For those who’ve been poking across the thought of shopping for your first house in Canada, you’ve in all probability observed that “first-time homebuyer” doesn’t at all times imply what you suppose it does. Totally different packages, federal and provincial, outline it in numerous methods, and that may make issues complicated quick.
We work with quite a lot of shoppers who get tripped up by this. Somebody will inform me they’re a first-time homebuyer as a result of they’ve by no means purchased a house in Canada, solely to find inheritor earlier house overseas disqualifies them from a key profit right here. Or, on the flip facet, somebody who owned a apartment years in the past doesn’t understand they may nonetheless qualify for sure first-time purchaser packages once more beneath the precise circumstances.
So let’s break it down. Right here’s how “first-time homebuyer” is outlined throughout three main packages Canadians usually depend on: the Ontario Land Switch Tax Rebate, the RRSP Residence Patrons’ Plan (HBP), and the First Residence Financial savings Account (FHSA).
How does Ontario outline a first-time homebuyer for the land switch tax rebate?
For those who’re shopping for property in Ontario, the land switch tax (LTT) rebate might be the primary program you’ll hear about. It will probably prevent as much as $4,000 on the provincial land switch tax, and one other $4,475 on the Toronto municipal land switch tax for those who’re shopping for within the metropolis.
However the eligibility guidelines listed below are strict.
The never-ever rule
To qualify:
You have to be at the very least 18 years outdated
You will need to have by no means owned a house or any curiosity in a house wherever on this planet
You will need to dwell within the house as your principal residence inside 9 months of the acquisition
And, right here’s the kicker, your partner or common-law associate should additionally by no means have owned a house whilst you’ve been collectively
That final level journeys up quite a lot of {couples}. In case your associate owned a house earlier than you bought collectively, you’re within the clear. But when both of you owned a property whereas in a relationship with the opposite, even when it was abroad, you’re disqualified.
I’ve needed to ship that disappointing information greater than as soon as. It’s a harsh line, however that’s the rule.
Actual property lawyer Maria Berenbaum notes:
“The newest addition is {that a} purchaser have to be both a Canadian Citizen or have Everlasting Resident standing. We had a file just lately the place spouses purchased a home together- they’re each first time homebuyers however she doesn’t have her PR but in order that they acquired solely half the rebate. As soon as she will get her papers she will apply for the rebate inside 30 days of getting a affirmation of residency, very brief window of alternative.”
Maria went on to say she usually hears feedback like, “How would they know if I owned one thing again in X? The reply is all authorities businesses are inter-connected. Subsequently, when they’re making use of for immigration and put of their utility that they owned a house again house, it could set off a re-assessment, along with penalties.”
How does the RRSP Residence Patrons’ Plan outline a first-time homebuyer?
The HBP is a well-liked possibility for patrons who need to faucet into their RRSP financial savings, as much as $60,000 per couple, to assist with a down fee.
Fortunately, this program is extra forgiving than the LTT rebate.
The four-year look-back rule
To qualify:
You will need to not have lived in a house that you just (or your partner/common-law associate) owned within the present yr or the 4 previous calendar years
You want a signed settlement to purchase or construct a qualifying house
You will need to intend to make that house your principal residence inside one yr
You have to be a resident of Canada on the time of the withdrawal and if you purchase the house
So sure, you possibly can technically qualify once more even for those who’ve owned property earlier than. So long as you (and your present partner or associate) haven’t lived in an owned house in that four-year window, you should still be eligible.
I name this the “contemporary begin” clause. It’s significantly helpful for individuals who bought a house years in the past and have been renting since.
How does the First Residence Financial savings Account outline a first-time homebuyer?
The FHSA is the brand new child on the block, and truthfully, it’s a game-changer. It combines the tax perks of an RRSP and a TFSA, and allows you to contribute as much as $40,000 towards your first house buy.
However, just like the HBP, it additionally makes use of a model of the four-year lookback rule.
Much like HBP, however tied to possession and occupancy
To open and use an FHSA:
You have to be between 18 and 71 years outdated and a Canadian resident
You will need to not have owned or collectively owned, or lived in, a qualifying house within the calendar yr earlier than you open the FHSA or through the earlier 4 calendar years
This rule additionally considers property owned by your partner or common-law associate that you just lived in
The FHSA’s definition of a first-time homebuyer is nearly equivalent to the HBP’s, however there’s one nuance: the timing begins earlier than the account is opened. Meaning it’s a must to meet the definition on the time you open the FHSA, not simply if you use it.
That is essential. We inform our shoppers: for those who’re even occupied with shopping for your first house within the subsequent few years, open your FHSA sooner fairly than later, even with a minimal contribution, to start out that eligibility clock.
How do the definitions examine?
Let’s stack them facet by facet so you possibly can see the place issues align, and the place they don’t.
The important thing takeaway? The LTT rebate is the strictest. HBP and FHSA are extra versatile, particularly for those who’ve taken a break from homeownership or just lately separated from a associate who had a house.
Our recommendation
Don’t assume you’re (or aren’t) a first-time purchaser till we actually have a look at the main points. Every program performs by its personal guidelines, and timing, relationship historical past, and previous possession all matter.
Right here’s what we advocate:
Speak to a mortgage skilled early: They’ll stroll you thru every of those definitions based mostly in your private historical past
Open your FHSA early if there’s any probability you’ll purchase within the subsequent few years. You’ll be glad you probably did
Be sincere with your self (and your associate) about your possession historical past, even that trip property from 15 years in the past may rely
Don’t go away cash on the desk. We’ve seen shoppers qualify for advantages they didn’t know they have been entitled to, and others miss out as a result of they made assumptions
Does first-time purchaser standing matter for mortgage functions?
Truly, for an insured mortgage, it may matter if you’re a primary time homebuyer.
Repeat patrons are eligible for a 30-year amortization with mortgage insurance coverage solely when buying newly constructed houses.
First-time homebuyers are eligible no matter whether or not they’re shopping for a brand new or resale house.
Repeat patrons buying resale (present) houses will not be eligible for a 30-year amortization with mortgage insurance coverage—the utmost stays 25 years in these instances.
Whether or not you’re shopping for your very first house or simply your first shortly, figuring out which packages you qualify for can prevent hundreds, and make your homeownership journey a lot smoother.
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Final modified: September 11, 2025
