Government Programs for Home Buyers

A home is usually the single largest investment that most people make in their lives. Achieving your dream can be made easier by taking advantage of various Government Programs for home buyers and property owners. Some of the programs are targeted to first time buyers, while others apply more generally. Other programs benefit those in the
industrial, commercial and multi-unit property market. Your REALTOR can provide information on these programs and help you to determine your eligibility. Check out What to Expect From Your REALTOR® for more information on how a REALTOR® can help you.

CMHC Purchase Plus Improvements
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property. This option eliminates the need to obtain secondary financing after the purchase to pay for improvements. The homebuyer obtains a single first mortgage, makes a single mortgage payment, and benefits from first mortgage interest rates.

The insured loan will be based on the lower of:
The purchase price plus the actual cost of improvements or the “as improved” market value. Prior to approval, CMHC will determine the market value of the property after renovations/ improvements. The lending value will not exceed the market value of the property after renovations/ improvements. Applicants must have the following:

  1. A minimum of 5% down payment of total cost (purchase price plus renovations/improvements).
  2. Cost estimates for renovations/improvements.
  3. Qualifications to obtain a CMHC insured loan through an approved lender. For more information call CMHC at (416) 221-2642 or


Purchase Price$100,000
Renovations/improvements costs$25,000
Total Cost$125,000
Lending Value$125,000
Maximum Mortgage (95%)$118,750
Minimum 5% down payment$6,250

RRSP Home Buyers’ Plan

The Home Buyers’ Plan (HBP) is a program under which you can, generally, withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home.

Withdrawals that meet all applicable HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts. However, before you can withdraw funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the

If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000. You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home more than 30 days before the date of your withdrawal.

Up to $20,000 per person could be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples —including common-law — will be able to withdraw up to $40,000.

You have to meet the first-time buyer’s condition. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days before your withdrawal is the rule adopted.

Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.

The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2000 will have until October 1, 2001 to acquire a qualifying home and their first annual repayment will be due by the end of 2002 or the first two months of 2003.

A special rule denies a tax deduction for contributions to an RRSP that are withdrawn within 90 days of the RRSP deposit being made. Consequently, to get the normal tax break for a contribution and to use those funds under
the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made. Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:
Qualifies for the disability tax credit (DTC) and is buying a home that is more accessible for the individual or is better suited for the care of the individual.
Is related to a disabled individual who qualifies for the DTC and is buying a home for the benefit of the disabled individual that is more accessible for, or better suited for, the care of the disabled individual.
Is related to a disabled individual who qualifies for the DTC and is withdrawing an amount for the disabled individual to buy a home that is more accessible for, or better suited for, the care of the disabled individual.

You can participate in the HBP more than once if:

  1. Your HBP balance for your previous participation is zero on January 1st of the year you want your new participation in the HBP to occur
  2. You meet the first-time buyer’s condition and all other HBP conditions that apply to your situation.

5% Down Payment
With as little as a 5% down payment, from personal or other sources (see below for eligible other sources), all home buyers have access to mortgage insurance enabling then to enter the housing market, as long as they can manage the costs of home ownership.

Mortgage insurance for 95% mortgages is available to both first time and repeat home buyers. Homebuyers have the option of using personal sources, such as savings or gifts, or other sources, such as lender incentives, borrowed funds/credit, or sweat equity (the amount of money spent to help construct the home) for the required 5% down payment. Buyers using the program may consume up to 32% of their gross monthly household
income for payments on loans for 95% of the lending value of the house where the 5%
down payment comes from other sources, will be 2.9% of the mortgage loan. This premium
can be added to the mortgage.

The maximum amortization period is 25 years. Insurance premiums on loans for 95% of the lending value of the house where the 5% down payment comes from personal sources will be 2.75% of the mortgage loan. Insurance premiums on loans for 95% of the lending value of the house where the 5% down payment comes from other sources will be 2.9% of the mortgage loan. This premium can be added to the mortgage.

Borrowers are required to demonstrate, at the time of application, their ability to cover closing costs equal to at least 1.5% of the purchase price. Where the minimum equity requirement is being met by way of a financial gift, the funds
must be in possession of the borrower 15 days before making an offer to purchase.

For more information call CMHC at 1-800-668-2642 or access through

GST New Housing Rebate
You may be eligible to claim a rebate for a part of the GST you pay on the purchase price or cost of building your home if:

  • You buy a new or substantially renovated home (including the land or if you lease the land) from a builder.
  • You buy a new mobile home (including a modular home) or a floating home from a builder or vendor.
  • You buy a share of capital stock of a co-operative housing corporation.
  • You construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so). Your home is destroyed in a fire and is subsequently rebuilt.

Resale homes are exempt from the 6% GST.

New homes are subject to the 6% GST. New home buyers can apply for a 36% rebate of the 6% GST applicable to the purchase price to a maximum of $7,560 for homes costing $350,000 or less before GST.

For new homes priced between $350,000 and $450,000 before GST, the GST rebate would be reduced proportionately. New homes priced $450,000 before GST or higher would not receive a rebate.

In the GTA, most builders include the GST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net GST cost.

Land Transfer Tax (LTT) Rebate Program
First-time home buyers who purchase a newly constructed home will receive a rebate of the Land Transfer Tax (LTT). All other buyers will continue to pay the full applicable tax. The maximum LTT rebate is $4,000.

The 1996 Ontario Budget announced a special one-year provision to the LTT that was renewed every year and is now a permanent program.

Beginning January 1, 2017, the maximum amount of the refund is $4,000. The increased limit of $4,000 applies only to conveyances or dispositions that occur on or after January 1, 2017, regardless of the date the agreement of purchase and sale was signed.

Beginning January 1, 2017, no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.

A real estate transfer tax is assessed on real property when ownership of the property is transferred from one party to another. The tax is a percentage of the value of the property based on a graduated scale:
0.5% on amounts up to and including $55,000
+1.0% on the amount exceeding $55,000 up to and including $250,000
+1.5% on amounts above $250,000 up to and including $400,000 for residential
+1.5% on the amount in excess of $250,000 for business properties +2.0% of the amount in excess of $400,000 [residential only]

For more information call the Ontario Finance Ministry at 1-800-263-7965.

These four potions added up together total the LTT payable. A simple formula is as follows:

**Purchase PriceCalculation of LTT
$0 to $55,0000.5% x purchase price
$55,001 to $250,000(1% x purchase price) minus 275
$250,001 to $400,000 (residential)
$250,001 plus (business)
(1.5% x purchase price) minus 1525
$400,001 plus (residential only)(0.2% x purchase price) minus 3525
**If the purchase price falls within this range, then apply the appropriate formula to the purchase price. For example on a $200,000 property, the LTT calculation would be (1% x $200,000) minux 275 = $1,725.
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