In order to meet the requirements of being a first-time homebuyer in Canada, you must satisfy the following conditions outlined in the Income Tax Act:

• You must be a Canadian resident at the time of withdrawing funds from a registered government plan for the purpose of purchasing your first home.
• You should not have resided in a home that you owned, jointly owned, or that was owned by your spouse or common-law partner during the current calendar year or the preceding four calendar years.
• However, if your marriage or common-law relationship ends and you have lived separately from your former partner for a minimum of 90 days, you may regain your first-time homebuyer status, unless you begin residing in a new primary residence with a new spouse or common-law partner within that timeframe.

The required down payment for a home purchase is not influenced by your status as a first-time homebuyer. However, in Canada, homebuyers are obligated to have a minimum percentage of the home’s purchase price available. The specific amount varies based on the cost of the home:

• If the purchase price is below $500,000, the minimum down payment is 5%.
• If the purchase price falls between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000 and 10% of any amount exceeding $500,000.
• If the purchase price is $1,000,000 or higher, the minimum down payment required is 20%.

The Canadian government provides the First-Time Home Buyer Incentive (FTHBI), a program designed to assist first-time homebuyers by increasing their down payments. Through the FTHBI, eligible individuals can obtain an interest-free loan ranging from 5% to 10% of the total home cost. This loan must be repaid within 25 years or upon selling the home, whichever occurs earlier. In return, the government shares in the equity accumulated in the property, resulting in a higher repayment if the home appreciates in value, or a lower repayment if it depreciates, with a maximum annual gain or loss capped at 8%.

Under the RRSP Home Buyers’ Plan (HBP), individuals saving for a home purchase can contribute an amount equal to 18% of their previous year’s income or the maximum RRSP contribution limit for the current year, whichever is greater. However, participants of the HBP are limited to a maximum withdrawal of $35,000 to be utilized for their home purchase.

Since the First Home Savings Account (FHSA) is a recently introduced product that debuted on April 1, 2023, several financial institutions in Canada are in the process of incorporating it into their range of offerings. Presently, the FHSA is available through Questrade, Royal Bank of Canada, and National Bank of Canada.

The First Home Savings Account is a government program aimed at assisting first-time homebuyers in saving for a down payment. Individuals can contribute a maximum of $8,000 per year into their FHSA, with a lifetime limit of $40,000. Withdrawals from the account are not limited, allowing tax-free access to any accumulated income. In the case of multiple first-time buyers saving for a home purchase together, each partner is eligible for an FHSA, and the combined contribution limit is $80,000.