June 25, 2024

Home Ownership Programs: Are You Eligible?

If you are planning to buy your first home , it is crucial to learn about the different programs, incentives, grants and tax credits available to put home ownership within reach. These options can significantly reduce your financial burden and help turn your dreams of home ownership into reality!

1. Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) is a first-time home buyer incentive that allows you to withdraw from your registered retirement savings plan (RRSP) without paying taxes on the withdrawal. Before April 16, 2024, buyers could withdraw up to $35,000. The limit is now $60,000. If you buy as a couple, you can double this limit.

Withdrawals from your RRSPs must be repaid over a maximum of 15 years, at a rate of at least 1/15 per year . For example, if you withdraw $18,000, you will have to repay $1,200 annually.

What generally makes you eligible?

Being a first-time buyer: You must be considered a first-time home buyer. This means that you have not owned a home you have lived in in the last four calendar years.
Purchasing an eligible property: The home you buy must be located in Canada. Most homes are eligible, including single-family homes, row houses, condo units (condominiums) and mobile homes. You can buy an existing property or build one yourself.
Becoming an owner-occupant: You must intend to live in the home within the year following the purchase.

* Check the detailed eligibility requirements on designated reference sites.

Why use the HBP?

Using the Home Buyers’ Plan (HBP) can help boost your down payment on the home, reduce your interest payments and even save on CMHC fees if your down payment is 20% . You can also use the HBP for something other than a down payment, such as renovations, or simply as a safety net.

Additionally, if you use the HBP, you may be eligible for significant tax benefits. For example, contributing $17,500 to your RRSP could save you $7,000 on your taxes. That means that in addition to the initial savings that you withdraw from your RRSPs to buy your first home, you would benefit from a total of $24,500: $17,500 in savings + $7,000 in tax benefits.

How do I use the HBP?

Make sure you have enough funds in your RRSP. They must be in the RRSP for at least 90 days before making the purchase.
Complete the T1036 – Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP form and submit it to the financial institution that manages your RRSP.
You can withdraw the funds and use them for the down payment or other housing-related expenses. Note: The financial institution will provide you with a tax receipt confirming your contribution and withdrawal, if applicable. You can include it in your next tax return to receive a tax credit.

	Tips and tricks Remember to start repaying the HBP in time to avoid tax penalties and report the repayment to the Canada Revenue Agency (CRA). Repayments begin two years after the withdrawal year. For example, if you withdraw the funds in 2024, you will have to make your first repayment in 2026. You won’t receive any new tax refunds for RRSP contributions that are used to repay the HBP.

2. First Home Savings Account (FHSA)

Another useful first-time home buyer program is the First Home Savings Account (FHSA) . This account has a lifetime contribution limit of $40,000 , with a maximum annual contribution of $8,000. The FHSA combines the advantages of RRSPs and TFSAs : contributions are tax-deductible, savings grow tax-free in the investments of your choice, and withdrawals made to buy a qualifying first home are tax-free, offering significant flexibility and tax benefits.

What generally makes you eligible?

Being a first-time buyer: Like with the HBP, you must not have owned a residence that you have lived in in the past four calendar years.
Purchasing an eligible property: The home you buy must be located in Canada. Most types of homes are eligible, like with the HBP. You can buy an existing property or choose to build one.
Becoming an owner-occupant: You must intend to live in the home within the year following the purchase.

* Check the detailed eligibility requirements.

Why use the FHSA instead of a TFSA to buy your first home?

The FHSA was specifically created for first-time home buyers, and unlike with TFSAs, contributions are tax deductible. However, the FHSA has a maximum lifespan of 15 years, so you have to make sure to buy a property within this period. There is also a contribution limit.

TFSAs have no lifetime contribution limit and can be used for any savings goal.

How do I withdraw funds from a FHSA?

Contact your banking institution and discuss your plans to buy your first home.
Complete the Request to Make a Qualifying Withdrawal from your FHSA form. The withdrawal must be made no later than 30 days after buying the property.
Withdraw the funds and use them for expenses related to your first home.

Note: Don’t forget to keep your receipts from your bank for your tax return.

	Tips and tricks Since the FHSA has a maximum lifespan of 15 years, it may be a good idea to contribute to a TFSA first and then transfer the funds into a FHSA to make the most of the contribution room. You can also do the opposite: contribute to your FHSA and transfer the funds to an RRSP if you decide not to buy a home. Ask your financial advisor which strategy is right for you.

3. Provincial and federal tax credits (HBTC)

First-time home buyers’ tax credits provide new homeowners with tax relief in the form of a non-refundable tax credit. This credit is designed to help cover the costs associated with the purchase, including notary fees, property transfer duties and other related costs. The maximum provincial tax credit you can claim is $1,400, while the maximum federal tax credit for a first home is $1,500.

What generally makes you eligible?

Being a first-time buyer: You must be considered a first-time home buyer. This means that you have not owned a house you have lived in in the last four calendar years.
Purchasing an eligible property: The home you buy must be located in Quebec. Most homes are eligible, including single-family homes, row houses, condo units (condominiums), mobile homes, etc.

* Check the detailed eligibility requirements.

How do I claim tax credits?

Complete the provincial Home Buyers’ Tax Credit form and attach it to your income tax return.
Complete line 31270 of your income tax return to claim the federal tax credit.

4. Financial assistance from the Novoclimat and Eco Plus programs

If you want to build a brand-new property or buy a new Novoclimat-certified property, Energy Transition Québec’s Novoclimat program provides $4,000 in financial assistance.

