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First Time Homebuyer

A simple guide on how to finance your first home in 2023

First-time homebuyers should keep their financial options open.

Mortgage Brokers have access to exclusive mortgage rates and can customize a financial plan by picking the best option from all Canadian Banks, Credit Unions, and other Lender Partners

First-Time homebuyers prefer Homedund Mortgage Brokers because we offer more than just mortgage advice. Our team works with lenders to get you the best rates, help you find a feasible financial solution to owning a home, and we are with you for the long run. After all, for most Canadians owning a home is the single most expensive purchase they’ll make in their lives. Once you have decided that you would like to purchase your first home, we recommend that you contact us right away to get a Pre-Approved Mortgage. This process provides many benefits to you:

  • Guaranteed Mortage Rate For 120 Days
  • Knowing Your Maximum Qualified Mortage Amount
  • Guidance To Improve Your Credit Score Through Assessment of Assets & Liabilities
  • Sellers Prefer Buyers Which Have Been Through The Mortgage Pre-Approval Process

Required down payment & additional funds for closing costs

A minimum down payment of 5%* of the purchase price is required, and that can come from the following sources:
• Personal Savings & Investments
• RRSP Withdrawn
• Gifted from an immediate family member (parent, sibling, grandparent, guardian)
• Non-traditional sources: borrowed funds, gifts, etc.

Home Buyer’s Plan

The Canadian government’s Home Buyers’ Plan (HBP) allows withdrawals up to $35,000 from your RRSP for a down payment, tax-free after March 19,2019. However, since the HBP is considered a loan, it must be repaid within 15 years.

In order to be eligible as a first-time homebuyer you must:
• Not own a home within the previous four years
• Sign a written agreement to buy a home
• Intend to live in the home within one year of purchase
• If you have used the Home Buyers’ Plan before, you cannot have any outstanding balance due
• Withdrawal from your RRSP within 30 days of taking the title of the home
• Buy the home before October 1st of the year after you made the withdrawal

If you are buying with a partner, each spouse needs to qualify as a first-time homebuyer, in order for you both to withdraw from your individual RRSPs. For example, if you have owned a home in the last four years but your spouse has not, then your spouse would be able to withdraw money from their RRSP under the Home Buyers’ Plan, provided you and your spouse have not been living together in the home you owned.

If you make a withdrawal from your RRSP, but do not meet the first-time homebuyer eligibility requirements, this withdrawal will be taxed and you must include it in your income tax statement as taxable income. If both you and your spouse meet the first-time homebuyer eligibility requirements, each of you can withdraw up to $35,000 from your RRSPs for a total of $70,000.

In order to participate in the Home Buyers’ Plan, you must print off a copy of Form T1036. This form is available from the Canada Revenue Agency’s website ( You must fill out Section 1 then give the form to the financial institution that holds your RRSP so they can fill out Section 2. Your financial institution will send you a T4RSP form, which will confirm how much you withdrew from your RRSP as a part of the Home Buyers’ Plan. You must reference this form in your income tax return for the year you made the withdrawal.

Land transfer tax (LTT) is often overlooked when considering the total cost of purchasing a home. All provinces have a land transfer tax, except Alberta and Saskatchewan, who instead levy a much smaller transfer fee.

The Ontario land transfer tax rebate is equal to the full value of the land transfer tax up to a maximum of $2,000.


• The buyer must be older than 18 years
• The buyer must occupy the home within nine months of purchase
• The buyer cannot have owned a home anywhere in the world
• The buyer’s spouse cannot have owned a home while being your spouse
• If you are purchasing a new home, it must be eligible for home warranty
• Based on Ontario land transfer tax rates, the rebate will cover the fully taxed amount on houses up to $227,500. For houses over $227,500, homebuyers will receive the maximum $2,000 rebate. To obtain this refund, you need to apply within 18 months after the purchase of the home.

The Ontario land transfer tax (LTT) is a marginal tax and each portion of your home’s value is taxed at a unique rate.

These tax rates are as follows:

price of home
tax rate
First-time home
buyer rebate
First $55,000 0.5% The Ontario first-time home buyer rebate covers the full land transfer tax up to a maximum of $2,000. It is only available to first time home buyers.
On $55,000 to $250,000 1.0%
On $250,001 to $400,000 1.5%
Over $400,001 2.0%

If purchasing a home in Toronto, there is an additional municipal land transfer tax. Toronto’s land transfer tax applies within the following boundaries: Steeles Avenue as the North border, Etobicoke as the West border, Scarborough as the East border, and Lake Ontario as the South border.

price of home
tax rate
First $55,000 0.5%
On $55,000 to $400,000 1.0%
Over $400,001 2.0%
Toronto first-time homebuyer land transfer tax rebate

First-time homebuyers in Toronto of new and resale homes are eligible to receive a refund up to a maximum of $3,725.


