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Published April 12, 2024
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Ontario First-Time Home Buyer Guide

First-time home buyers in Ontario should prepare for a competitive market, get their finances in order, and explore various grants and assistance programs.

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Home buyers in Ontario have faced an increasingly tough market, with average prices exceeding $800,000 for years now. This may seem especially daunting for first-time home buyers, however, there are ways to succeed. 

Walking away from this market with keys to your first home requires both mental and financial preparation, professionals to help you avoid common mistakes and, in some cases, a leg up from local, provincial and federal incentive programs.

Let’s dig into each of these aspects and get you prepped for your first run at the market.

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Who qualifies as a first-time buyer in Ontario?

It’s good to understand what being a “first-time home buyer” means in Ontario, especially if you intend on making use of any government assistance programs.

Being considered a first-time home buyer in Ontario usually means you have never owned a home, though there are exceptions, such as those who have had a separation or divorce. That also holds true if you owned property that you didn’t technically buy. If you previously received a home as a gift or inheritance, for example, the government of Ontario won’t consider you a first-time buyer. Finally, to qualify for first-time home buyer financial assistance, your income will likely need to be below a certain amount, which can vary by location and program.

With that little bit of housekeeping out of the way, let’s look at three tactics that can help you buy that first home.

Set realistic expectations

If it’s your first time trying to buy a home in Ontario, you’re about to embark on what could be a difficult journey. Realizing just how challenging the Ontario housing market can be is a critical first step. It’ll keep you motivated and focused, and can take some of the sting out if one or more of your offers are rejected.

Here are the main areas where first-time home buyers can benefit by aligning their expectations with a rather harsh reality.

Housing supply and prices in Ontario

At the end of October 2023, Ontario had roughly 50,000 active residential listings, according to the Ontario Real Estate Association. When there are so few homes for sale in a province of almost 15 million people, it’s hard for prices to fall too quickly. Though the average price fell 7% between January and October, that price — $855,990 — is still out of reach for many first-time buyers.

Prices that high can be doubly scary for first-timers. In addition to requiring massive mortgages to finance them, these pricey properties also require larger minimum down payments.

Your down payment and overall finances

Canada’s mortgage lending rules require buyers to provide at least a 5% down payment on homes that cost less than $500,000. If a property costs more than that, your down payment must be even larger.

In addition to doing everything you can to save a substantial down payment, it’s a good idea to speak to your bank’s mortgage advisor, a direct lender or a mortgage broker early in your home buying journey.

An experienced mortgage professional can calculate how much home you can afford and even provide a mortgage pre-approval. They can also suggest strategies to strengthen your overall finances before applying for a loan.

To get an estimate of what your home buying budget is right now, use a mortgage calculator.

Local real estate activity

Another professional worth reaching out to is an experienced, full-time real estate agent who specializes in the area where you’d like to own your first home.

Once they have a sense of your goals and spending limits, reputable local agents will look at recent sales activity and help you understand the market you’re facing, including how competitive it is, what growth potential it has and if you should expect to pay more than the asking price.

Good agents won’t sugar-coat the situation you’re facing, nor will they pressure you to bid on a home if you have no reasonable chance of winning. Their job is to help you feel prepared, both emotionally and strategically, to buy your first home. Being honest is how the best agents do it.

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Explore first-time home buyer programs in Ontario

There are several programs that provide financial assistance to first-time buyers in Ontario. These programs aren’t likely to be game-changers for most buyers struggling with affordability, but they can help chip away at the overall cost of being a homeowner.

Ontario Land Transfer Tax Refund

If you fit the definition of a first-time buyer, you may be eligible for a refund of the provincial land transfer tax — an expense that’s typically part of the closing costs you’ll be required to pay. With the land transfer tax refund, buyers won’t pay any tax if their home is worth less than $368,000. Buyers of homes with a higher value can receive refunds of up to $4,000.

To qualify for the full refund, you must:

  • Be at least 18 years old.
  • Be a Canadian citizen or permanent resident of Canada.
  • Live in the home as your principal residence within nine months of registering it in your name.

For married homeowners, a spouse’s property history can affect the size of the refund. If your spouse acquired property individually while the two of you have been married, for example, neither of you would be eligible to claim the exemption, even if the next purchase is your first home. But if your spouse’s property was purchased or inherited before you got married, you may still be able to claim a full or partial refund.

To qualify for the refund, you must apply for it within 18 months of registration.

» MORE: Crunch the numbers with our land transfer tax and fee calculator.

First-Time Purchaser Rebate (Toronto only)

First-time buyers in Toronto can receive additional tax relief if they purchase a new-build or resale residential property.

All of the requirements for Ontario’s provincial rebate program apply to this municipal rebate as well, but the maximum amount here is $4,475. 

If you qualify for both the Ontario and Toronto rebates, you could shave up to $8,475 from your total closing costs.

