Start by separating savings plans from closing-cost rebates
The programs don't all hand you money in the same way. The First Home Savings Account, or FHSA, is an account you open and contribute to before buying. The Home Buyers' Plan, or HBP, lets an eligible buyer take money from an RRSP and repay it later. The Ontario and Toronto land transfer tax rebates reduce taxes charged when ownership transfers. They don't create a down payment. This distinction matters because a buyer can have enough for the minimum down payment and still be short at closing once legal fees, adjustments, moving costs, and land transfer tax are included. In Toronto, there are two land transfer taxes: Ontario's tax and the City's municipal tax. Build the closing-cost plan separately from the down payment, then apply each program to the part it actually covers.
FHSA: usually the first account worth understanding
The FHSA combines two tax advantages. Eligible contributions are generally deductible from income, and a qualifying withdrawal to buy a first home is not taxed. You receive $8,000 of participation room in the first year you open an FHSA, with a $40,000 lifetime contribution limit. The room doesn't begin building before the account exists, so opening one can matter even if the first contribution is modest. Unused annual room can be carried forward, but only within the program's rules. A couple who each qualifies can each use their own FHSA toward the same purchase. Unlike money withdrawn through the HBP, a qualifying FHSA withdrawal doesn't have to be repaid. Keep records and confirm the withdrawal timing with the institution. Pulling money out as an ordinary taxable withdrawal instead of a qualifying home purchase withdrawal defeats the main benefit.
HBP: using RRSP money without an immediate tax bill
The Home Buyers' Plan currently allows an eligible person to withdraw up to $60,000 from their own RRSP to buy or build a qualifying home. A qualifying couple could each use the plan if each person meets the conditions. The withdrawal isn't taxed at the time when it follows the HBP rules, but it isn't free money. It is normally repaid to the RRSP over 15 years, and a required amount that isn't repaid is generally included in taxable income for that year. For first withdrawals made from 2026 through 2028, current federal rules delay the beginning of the repayment period so it starts in the fifth year after the withdrawal year. Also watch the RRSP timing rule: contributions made in the 89 days before an HBP withdrawal may not be deductible in some circumstances. Don't move last-minute money into an RRSP assuming it will automatically produce a deduction and come straight back out.
Yes, you can combine the FHSA and HBP
An eligible buyer can use a qualifying FHSA withdrawal and an HBP withdrawal for the same home. That can be useful, but the accounts do different jobs. FHSA contributions may create a deduction and the qualifying withdrawal is not repaid. HBP funds come from retirement savings and create a future repayment schedule. Before using the maximum just because it's available, look at what remains after closing. Emptying every account can leave no cushion for repairs, condo adjustments, furniture, property tax, or an income interruption. Lenders also need a clear paper trail for the down payment. Keep account statements and transaction records, and avoid moving funds repeatedly between accounts just before the mortgage application. Clean documentation saves questions when the lender reviews the source of funds.
Ontario's first-time buyer land transfer tax refund
Ontario offers eligible first-time buyers a refund of provincial land transfer tax, up to $4,000. It is usually claimed by the lawyer as part of closing, reducing the amount you need to provide, though there is a process to apply afterward when it wasn't claimed at registration. The eligibility definition is stricter than many people expect. You generally must be at least 18 and must never have owned a home or an interest in a home anywhere in the world. How you received the interest, including a gift or inheritance, can matter. A spouse's ownership can also affect eligibility. This is not the same four-year lookback used for some federal programs. Tell your real estate lawyer about any previous ownership early, including property outside Canada, rather than assuming 'first home in Toronto' means first-time buyer under the tax rules.
Toronto has a second land transfer tax rebate
A Toronto purchase is also subject to the City's Municipal Land Transfer Tax, often shortened to MLTT. Eligible first-time buyers can receive a municipal rebate of up to $4,475 in addition to Ontario's refund. The Toronto program applies to eligible new and resale residential properties, and the buyer must occupy the home as a principal residence within the required period. The City also looks at prior ownership anywhere in the world and a spouse's ownership history. Citizenship or permanent-resident rules apply as well. Because both taxes can be significant, ask the lawyer for a written estimate showing the provincial tax, municipal tax, each expected rebate, and the net cash needed. A rebate reduces tax. It doesn't necessarily erase the whole bill, particularly at Toronto purchase prices above the value fully covered by the rebate.
The First-Time Home Buyer Incentive is closed
The First-Time Home Buyer Incentive, often shortened to FTHBI, was the federal shared-equity program where the government contributed a percentage of the purchase price and shared in the property's future value change. It is not available for new applications. The deadline for new submissions was March 21, 2024, and no new approvals were issued after March 31, 2024. Older articles, calculators, and checklists still mention it, which is why buyers keep asking. Don't include it in a 2026 down-payment plan. People who were approved while the program operated still have obligations under their existing agreement, but that doesn't reopen it for a new Toronto purchase. Also don't confuse this closed program with the Home Buyers' Plan. The names are similar; the HBP is the active RRSP withdrawal program described above.
A simple way to put the programs together
Start with the expected purchase price and closing date. List the cash already saved, FHSA funds, and any RRSP amount that could qualify under the HBP. Set aside a realistic emergency reserve instead of directing every dollar to closing. Next, have the lawyer estimate both land transfer taxes and test eligibility for both rebates. Then have the mortgage approval reviewed using documented income, debts, credit, down payment sources, property taxes, and condo fees where applicable. Program eligibility doesn't equal mortgage approval. A tax rebate also doesn't help the debt-service calculation in the same way income or a smaller loan does. Finally, confirm every amount close to the purchase date because government rules can change. Use official federal, Ontario, and City of Toronto guidance for the final check, not an old social post or a screenshot from a friend.
Need help turning the acronyms into a purchase plan?
If you're buying your first home in Toronto, contact Meshesha Robel, Mortgage Agent Level 2, FSRA #M15001135. Text or call (647) 342-1355, or email MROBEL@MESHESHAGROUP.COM. A useful first conversation covers your target timing, current savings, FHSA and RRSP balances, debts, income documents, and expected closing costs. For legal and tax eligibility, your lawyer and tax adviser should confirm the final details.
Frequently asked questions
- Can I use an FHSA and the Home Buyers' Plan for the same Toronto home?
- Yes. If you meet each program's conditions, a qualifying FHSA withdrawal and an RRSP Home Buyers' Plan withdrawal can be used for the same purchase.
- How much can Toronto first-time buyers receive in land transfer tax rebates?
- Eligible buyers can receive up to $4,000 from Ontario and up to $4,475 from the City of Toronto. Eligibility must be checked separately, and a higher-priced purchase may still have land transfer tax owing after the rebates.
- Is the federal First-Time Home Buyer Incentive still available?
- No. The shared-equity First-Time Home Buyer Incentive stopped accepting new applications in March 2024. It should not be included in a new buyer's 2026 plan.