Buying your first home in Ontario is one of the most significant financial decisions you'll make — and in 2025, there are more government programs, tax incentives, and mortgage options available for first-time buyers than ever before. This guide covers everything you need to know, from the brand-new First Home Savings Account (FHSA) to the step-by-step mortgage process, so you can walk into the process confident and prepared.

Government Programs for First-Time Home Buyers in Ontario (2025)

First Home Savings Account (FHSA)

The FHSA launched in April 2023 and is the most powerful new savings tool for first-time buyers in a generation. Key details: You can contribute up to $8,000 per year, to a lifetime maximum of $40,000. Contributions are tax-deductible (like an RRSP) AND withdrawals for a first home purchase are completely tax-free (like a TFSA). If you haven't opened your FHSA yet, do it today — even if you only contribute a small amount, the clock on your room starts the moment the account is open.

RRSP Home Buyers' Plan (HBP)

The RRSP HBP allows first-time buyers to withdraw up to $35,000 per person ($70,000 for a couple) from their RRSP for a first home purchase, tax-free. The amount must be repaid to your RRSP over 15 years. Combined with the FHSA, a couple can access up to $110,000 in tax-advantaged savings for a down payment in Ontario.

Ontario Land Transfer Tax Rebate

Ontario first-time buyers receive a rebate on the provincial land transfer tax of up to $4,000. In Toronto, there is an additional municipal land transfer tax with a separate first-time buyer rebate of up to $4,475. On a $700,000 purchase, these rebates can reduce your closing costs by up to $8,475.

First-Time Home Buyer's Tax Credit (HBTC)

The federal HBTC provides a $1,500 non-refundable tax credit (up from $750 before 2022) for first-time buyers in the year they purchase a qualifying home. This is automatically claimed on your T1 tax return for the year of purchase.

CMHC Mortgage Insurance: What It Is and When You Need It

If your down payment is less than 20% of the purchase price, your mortgage must be "insured" through CMHC, Sagen, or Canada Guaranty. This insurance protects the lender (not you) against default, and the premium is added to your mortgage. CMHC insurance premium rates for 2025:

• 5–9.99% down payment: 4.00% of mortgage amount
• 10–14.99% down payment: 3.10% of mortgage amount
• 15–19.99% down payment: 2.80% of mortgage amount
• 20%+ down payment: No CMHC insurance required

For a $600,000 purchase with 5% down ($30,000), the CMHC premium is $22,800 — added to your mortgage balance. Not a reason to avoid buying, but important to budget for.

How Much Down Payment Do You Actually Need?

• Properties under $500,000: Minimum 5% down
• Properties $500,000 to $999,999: 5% on first $500K + 10% on the remaining amount
• Properties $1,000,000 and above: Minimum 20% down (no CMHC insurance available)
• Competitive markets: A larger down payment (10–15%+) can strengthen your offer — sellers prefer buyers with financial strength

The Step-by-Step Ontario First-Time Buyer Mortgage Process

1. 1Open your FHSA if not already open — contribution room starts accumulating immediately
2. 2Get a free credit report from Equifax and TransUnion — know where you stand before a lender sees it
3. 3Meet with a licensed mortgage broker for a pre-approval — this confirms your maximum budget and rate-locks for 90–120 days
4. 4Engage a licensed Ontario real estate agent familiar with the markets you're considering
5. 5Find a property and make an offer with a financing condition (gives you 3–5 business days to confirm your mortgage)
6. 6Your broker orders the appraisal and submits your full mortgage application once the offer is accepted
7. 7Review and sign the mortgage commitment, choose your term and rate type
8. 8Have a real estate lawyer review the purchase agreement and handle title transfer
9. 9Receive keys on closing day

Fixed vs. Variable Rate: What First-Time Buyers Should Know

First-time buyers often face the choice between a fixed-rate mortgage (payment stays the same for the full term) and a variable-rate mortgage (payment fluctuates with the Bank of Canada prime rate). In 2025, with interest rates having peaked and beginning to moderate, this is an especially important decision. Our recommendation for most first-time buyers: a 3-year fixed rate is often the sweet spot — locking in for stability without committing to a 5-year term that may be higher than rates in 2–3 years. Variable rates are compelling for buyers who can tolerate payment fluctuation and believe rates will continue declining.