• The buyer must be older than 18 years
• The buyer must occupy the home within nine months of purchase
• The buyer cannot have owned a home anywhere in the world
• The buyer’s spouse cannot have owned a home while being your spouse
• If you are purchasing a new home, it must be eligible for home warranty
• Based on Toronto land transfer tax rates, first-time homebuyers with homes of $400,000 or less will avoid the tax altogether.

The First-time Home Buyers’ Tax Credit was introduced as part of ‘Canada’s Economic Action Plan’ to assist Canadians in purchasing their first home. It is designed to help recover closing costs, such as legal expenses, inspections, and land transfer taxes, so you can save more for money for a down payment.

The Home Buyers’ Tax Credit, at current taxation rates, works out to a rebate of $750 for all first-time buyers. After you buy your first home, the credit must be claimed within the year of purchase and it is non-refundable. In addition, the home you purchase must be a ‘qualified’ home, described in more detail below. If you are purchasing a home with a spouse, partner or friend, the combined claim cannot exceed $750. To receive your $750 claim, you must include it with your personal tax return under line 369.

How do you qualify for the First-time Home Buyers’ Tax Credit?

In order to be eligible for the First-time Home Buyers’ Tax Credit, your home must meet the following requirements:
• Be within Canada
• Be an existing or new home
• Be a single, semi, townhouse, mobile home, condo, or apartment
• Can include a share in a co-operative housing corporation that gives you possession of the home
• You must intend to occupy the home within one year of purchase
• To personally be eligible for the First-time Home Buyers’ Tax Credit, you must also meet the following requirements:
• You or your spouse must purchase a qualifying home
• The home must be registered in either your name or your spouse’s name
• You cannot have owned a home in the previous four years
• You cannot have lived in a home owned by your spouse in the previous four years
• You must present documents supporting the purchase of the home

For many Canadians, especially young people and first-time buyers, finding an affordable place to call home is not just a challenge – it feels like an impossibility. There aren’t enough houses for people to buy, or apartments for people to rent. That makes finding a good place to live too expensive and beyond what many people, especially younger Canadians, can afford.  This initiative is designed to help young Canadians access home ownership in a fiscally responsible and affordable way.

The program will be administered by Canada’s housing agency, Canada Mortgage and Housing Corp. (CMHC), which will pay 5% of the purchase price for an existing home, and up to 10% for the value of a new home, in exchange for an equity stake. Once the homeowner sells (or after 25 years – whichever comes first), they’re obligated to repay the CMHC.

The fine print includes the following:

  • To qualify, you must be a first-time home buyer.
  • Buyers must have a down payment of at least 5%* of the total purchase price, up to 20%. (*Note: Unsecured personal loans or unsecured lines of credit used to satisfy minimum down payment requirements are not eligible for the program)
  • The household’s income must be under $120,000, and the total borrowing is limited to 4 times the qualifying income. The combined mortgage and Incentive amount cannot exceed four times the total qualifying income.  The amount for the mortgage loan insurance premium is excluded from this calculation.
  • The Incentive is a second mortgage on the title of the property. There are no regular principal payments. It isn’t interest bearing and has a maximum term of 25 years.
  • The Government of Canada will share in the upside and downside of the property value upon repayment.
  • Only insured mortgages will be eligible, meaning this will be restricted to those with a down payment worth less than 20% of the purchase price.
  • Buyers will not be exempt from federal “stress test” regulations (a mandatory mortgage qualification using the five-year benchmark rate published by the Bank of Canada or the customer’s mortgage interest rate plus 2%)


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"Homefund got us the right lender partner, and we got the keys to our first home!"

* If the purchase price is up to $500,000.00 – the minimum down payment is 5%. However, if the purchase price is over $500,000.00 – the minimum down payment is 5% of the first $500,000.00 and 10% on the amount over $500,000.00. This formula calculation for minimum down payment is used for purchases up to $999,999.00.

For down payments that are less than 20% of the purchase price or value of the property (lesser of the two), these mortgages must be insured against default, and the cost of the insurance premium is non-refundable, paid at the time of closing and may be added onto the mortgage. There are (3) insurers in Canada that lenders can go to obtain insurance for mortgages that require it. These are: Canada Mortgage and Housing Corporation (CMHC), Genworth Canada, and Canada Guaranty. The insurance premiums vary based on the percentage of down payment, and below is a Premium Rate Table currently in use:

  • 5% – 9.99% down payment > 4.00% of mortgage amount
  • 10% – 14.99% down payment > 3.10% of mortgage amount
  • 15% – 19.99% down payment > 2.80% of mortgage amount
  • 20% or more down payment > no mortgage insurance required

If your purchase price exceeds $1,000,000.00 – then automatically you must put at least 20% down payment, and they cannot be default-insured.