Back to Finance

Down payment assistance programs in Canada

Canada Mortgage and Housing Corporation sign

After years of dealing with the high costs and inconveniences of renting, you’re craving more independence and looking to purchase your first home. But there’s a big hurdle to be crossed first — the dreaded upfront costs. Without down payment assistance, in Canada, the required minimum amount for a down payment is 5% for properties priced at $500,000 or less. Although 5% might not sound so bad, the dollar amount it represents can be daunting, particularly for those who make only a modest income.

If you purchase a house that costs more than $500,000, you have to pay 5% for the first $500,000 plus 10% on the amount between $500,000 and $1 million.


Fortunately, there are government down payment assistance programs that support first-time homebuyers with limited income. You may not have heard about these programs, or be familiar with how they work, but if you are serious about buying a house, it’s definitely worth your time to investigate and see what benefits they may hold for you.

RRSP Home Buyers’ Plan

A chart with multiple points of data

Under this plan, you may borrow up to $35,000 tax free from your RRSP (Registered Retirement Savings Plan) to fund the down payment. If you plan to purchase a home with a partner who is also a first-time purchaser, you can each borrow up to $35,000, or $70,000 combined.

To qualify for this program, you must be a first-time homebuyer, which is defined as anyone who, in the last four years, has not purchased a house or lived in a home that was owned by their spouse. (Please refer to the website link below to see how the benefits and limitations differ for residents with disabilities.)

The HBP funding is treated as a 15-year interest-free loan as long as you start making annual repayments to your RRSP account no more than two years after borrowing the money from your RRSP. Keep in mind, the money in your RRSP must have been available for at least 90 days before the HBP application is submitted and you do not have to repay the money into the same RRSP account — it can be contributed to any RRSP account as you will end up designating this portion of your RRSP contribution as part of your HBP loan repayment.

Another perk about the Home Buyer’s Plan is that even though it’s a withdrawal from your RRSP — which is typically subject to withholding tax — this withdrawal is not.

Website: Home Buyers’ Plan (HBP)

RRSP First Time Home Buyer Incentive

A couple sitting on a couch signing paperwork

The First-Time Home Buyer Incentive (HBI) program was announced in June 2019, but will not be fully available to Canadian home buyers until September 2, 2019. The incentive is a shared equity mortgage. In short, the Canadian government will provide 5% or 10% of your down payment on a new home or 5% of a down payment on an existing home in exchange for equity in your property.

In return, when you sell your home, you must pay back the equity in which you share with the government. Therefore, if your house increases in value, you will pay more than you first received.

Buyers must have 5% of a down payment to be eligible for this program. Other factors that affect whether or not you qualify are that you must be a first-time buyer, have a household income of less than $120,000 annually, can only borrow less than four times your qualifying income and you must never have had a divorce or broken common law. You are free to combine the HBI with the RRSP First Time Home Buyer Plan.

Website: First-Time Home Buyer Incentive

First-Time Home Buyers’ Tax Credit

Two people exchange keys in front of a sold for sale sign

The First-Time Home Buyers’ Tax Credit (HBTC), first introduced in the 2009 federal budget, allows first-time home buyers to recover some of the costs related to their purchase. This non-refundable tax credit covers inspections, legal fees, and other similar closing costs, and is valued at up to $750. 

The dwelling types that qualify for the tax credit include the following: single-family homes (both existing and newly built), condos, townhomes, semi-detached homes and duplexes. The requirement to be a first-time buyer does not apply if you have a disability. The eligibility requirements for HBTC are similar to those for the Home Buyer’s Plan, but your participation in the Home Buyers’ Plan does not affect your eligibility for the HBTC. The credit can be claimed in the same taxation year as when the house is purchased.

