By Mohsin Lakhani · Benson Crew Real Estate, REAL Broker Ontario Ltd., Brokerage
If you've already maxed out your First Home Savings Account, you're not out of options. Ontario's temporary HST rebate on new construction — confirmed in the 2026 provincial budget — can be layered on top of your FHSA, the RRSP Home Buyers' Plan, and Toronto's land transfer tax refund. Used together, a first-time buyer purchasing new construction in the city could realistically be looking at well over $100,000 in combined savings and rebates.
Here's how the pieces fit together, and where I've seen buyers trip up.
Affordability is still the number one conversation I have with buyers in this city. A late-2025 Toronto Life/CityNews poll found that three-quarters of Toronto-area renters believe they'll never own a home, and most rated affordable housing access as poor. That's a sobering number — but it doesn't match what I'm actually seeing at the closing table.
CMHC's 2025 Mortgage Consumer Survey shows first-time buyers made up 12% of the national mortgage market last year, up from 10% the year before, and that share is trending toward buyers in their mid-30s and older as savings timelines stretch out. Family help is playing a bigger role, too: CIBC's mortgage data shows about a third of first-time buyers got a financial gift from family in 2024, averaging roughly $115,000 nationally — and Ontario buyers received even more, averaging around $128,000, a jump of over 50% in five years.
Against that backdrop, it makes sense that the FHSA has become a standard part of how people buy here. CMHC's survey found the large majority of first-time buyers already know about the FHSA, and more than a third used it directly toward their down payment.
The FHSA pairs an RRSP-style tax deduction with TFSA-style tax-free withdrawals. To open one, you need to be a Canadian resident aged 18 to 71 who qualifies as a first-time buyer — meaning neither you nor your spouse or common-law partner has owned and lived in a home as a principal residence in the current calendar year or the four before it.
By the end of 2023, CRA figures put total FHSA holdings at roughly $2.79 billion across around 739,000 accounts; industry estimates had that climbing toward the one-million-account mark by the end of 2024. The tax benefit scales with your income — someone at a 40% marginal rate saves roughly $3,200 by contributing the full $8,000, while someone at 20% saves about $1,600. If you're early in your career, it's often worth contributing now and claiming the deduction in a higher-earning year later.
If you end up not buying, the funds can move tax-free into an RRSP or RRIF within 15 years, without eating into your existing RRSP room.
This is where a lot of buyers get confused, because "the HST rebate" actually refers to three separate programs that can apply depending on what and when you buy.
| Program | Who qualifies | Maximum benefit |
|---|---|---|
| Legacy new housing rebate | Any new-construction buyer | Federal: 36% of GST paid, capped at $6,300 (phases out $350K–$450K). Ontario: 75% of the provincial HST portion, up to $24,000, no price cap |
| First-Time Home Buyers' GST/HST rebate | First-time buyers of new construction | Eliminates 5% GST on homes up to $1M, phasing out to $1.5M. Federal max $50,000 + Ontario match up to $80,000 |
| 2026 expanded HST rebate | All buyers, including move-up buyers and investors, on eligible agreements | Covers the full 13% HST on new homes up to $1M |
That third program is the newest and broadest. Confirmed in the 2026 Ontario Budget, it applies to purchase agreements signed between April 1, 2026 and March 31, 2027 — and unlike the first-time buyer rebate, you don't need to be a first-time buyer to use it.
For a single first-time buyer, combining the FHSA's $40,000 lifetime limit with the RRSP Home Buyers' Plan — which allows a tax-free withdrawal of up to $60,000, repayable over 15 years — creates a $100,000 pool of tax-advantaged funds toward a purchase. A couple who both max out these programs can access up to $200,000 combined.
On top of that, Toronto first-time buyers can claim Ontario's land transfer tax refund (up to $4,000) alongside the city's municipal rebate (up to $4,475) — up to $8,475 in combined savings on closing costs alone. See the full breakdown of how that rebate works →
I'd rather flag these now than have a client find out at the closing table.
Builders aren't always crediting the rebate upfront. With CRA paperwork for the new rebate still catching up as of mid-2026, many builders are choosing not to apply the rebate at closing — partly to avoid the cash-flow hit, partly to avoid liability if a buyer later turns out ineligible. If that happens, you pay full HST at closing and apply to the CRA afterward yourself using Form GST190. Budget for this possibility.
Lenders won't count the rebate as part of your down payment. Down payment funds generally need to sit in your account, "seasoned," for 90 days before closing. An expected rebate doesn't meet that bar.
Construction timing matters. To qualify for the expanded 2026 rebate, construction has to start by December 31, 2028 and be substantially complete by December 31, 2031. Miss those dates and you fall back to the legacy $24,000 rebate — a gap that can run past $100,000 on a higher-priced home.
Residency rules are real. You (or a close family member) generally need to move in within a year of closing and live there for at least 12 months, or you risk having to repay the full rebate. Buying purely as a long-term rental investment routes you to a different program — the New Residential Rental Property Rebate, which requires a signed one-year lease.
The stress test hasn't moved. OSFI confirmed in early 2026 that the minimum qualifying rate for uninsured mortgages is still the greater of your contract rate plus 2%, or 5.25%. These rebates lower your upfront costs — they don't change what you need to qualify for.
Yes. They're separate programs and can be combined, giving a single buyer access to up to $100,000 in tax-advantaged funds toward a purchase.
No — that's what makes it different from the earlier First-Time Home Buyers' GST/HST rebate. The 2026 program is open to move-up buyers and investors as well, on new-construction agreements signed between April 1, 2026 and March 31, 2027.
Not always. Some builders aren't crediting it upfront right now, which means you may need to pay the HST and apply to the CRA for reimbursement afterward. Confirm this with the builder before you sign.
Not directly. It reduces your upfront cost, but lenders still apply the mortgage stress test, and they won't count an anticipated rebate toward your required down payment.
Market stats and program details above are sourced from CMHC, CRA, CIBC, OSFI, and the 2026 Ontario Budget as of July 2026, and are subject to change. This is general information, not tax or financial advice — talk to your mortgage professional and accountant about how these programs apply to your specific situation before you sign anything.