Not all “first-time buyers” are created equal. Here’s how the rules differ across Canada’s most-used programs.
If you’ve been poking around the idea of buying your first home in Canada, you’ve probably noticed that “first-time homebuyer” doesn’t always mean what you think it does. Different programs, federal and provincial, define it in different ways, and that can make things confusing fast.
We work with a lot of clients who get tripped up by this. Someone will tell me they’re a first-time homebuyer because they’ve never bought a home in Canada, only to discover their previous home in another country disqualifies them from a key benefit here. Or, on the flip side, someone who owned a condo years ago doesn’t realize they might still qualify for certain first-time buyer programs again under the right circumstances.
So let’s break it down. Here’s how “first-time homebuyer” is defined across three major programs Canadians often rely on: the Ontario Land Transfer Tax Rebate, the RRSP Home Buyers’ Plan (HBP), and the First Home Savings Account (FHSA).
How does Ontario define a first-time homebuyer for the land transfer tax rebate?
If you’re buying property in Ontario, the land transfer tax (LTT) rebate is probably the first program you’ll hear about. It can save you up to $4,000 on the provincial land transfer tax, and another $4,475 on the Toronto municipal land transfer tax if you’re buying in the city.
But the eligibility rules here are strict.
The never-ever rule
To qualify:
- You must be at least 18 years old
- You must have never owned a home or any interest in a home anywhere in the world
- You must live in the home as your principal residence within nine months of the purchase
- And, here’s the kicker, your spouse or common-law partner must also never have owned a home while you’ve been together
That last point trips up a lot of couples. If your partner owned a home before you got together, you’re in the clear. But if either of you owned a property while in a relationship with the other, even if it was overseas, you’re disqualified.
I’ve had to deliver that disappointing news more than once. It’s a harsh line, but that’s the rule.
Real estate lawyer Maria Berenbaum notes:
“The latest addition is that a purchaser must be either a Canadian Citizen or have Permanent Resident status. We had a file recently where spouses bought a house together- they are both first time homebuyers but she doesn’t have her PR yet so they got only half the rebate. Once she gets her papers she can apply for the rebate within 30 days of getting a confirmation of residency, very short window of opportunity.”
Maria went on to say she often hears comments like, “How would they know if I owned something back in X? The answer is all government agencies are inter-connected. Therefore, when they are applying for immigration and put in their application that they owned a home back home, it may trigger a re-assessment, together with penalties.”
How does the RRSP Home Buyers’ Plan define a first-time homebuyer?
The HBP is a popular option for buyers who want to tap into their RRSP savings, up to $60,000 per couple, to help with a down payment.
Thankfully, this program is more forgiving than the LTT rebate.
The four-year look-back rule
To qualify:
- You must not have lived in a home that you (or your spouse/common-law partner) owned in the current year or the four preceding calendar years
- You need a signed agreement to buy or build a qualifying home
- You must intend to make that home your principal residence within one year
- You must be a resident of Canada at the time of the withdrawal and when you buy the home
So yes, you can technically qualify again even if you’ve owned property before. As long as you (and your current spouse or partner) haven’t lived in an owned home in that four-year window, you may still be eligible.
I call this the “fresh start” clause. It’s particularly useful for people who sold a home years ago and have been renting since.
How does the First Home Savings Account define a first-time homebuyer?
The FHSA is the new kid on the block, and honestly, it’s a game-changer. It combines the tax perks of an RRSP and a TFSA, and lets you contribute up to $40,000 toward your first home purchase.
Similar to HBP, but tied to ownership and occupancy
To open and use an FHSA:
- You must be between 18 and 71 years old and a Canadian resident
- You must not have owned or jointly owned, or lived in, a qualifying home in the calendar year before you open the FHSA or during the previous four calendar years
- This rule also considers property owned by your spouse or common-law partner that you lived in
The FHSA’s definition of a first-time homebuyer is almost identical to the HBP’s, but there’s one nuance: the timing starts before the account is opened. That means you have to meet the definition at the time you open the FHSA, not just when you use it.
This is crucial. We tell our clients: if you’re even thinking about buying your first home in the next few years, open your FHSA sooner rather than later, even with a minimal contribution, to start that eligibility clock.
How do the definitions compare?
Let’s stack them side by side so you can see where things align, and where they don’t.
| Program | Never Owned Anywhere | Four-Year Lookback | Spouse/Partner Ownership Included | Notable restriction |
| LTT Rebate (ON) | Yes | No | Yes | Ever owned (anywhere) = disqualified |
| HBP (RRSP) | No | Yes | Yes | 4-year rule based on occupancy |
| FHSA | No | Yes | Yes | 4-year rule based on ownership + occupancy |
The key takeaway? The LTT rebate is the strictest. HBP and FHSA are more flexible, especially if you’ve taken a break from homeownership or recently separated from a partner who had a home.
Our advice
Don’t assume you are (or aren’t) a first-time buyer until we really look at the details. Each program plays by its own rules, and timing, relationship history, and past ownership all matter.
Here’s what we recommend:
- Talk to a mortgage expert early: They can walk you through each of these definitions based on your personal history
- Open your FHSA early if there’s any chance you’ll buy in the next few years. You’ll be glad you did
- Be honest with yourself (and your partner) about your ownership history, even that vacation property from 15 years ago might count
- Don’t leave money on the table. We’ve seen clients qualify for benefits they didn’t know they were entitled to, and others miss out because they made assumptions
Does first-time buyer status matter for mortgage purposes?
Actually, for an insured mortgage, it can matter if you are a first time homebuyer.
Repeat buyers are eligible for a 30-year amortization with mortgage insurance only when purchasing newly built homes.
First-time homebuyers are eligible regardless of whether they are buying a new or resale home.
Repeat buyers purchasing resale (existing) homes are not eligible for a 30-year amortization with mortgage insurance—the maximum remains 25 years in these cases.
Whether you’re buying your very first home or just your first in a while, knowing which programs you qualify for can save you thousands, and make your homeownership journey much smoother.
