First Time Home Buyer Toronto: What You Need to Know

The short answer

• The federal First-Time Home Buyer Incentive was discontinued as of March 21, 2024, so it’s not something to plan around anymore.
• Toronto buyers pay both an Ontario land transfer tax and a separate municipal land transfer tax and first-time buyers can claim a rebate against each.
• The rebate caps have not kept pace with downtown Toronto prices, so most first-time buyers still pay meaningful land transfer tax on closing.
• The Home Buyers’ Plan and the First Home Savings Account (FHSA) are the two federal tools still worth using to build a down payment.
• Getting pre-approved early tells you your real budget before you start touring condos and townhomes downtown.

What happened to the federal first time home buyer incentive

If you’ve been researching this for a while, you may remember the CMHC First-Time Home Buyer Incentive. It was a shared-equity program that offered 5% or 10% toward your down payment on a new build or 5% on a resale home, in exchange for the government sharing in the home’s future gain or loss. It sounded good on paper, but the income and purchase price limits made it hard to use in a city like Toronto.

The program was discontinued effective March 21, 2024, with CMHC accepting applications only up to March 31, 2024. If you see it mentioned on an older blog post or a lender’s outdated page, that’s why it no longer applies. For current first time home buyer incentive in Toronto conversations, the programs below are what’s actually on the table.

First time home buyer toronto land transfer tax: what it actually costs

This is the part that surprises a lot of first-time buyers, so it’s worth spelling out clearly. Toronto is one of the only cities in Canada that layers a municipal land transfer tax (MLTT) on top of the provincial one. That means a Toronto buyer pays two separate land transfer taxes on closing, calculated using tax-bracket systems that apply higher rates as the purchase price climbs.

Both levels offer a rebate for qualifying first-time buyers and both rebates are capped. Historically, the combined rebate has fully offset the tax on a home priced in roughly the low $400,000s, a threshold that has not moved much even as the average Toronto home price has risen well past that. The Toronto Regional Real Estate Board has publicly pushed the city to modernize this rebate, noting that most first-time buyers purchase well above that cap and therefore still pay significant tax out of pocket on closing day.

What this means practically: budget for land transfer tax as a real closing cost, not something a rebate will erase. Ask your lawyer or mortgage professional to calculate your specific provincial and municipal tax and rebate amount based on your purchase price, since the brackets and caps can change and should be confirmed before you firm up an offer.

How the first time home buyer toronto rebate is claimed

Both rebates are typically applied at closing by your real estate lawyer, who files the paperwork directly with the land registry so you don’t pay the full tax and then wait for a refund. To qualify, you generally need to be a Canadian citizen or permanent resident, at least 18 and someone who has never owned a home anywhere in the world. If you have a spouse, their ownership history can affect your eligibility for the Toronto portion specifically, so flag this early with your lawyer.

First time home buyer toronto down payment: where the money comes from

Minimum down payment rules in Canada are tiered by purchase price, with lower percentages required on the portion of the price under a set threshold and higher percentages on amounts above it. Because most of downtown Toronto sits in higher price brackets, buyers here often need a larger down payment than the bare minimum suggests and anything under 20% down typically requires mortgage default insurance, which adds its own premium cost.

Two tools are genuinely useful for building that down payment:

• Home Buyers’ Plan (HBP): lets you withdraw funds from your RRSP, tax and penalty free, to put toward a first home, as long as you repay the withdrawal back into your RRSP over time. The withdrawal limit has increased in recent years, so confirm the current cap with the CRA before you rely on a specific number.
• First Home Savings Account (FHSA): a newer registered account that combines a tax deduction on contributions with tax-free withdrawals when the money is used for a qualifying first home purchase. Annual and lifetime contribution limits apply and are worth checking directly with your bank or the CRA.

First time home buyer toronto mortgage: getting pre-approved

Before you tour a single condo or semi downtown, get a mortgage pre-approval. A good lender will confirm what you can actually borrow based on your income, debts and down payment and will lock in a rate for a set period, which protects you if rates move while you’re shopping.

Pre-approval also gives you a realistic number to compare against downtown Toronto pricing, which varies enormously by neighbourhood and property type. A one-bedroom condo near the financial district and a semi-detached house in the east end can sit at very different price points and your pre-approval amount should shape which of those conversations is realistic for you.

First time home buyer toronto benefits beyond rebates

Being a first-time buyer in Toronto isn’t only about tax rebates. It also means you’re eligible for insured mortgages with smaller down payments on certain price ranges, you can use RRSP and FHSA savings specifically earmarked for this purpose and in many cases you qualify for longer amortization options on insured mortgages that weren’t available to repeat buyers under recent federal rule changes. Ask your mortgage professional whether any of these apply to your specific situation, since eligibility details are set federally and get updated periodically.

Comparing the main programs and tools

Program or tool	What it does	Current status
Federal First-Time Home Buyer Incentive	Shared-equity contribution toward a down payment	Discontinued March 21, 2024
Ontario Land Transfer Tax Rebate	Rebates provincial land transfer tax up to a capped amount	Active; confirm current cap
Toronto Municipal Land Transfer Tax Rebate	Rebates the city’s separate land transfer tax up to a capped amount	Active; cap has not kept pace with prices
Home Buyers’ Plan (HBP)	Tax-free RRSP withdrawal for a down payment, must be repaid	Active; withdrawal limit raised in 2024
First Home Savings Account (FHSA)	Tax-deductible contributions, tax-free withdrawals for a first home	Active

What first time home buyers get wrong downtown

The most common mistake is assuming the land transfer tax rebate will cover most or all of the tax owed. In a downtown market, it usually covers only a portion, so that tax bill should be budgeted for separately from your down payment.

The second common mistake is shopping before getting pre-approved. Rates, insurance requirements and your actual borrowing power all affect what’s realistic and finding that out after falling for a listing is a hard way to learn it.

The third is underestimating closing costs generally. Legal fees, title insurance, home inspection, moving costs and the land transfer tax balance all add up and first-time buyers in a condo-heavy market like downtown Toronto should also budget for status certificate review fees and potential maintenance fee adjustments.

What to do next

• Talk to a mortgage professional this week and get pre-approved so you know your real budget.
• Open an FHSA if you haven’t already and check whether using the Home Buyers’ Plan alongside it makes sense for your timeline.
• Ask your lawyer or mortgage broker to calculate your specific provincial and Toronto land transfer tax, along with the rebate you’d qualify for, based on a realistic purchase price.
• Make a list of downtown neighbourhoods and property types that fit your pre-approved budget, rather than starting with the listings and working backward.
• Confirm current program details (contribution limits, rebate caps, eligibility rules) directly with the CRA, Ontario Ministry of Finance or City of Toronto before you rely on any specific figure.

If you’re a first time home buyer trying to make sense of all this in downtown Toronto, I’d rather walk you through it directly than have you piece it together from old blog posts. Reach out to Kirby Chan through kirbychandigital.com and let’s talk about what your budget actually looks like and which neighbourhoods make sense for it.