Everything You Need To Know | First Time Home Buying

Everything You Need To Know | First Time Home Buying

Ready to take the leap into homeownership? Congratulations on making this exciting decision! Buying your first home can be overwhelming, but with the right guidance, it can also be a smooth and rewarding experience.

When buying a home in Canada as a first time home buyer, here is all you have to know about:

Home Buyers' Plan

The First Time Home Buyers’ Plan allows qualified first-time buyers to withdraw up to $35,000 tax-free from their RRSPs, to purchase or build a home. If a couple is buying together, and both are qualified first-time buyers, they can withdraw $35,000 each for a total of $70,000.


To be eligible for the First Time Home Buyers’ Plan (HBP), you must:

  • Be a Canadian resident
  • Be considered a first-time homebuyer
  • Not have owned a home within the past four years
  • Not have lived in a home that your spouse owned within the past four years, if you are now buying together
  • Sign a written agreement to buy or build a home
  • Intend on living in the home within one year of buying or building it
  • Not own the home for more than 30 days before making the withdrawal
  • Close the sale before October 1 of the year after you made the withdrawal

Buyers with special needs or who are purchasing homes that are more accessible for an individual with special needs, and/or who are eligible for the Disability Tax Credit, may also be eligible to use the HBP, even if the other eligibility requirements are not met.

Withdrawing from your RRSP

When you find a home you want to buy, you put in an Offer to Purchase (with any conditions you want—a home inspection and/or time to confirm your financing being the most common). Once the seller agrees, you finalize the Agreement of Purchase and Sale (APS) and book your home inspector. At the same time, you can fill out Form T1036, take it to the financial institution that holds your RRSPs, and withdraw the amount you need for your down payment, once you have a firm and binding APS.

To withdraw funds from your RRSPs, using the First Time Home Buyers’ Plan, you must print a copy of Form T1036. Fill out Section 1 yourself then bring the form to the financial institution that holds your RRSPs, so they can fill in Section 2 and make your withdrawal.

Once the withdrawal has been made, your financial institution will send you a T4RSP form, which confirms how much you withdrew. You’ll need to reference this form in the income tax return for the year you made your withdrawal.

Repaying your Home Buyers’ Plan

Because the Home Buyers’ Plan is considered a loan, it must be repaid. You have to repay at least 1/15 of the amount you borrowed each year. Repayment begins the second year after your withdrawal, and the full amount must be paid off within 15 years of that date. For example, if you withdrew funds in 2019, your first year of repayment will be 2021.

If a condition is not met, after you have made the withdrawal, you will have to claim the amount as income on your personal income taxes and you will pay tax on it. If you’ve already submitted an assessment for the year you made the withdrawal, you will be required to submit a reassessment.


First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive (FTHBI) was launched on September 2, 2019 by the federal government and offers a 5% or 10% contribution towards your down payment in the form of a shared equity mortgage. The program aims to improve affordability by reducing the monthly mortgage payments for buyers.

There is no interest charged on the FTHBI amount nor is there an ongoing repayment schedule, instead the government will share in the upside and downside of the property value. The FTHBI offers the following down payment contributions:

  • 5% for a first-time buyer’s purchase of a re-sale home
  • 5% or 10% for a first-time buyer’s purchase of a new construction
  • 5% for new and re-sale mobile/manufactured homes

Eligible Property types

Only residential properties in Canada that are suitable for full-time, year-round occupancy are eligible. The property must be intended for the homebuyers’ own occupancy and investment properties are not permitted.

Examples of residential properties include:

  • detached houses
  • semi-detached houses
  • duplexes
  • triplexes
  • fourplexes
  • townhouses
  • condominiums

Home Buyer, Down Payment and Mortgage Requirements

Buyers who wish to participate in the First-Time Home Buyer Incentive program must meet the following criteria:

  • Be Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada
  • Buyers’ combined qualifying income cannot exceed $120,000; this includes the income of guarantors co-signing on the mortgage
  • At least one buyer must be a first-time home buyer
  • Buyer(s) must have the minimum down payment

For the purpose of the FTHBI, you are considered a first-time home buyer if you meet any of these qualifications:

  • You have never owned a home
  • You experienced a breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time home buyer requirements)
  • In the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned

Minimum down payment and mortgage requirements for the FHTBI:

  • The minimum down payment the buyer must have through their own sources is 5% of the first $500,000 of the home value and 10% of any value above $500,000
  • Mortgages must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth, which means the total down payment including the FTHBI amount must be 19.99% or less
  • For a 5% FTHBI, the maximum down payment the buyer can provide is 14.99%; for a 10% FTHBI, the maximum down payment the buyer can provide is 9.99%
  • Total amount borrowed (including the FTHBI amount) is limited to 4 times the qualifying income

In addition, the closing date for a re-sale home must be within 6 months from the application approval. The closing date for new a construction home must be within 18 months from the application approval.

