. While some programs overlap, others can be layered together for maximum benefit.

GST / HST New Housing Rebate

What It Is: A rebate available to buyers of new or substantially renovated homes. It offers a partial rebate of the federal portion of GST/HST paid on the purchase.

Key Highlights:

• Applies to newly built or substantially renovated properties

• Reduces the federal tax burden on qualifying homes

• Often credited at closing (depending on the builder)

Who It Helps Most:

• Buyers purchasing new construction

• Buyers of major renovations that meet “substantial renovation” thresholds

This rebate helps lower the effective purchase cost of new housing.

Provincial New Housing Rebate

What It Is: A rebate of the provincial portion (8%) of HST on new homes, available to first-time home buyers, typically on purchases up to $1,000,000.

Key Highlights:

• Applies to newly built homes

• Provincial portion only

• Eligibility thresholds apply

Important Note: This rebate is often built into the purchase price by builders, meaning buyers may not see it as a separate refund but benefit through a lower net cost.

Federal First-Time Home Buyer GST / HST Rebate

What It Is: A federal incentive that eliminates the federal portion of GST/HST on new homes up to $1,000,000 for first-time home buyers.

Key Highlights:

• Applies to qualifying new builds

• Significantly reduces tax burden for first-time buyers

• Phased out above program thresholds

This incentive can represent tens of thousands of dollars in savings on new construction purchases.

Land Transfer Tax (LTT) Refund

What It Is: A refund that reduces the provincial land transfer tax for first-time home buyers.

Key Highlights:

• Refund of up to $4,000

• Applied at closing or refunded after purchase

• First-time buyer status required

Land transfer tax is one of the largest closing costs — this refund directly improves affordability at closing.

First-Time Home Buyer’s Tax Credit (HBTC)

What It Is:A federal non-refundable tax credit available to first-time home buyers.

Key Highlights:

• Claimed when filing income taxes

• Reduces tax payable (not a cash refund)

• Can be shared between spouses

This credit helps offset legal fees, inspections, and other closing costs.

Home Buyers’ Plan (HBP)

What It Is:A program allowing buyers to withdraw up to $35,000 from their RRSP, tax-free, to use toward a home purchase.

Key Highlights:

• Withdrawals are not taxed upfront

• Funds must be repaid over time

• Can be combined with other incentives

Strategic Insight: The HBP is best used as a temporary liquidity tool, not long-term spending money. Repayment planning is essential.

First Home Savings Account (FHSA)

What It Is:A registered account designed specifically for first-time home buyers.

Key Highlights:

• Contributions are tax deductible

• Withdrawals for a first home are tax free

• Can be combined with RRSPs and TFSAs

The FHSA is often described as a hybrid between an RRSP and TFSA, and is one of the most powerful planning tools for future buyers.

How Incentives Can Work Together (Example)

A first-time buyer purchasing a new home may:

• Reduce HST through federal and provincial rebates

• Receive a land transfer tax refund

• Use RRSP funds through the HBP

• Withdraw FHSA funds tax-free

• Claim the First-Time Home Buyer’s Tax Credit

When layered properly, these programs can reduce upfront costs by tens of thousands of dollars.

Additional Information Every Buyer Should Know

Incentives Don’t Replace Qualification

Incentives help with affordability, but buyers must still:

• Qualify for financing

• Pass lender stress tests

• Demonstrate stable income and credit

Builder Credits vs. Government Rebates

Some builders advertise “rebates” that are actually:

• Price adjustments

• Credits already factored into pricing

Understanding the difference helps avoid confusion at closing.

Timing Matters

• Some incentives apply at closing

• Others are claimed when filing taxes

Buyers should plan cash flow accordingly.

Common Mistakes to Avoid

• Assuming all incentives apply automatically

• Missing application deadlines

• Using RRSP funds without a repayment plan

• Overestimating how much incentives reduce monthly payments

Final Thoughts

Home buyer incentives can significantly reduce the cost of purchasing a home — but only when understood and applied correctly. The biggest advantage comes not from any single program, but from strategically combining multiple incentives.

For first-time buyers especially, understanding these tools early can mean the difference between stretching uncomfortably and buying with confid