Website: First Time Home Buyer’s Tax Credit

Land Transfer Tax Rebate

A sold for sale sign in front of a home with palm trees

If you live in British Columbia, Ontario or Prince Edward Island, you may be eligible to receive a rebate on a portion of the land transfer tax that must be paid on a townhouse, condo, or house, provided that you’re a first-time buyer.  In addition to the provincial rebate, first-time homebuyers in Toronto are also eligible to receive a rebate on the city’s land transfer tax. Other provinces and cities may also offer different rebate programs to help residents offset the cost of land transfer tax.

Websites: Ontario; British Columbia; Toronto; Prince Edward Island

GST/HST New Housing Rebate

A new build house surrounded by a construction site eligible for GST rebate

The GST/HST New Housing Rebate offers you money back on the portion of the GST (goods and services tax) or HST (harmonized sales tax) you must pay when you build a house or renovate your existing house. You could also be eligible for a rebate of a portion of the costs of building an add-on to your existing home or converting a commercial property into a residential home.

This rebate can only be claimed if the fair market value of the house upon completion is deemed to be less than $450,000. You can also claim this rebate on non-traditional homes such as mobile and floating homes.

Website: GST/HST New Housing Rebate

CMHC Insurance

CMHC federal down payment assistance Zolo

Also known as mortgage default insurance, the CMHC insurance is beneficial for homebuyers who want to buy a home but cannot make the 20% down payment. Despite the name, it is not really “insurance”, at least in the traditional sense. Instead, it protects the lender against the potential default of mortgage payments by borrowers. This protection makes it possible for more Canadians to achieve homeownership.

The CMHC insurance can’t be used for homes that cost more than $1 million. For homes in this price range, a down payment of at least 20% is mandatory.

You can apply for this insurance through Canada Guaranty, Genworth Financial, or the Canada Mortgage and Housing Corporation (CMHC).

Websites: CMHC; Genworth Financial; Canada Guaranty

These are just some of the down payment assistance programs available to Canadians across the country. There are additional grants and programs available through provincial programs: 

Alberta Down Payment Assistance

PEAK Housing Initiatives: Formerly known as the PEAK Program, this initiative offers to fund in the form of a second mortgage and covers partial or full down payments up to no more than 5%. 

Attainable Homes (AHC): This program is for Calgary residents only. Applicants contribute $2,000 towards the down payment of their home while the program covers the remainder.

New Brunswick Down Payment Assistance

Home Ownership Program: The program will issue a repayable loan of 40% of the purchase price of the established unit. If you’re building a new home, you can qualify for a repayable loan of up to $75,000.

Newfoundland Labrador Down Payment Assistance

Home Purchase Program (HPP): Grants of $3,000 go towards the down payment of a new home with a value of no more than $400,000 (including HST). It applies to newly constructed homes or existing new homes that have not previously been occupied or sold. The grants will be available to the first 300 qualifying buyers up until March 31, 2019.

Nova Scotia Down Payment Assistance

Down Payment Assistance Program: Established on May 1, 2017, this Nova Scotian pilot program will run until March 31, 2019, and offers an interest-free repayable loan of up to 5% of the home’s purchase price. Payments may be waived in the first year.

Prince Edward Island Down Payment Assistance

Down Payment Assistance Program: PEI Applicants can qualify for a conditionally interest-free loan of up to 5% of the home’s purchase price, to a maximum of $11,250. The money must only be used towards home down payments and not to pay for other purchase-related costs such as financing and closing.

Quebec Down Payment Assistance

AccèsCondos: A financial assistance tool to help residents looking to buy an affordable condo in Montreal. In return for a deposit of $1,000, the SHDM (Montreal’s housing development authority) will advance a percentage of the sale price of one of the condo units accredited by their organization to be used towards the down payment.

It is likely that there are other programs available not listed above. If you do not see your province included in this list, contact the local government to learn more about what programs are available. Program status and availability can change quickly, particularly as quotas are reached, so it is advisable to do your research and contact local governments directly for the most up-to-date program requirements and information.

Image of Lauren Sargent

Lauren Sargent

Lauren Sargent is a freelance writer and copywriter that specializes in real estate and issues that impact homeowners and property buyers.