Local Homeownership Programs

Some Ontario municipalities run programs to help residents in their home search. The following initiatives aren’t specifically for first-time buyers, but if one seems suitable to your needs, don’t hesitate to investigate further:

  • The Region of Waterloo, which includes housing hotspots Waterloo, Kitchener and Cambridge, offers eligible residents a 5% loan they can use for a down payment on properties worth $506,000 or less. To be eligible, your household income can’t exceed $101,300, and you must have resided in the region for at least the last 12 months.
  • Simcoe County’s Homeownership Program provides a loan of up to 10% of the purchase price for down payment purposes. The loan is completely forgiven if you live in the home for 20 years. If you sell before then, however, you’ll have to repay the loan in full plus a percentage of the capital gains. Eligible properties must be valued at $593,879 or less; eligible participants must be renters earning a gross household income of no more than $103,200.
  • Renter households in Kingston or the surrounding County of Frontenac that earn a pre-tax income lower than $94,000 can apply for a forgivable loan to help build their down payment. The loan is worth up to 10% of the purchase price of a home priced at $440,000 or less.
  • The Affordable Homeownership program in Chatham-Kent offers applicants earning a gross household income of $95,000 or less 10% of the purchase price of a home, up to a maximum of $25,000. The funds are delivered as a 20-year, interest-free loan.
  • Brantford, Dufferin County and the District of Muskoka all provide similar programs that help fund down payments.

Low-to-moderate income families in the Greater Toronto Area can also apply for housing through Habitat for Humanity, which builds multi-unit properties across the city.

Consider federal programs for first-time buyers in Canada

There are several programs that can help you either increase your purchasing power or save a little cash after becoming a homeowner.

The Home Buyers’ Plan

As of April 16, 2024, the Home Buyers’ Plan allows you to take up to $60,000 out of an eligible registered retirement savings plan, or RRSP, tax-free so you can put it toward the down payment of your primary residence. The previous HBP withdrawal limit was $35,000.

In order to qualify, you must:

  • Be a first-time buyer.
  • Be a resident of Canada from when you withdraw the funds until your home is bought or built.
  • Intend to use the home as your principal residence within a year of buying or building it.

The funds can be taken from your RRSP tax-free, but they must be repaid within 15 years.If these programs won’t work for you, there are a few more federal first-time home buyer grant and assistance programs worth investigating, including an easy-to-claim tax credit.

The First Home Savings Account

The First-Home Savings Account is a registered savings account that offers the tax advantages of an RRSP and a TFSA. Your deposits are tax-deductible, and any returns generated by the investments in your account are tax-free.

You can deposit up to $8,000 a year into an FHSA to a maximum of $40,000. It may not sounds like a lot considering Canadian home prices, but you can combine an FHSA with the HBP to give your down payment savings more of a boost.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit, also known as the Home Buyers’ Amount, is a non-refundable credit of $10,000 for first-time home buyers. It results in a tax rebate of up to $1,500.

This isn’t the kind of assistance that will help you buy a house or qualify for a mortgage, but it will make that first year of homeownership a little more affordable. 

GST/HST New Housing rebate

If you purchase or build a new house, or significantly renovate your primary residence, you could recoup some of the Goods and Services Tax (GST), or the federal portion of the Harmonized Sales Tax (HST), that you paid. 

Different rules apply depending on property type and location, so make sure the new home you have your eye on is eligible for a rebate. 

The bottom line for first-time home buyers in Ontario

There’s a lot of frustration, and even anger, among first-time home buyers in Ontario, who feel like home ownership in the province is becoming unattainable.

It’s undoubtedly hard, but don’t let yourself be intimidated. You won’t know what’s possible until you give it a shot. To get started, follow the tried and true first-time home buyer tips:

  • Create a budget — and commit to it — to keep your down payment savings on track.
  • Try to generate as much income as possible. That may mean looking for a higher-paying job or taking on a roommate.
  • Keep an eye on the market to see if competition is heating up or easing a little.
  • Get guidance from professionals who understand both the real estate and mortgage landscapes, such as a real estate broker or a realtor.

And don’t take it personally if the market doesn’t cooperate. There’s nothing wrong with delaying your plans until buying a home fits more comfortably in your budget.


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Find The Best 5-Year Fixed Mortgage Rates In Canada

Compare customized 5-year fixed mortgage rates from Canada’s best lenders and brokers for free. Find the lowest mortgage rate and apply for the home loan that best fits your needs.

First-Time Home Buyer Grants and Assistance Programs

First-Time Home Buyer Grants and Assistance Programs

Various Canadian grants and assistance programs provide financial incentives that can make it easier and more affordable to buy your first house.

How Much for a Down Payment on a House?

How Much for a Down Payment on a House?

Your minimum down payment depends on the lender, but you are required to put at least 5% down on a home under $500,000.

Mortgage Payment Calculator: Canada

Mortgage Payment Calculator: Canada

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