In addition, CMHC offers an Eco Plus program that gives buyers a 25% partial premium refund.

What generally makes you eligible?

Purchasing an eligible property: New homes must be Novoclimat certified and located in Quebec. New single-family homes (detached or semi-detached and row houses), intergenerational and single-family houses with an adjacent dwelling are eligible, and the home must have been built by a Novoclimat contractor . For the Eco Plus program, the home must have received an eligible certification.
Buy a property with the right primary energy source: it must use electricity or residual forest biomass . For the Eco Plus program, the home must meet EnerGuide ratings .
Becoming an owner-occupant: You must intend to live in the home.

* Check the detailed eligibility requirements.

How do I access the programs?

Novoclimat program

The contractor is responsible for ensuring that the house is approved and handling the inspections, which are conducted by a Ministère-appointed appraiser.
Once the house has been approved, you will receive a certificate of compliance and a form to apply for financial assistance when you take possession of your home.

Eco Plus program (CMHC)

Complete the Partial Premium Refund Application .
Submit the completed form and a copy of your home’s energy efficiency certificate within two years of the closing date of your mortgage.

	Tips and tricks Be careful! When you sign the contract to purchase your home, make sure that it includes the Novoclimat option. Just because a contractor is Novoclimat certified doesn’t mean that all their buildings meet the criteria and receive certification.

Municipal programs for first-time buyers

Cities sometimes have programs to give you a hand when buying your first home. Montreal offers the Home Purchase Assistance Program , with financial assistance ranging from $5,000 to $15,000 for new properties and from $5,000 to $7,000 for existing properties.

Quebec City also offers an Accès Famille program to purchase a new home. This is in the form of a homebuyer credit, or an interest- and payment-free loan to help with the down payment.

Several other cities have programs to help residents access home ownership. These are not always intended exclusively for first-time buyers or families, but for anyone who wants to buy in the city. Check the website of the municipality you want to live in to find out which programs are available.

What generally makes you eligible?

Montreal – Home Purchase Assistance Program

Being a first-time buyer: You must be considered a first-time home buyer by the city. This means that you have not owned a home you have lived in in the five years preceding the purchase, unlike with other programs, which consider four years to be enough.
Being a parent: You must have at least one child under 18 who lives with you at least 40% of the time to purchase an existing property and receive assistance. However, for new properties, all types of households are eligible.

Quebec City – Accès Famille program

Being a couple with or without children or a single-parent family: Your household must have a maximum gross income of $150,000.
Buying a new property: The property must have a maximum sales price of $370,000, be located in Quebec City, have at least two bedrooms and meet other specific criteria.

* Check the detailed eligibility requirements.

How do I apply?

For programs offered by municipalities, you apply directly to them. You will normally need to complete a form, attach supporting documentation and send it directly to the city at the email address provided.

Montreal: Home Purchase Assistance Program | City of Montréal (montreal.ca) – Submit an application section.
Quebec: Steps to follow (quebec.qc.ca)

Summary of available financial assistance

Finding it hard to make sense of all these programs? Navigating the different first-time home buyer tax credits and first-time home buyer grants can be a chore. To simplify things, we’ve created a detailed table comparing them.

First-time home buyer grants, assistance and programs
	HBP	FHSA	Tax credits	Novoclimat and Eco Plus	Municipal programs
Definition	Program to withdraw funds from RRSPs without a penalty	Tax-free registered savings plan	Non-refundable provincial and federal tax credit	Financial assistance and partial premium refund	Several options available: financial assistance, credit, etc.
Contribution limit	Annual: 18% of your income from the previous year or limit applicable to the current year	Annual: $8,000 Total: $40,000 over your lifetime	N/A	N/A	N/A
Maximum withdrawal amount and/or financial assistance	$60,000	No withdrawal limit	Provincial: $1,400 Federal: $1,500	Novoclimat: $4,000 Eco Plus: 25% partial premium refund	Amounts vary by municipality
Special features	The money must be in the RRSP 90 days before withdrawal Repayment required (1/15 per year)	No minimum time in the account before withdrawal Repayment not required	Repayment not required	Repayment not required	Conditions differ from city to city

Maximizing the benefits for first-time buyers

First-time home buyer programs, grants and tax credits offer a multitude of benefits to make home ownership accessible, so why not take advantage of them? This financial assistance can significantly reduce the economic burden on new first-home buyers, making it easier to realize your dreams of becoming a homeowner faster. Feeling ready to take the plunge and buy your first property? Find your first home now with the help of a real estate broker .

* Please note that these programs and grants may be subject to change. Although the general conditions and eligibility criteria are provided here, it is important to check the appropriate websites and talk to professionals for full program details.

FAQ

1. Can I use the HBP twice?

Yes, it is possible to use the HBP a second time if the first has been fully repaid. In fact, as of 1999, there is no limit to the number of times you can use the HBP .

2. Can I use the FHSA and HBP together to purchase my first home?

Yes, you can use both the Home Buyers’ Plan (HBP) and the First Home Savings Account (FHSA) on the same eligible home.

3. Are there any programs to help me renovate my new home?

If you are buying a property that needs work, you should know that there are also renovation assistance programs available . These include RénoRégion , RénoVert , Réno-Climat , the Multigenerational Home Renovation Tax Credit and the GST and QST rebate for owners of substantially renovated housing.