Maximum Home Price Allowed Under the FTHBI

The maximum price you could buy a home for under the FTHBI depends on your qualifying income as well as your down payment.

Here is a sample maximum home price calculation:

Suppose your annual qualifying income is $120,000/year (the maximum allowable when using the FTHBI). The FTHBI stipulates the maximum amount you can borrow, including the FTHBI amount, is four times your income, thus you can borrow up to $480,000 to purchase a home.

i. Maximum home price if you have the minimum down payment of 5%

The minimum down payment required from the home buyer is 5%, thus the maximum price of a re-sale home you could purchase is $505,263 (calculated as $480,000 divided by 0.95).

ii. Maximum home price if you have a down payment of 14.99%

With a down payment of 14.99%, the maximum price of a re-sale home you could purchase is $564,639 (calculated as $480,000 divided by 0.8501).

Repaying your First Time Home Buyer Incentive

The home buyer must repay the FTHBI amount in full after 25 years or when the property is sold, whichever comes first. The full amount can be repaid in full anytime, without a pre-payment penalty; however, partial repayments are not permitted.

The amount due to be repaid is calculated as the percentage of the FTHBI times the home’s value at the time of repayment. For example, if a homebuyer received 5% of the down payment through the FTHBI at the time of purchase, the homebuyer will repay 5% of the home’s fair market value at the time of the repayment.

Here is a sample repayment calculation:

You purchase a property for $400,000 and receive a 5% for your down payment through the FTHBI in the amount of $20,000. When you sell your home within 25 years, the home value has increased to $600,000. The repayment amount due would be 5% of $600,000, or $30,000.

Applying for First Time Home Buyer Incentive

To apply for the FTHBI, complete the application documents found on the official First-Time Home Buyer Incentive Plan website, speak to your mortgage lender and notify the lawyer who will be managing your home closing.

Additional Resources

Visit the official website for the First-Time Home Buyer Incentive Plan for additional details and resources, including a maximum home purchase price & eligibility calculator.

First Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit is a tax claim made available to first-time homebuyers purchasing qualified homes. The rebate, at current taxation rates, works out to $750.


To be eligible for the First-Time Home Buyers’ Tax Credit, you must:

  • Be a Canadian resident
  • Be considered a first-time homebuyer
  • Not have owned a home within the past four years
  • Not have lived in a home that your spouse owned within the past four years, if you are now buying together
  • Present documents supporting the purchase of your home
  • Intend on living in the home within one year of buying or building it

If you have a special need or are buying a home for someone who does, you can claim the Home Buyers’ Tax Credit, so long as you are also eligible to claim the Disability Tax Credit and the person with the special need is living in the home within one year.

To quality for the First-Time Home Buyers’ Tax Credit, your home must:

  • Be a new or existing home in Canada
  • Be registered in either yours or your spouse’s name
  • Be a single, semi-detached, townhouse, mobile home, condo, or apartment
  • Can also include a share in a co-operative housing corporation, so long as you get possession of the home

To receive your $750 rebate, you must claim it in your personal income tax return under line 369. The claim must be made in the same year you purchased your home and it is non-refundable.

Styles of Homes and Types of Ownership

There are a few high-level decisions you’ll have to make when looking at homes: Detached or townhouse? Condo or co-op? These choices fall into two simple categories of style and ownership.

The different types of property ownership – Garbutt + Dumas Realtors

Home styles

Detached house

Categorically, the most expensive homes—and typically most desired—detached homes offer privacy, space, and renovation flexibility. The separation from your neighbours can allow for quieter living, a great sense of ownership, and makes home renovations easier (since you don’t share a wall with a neighbour!).

Semi-detached house

This means that the home shares one “party wall” with a neighbour; they’re very popular in high-density building areas where land is scarce and valuable.


Townhouses are many homes attached in a row. They have historically been, and continue to be, popular in high-density areas and allow for large living spaces with relatively small land allotments.


Duplexes, triplexes, and similar multi-unit homes are owned as investment properties. You can purchase the entire building, then rent out the units. It’s also common for a buyer to purchase a multi-unit and live in one portion and rent out the remainder to tenants.

Condos and apartments

Just like houses, no two units are the same, even suites with the exact same layout and finish will have a different view. There are small bachelor condos, industrial converted lofts, palatial penthouse suites—you name it. All major Canadian cities have condo developments in progress with 1 in 8 households living in condos across the country.1

There are also combinations of these categories, like condo townhomes; typically at the bottom of large condo developments, these have small outdoor areas, but are attached to the condo building.

Types of homeownership

Freehold ownership

In the case of detached homes, semi-detached homes, and most townhouses, you purchase a plot of land and the building that sits on it.

Condominium ownership

In a condo building, you own a specific part of the building. This is exclusive to your own unit, as well as shared ownership of any common areas, which include amenities, hallways, etc.

Co-op ownership

Instead of owning an exact portion of the building, in a co-op you own a percentage of the entire building based on your purchase in the building—and have the exclusive use of your specific unit.

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