Fédéral Homebuyer Assistance Programs | Canadian Broker Guide

Q: How much can you withdraw from an RRSP under the HBP?

Since the 2024 fédéral budget, the Home Buyers' Plan (HBP) limit has been increased to $60,000 per person ($120,000 for a couple). The withdrawal is non-taxable provided the amount is repaid into the RRSP over a 15-year period, in equal annual payments beginning the second year after the withdrawal.

Q: What is the FHSA and how does it work?

The First Home Savings Account (FHSA) is a registered account launched in April 2023. Contributions are tax-deductible (like an RRSP) and withdrawals for a first home purchase are tax-free (like a TFSA). The maximum is $8,000 per year and $40,000 lifetime. The account must be used within 15 years of opening.

Q: Can you combine the HBP and FHSA?

Yes. A first-time buyer can use both the HBP (up to $60,000 from RRSP) and the FHSA (up to $40,000), for a potential total of $100,000 per person or $200,000 for a couple. This is a powerful strategy that brokers should present to their clients.

Q: Does the First-Time Home Buyer Incentive still exist?

No. The First-Time Home Buyer Incentive (FTHBI), also known as the shared-equity program with CMHC, was discontinued on March 21, 2024. The program had low uptake due to overly restrictive eligibility criteria and insufficient price caps for urban markets.

Q: What is the first-time home buyer tax credit?

The First-Time Home Buyers' Tax Credit is a non-refundable fédéral credit of $10,000, resulting in tax savings of approximately $1,500 (15% of $10,000). It is available to buyers who have not owned a home in the four years preceding the purchase.

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Fédéral Homeownership Assistance Programs

Homeownership is a fundamental goal for many Canadians, and the fédéral government offers several programs to facilitate this process. For mortgage brokers in Quebec, in-depth knowledge of these programs is a major competitive advantage that allows them to propose optimized solutions for every first-time buyer client.

The Home Buyers' Plan (HBP)

The HBP, administered by the CRA under section 146.01 of the Income Tax Act, allows a first-time buyer to withdraw up to $60,000 from their RRSP without tax consequences to finance a home purchase. The limit was increased from $35,000 to $60,000 in the 2024 fédéral budget. For a couple, the combined maximum withdrawal reaches $120,000. The borrower must repay the amount into their RRSP over 15 years, in equal annual payments beginning the second calendar year following the withdrawal. Any missed payment is added to taxable income for that year.

The First Home Savings Account (FHSA)

Launched in April 2023, the FHSA is a hybrid savings tool that combines the advantages of an RRSP (tax deduction on contribution) and a TFSA (tax-free withdrawal). The holder can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Unused contribution room can be carried forward to the following year, up to $8,000. The FHSA must be used for the purchase of a qualifying first home within 15 years of opening. If the account is not used, funds can be transferred to an RRSP without affecting RRSP contribution room.

First-Time Home Buyers' Tax Credit

This non-refundable credit of $10,000 provides fédéral tax savings of $1,500 (15% x $10,000) to first-time home buyers. To be eligible, the buyer must not have owned a home in the four years preceding the purchase. The credit can be shared between spouses, but the total cannot exceed $10,000. It is claimed on the tax return for the year of purchase.

The First-Time Home Buyer Incentive: A Discontinued Program

The First-Time Home Buyer Incentive (FTHBI) was a shared-equity program administered by CMHC. The government offered 5% or 10% of the purchase price as an equity stake, in exchange for a proportional repayment at market value at the time of sale or after 25 years. The program was discontinued on March 21, 2024, primarily due to low uptake. Price caps (between $505,000 and $722,000 depending on the region) were insufficient for urban markets like Montreal and Toronto, and the repayment conditions were considered complex and disadvantageous.

The Broker's Role in Optimizing Programs

The mortgage broker plays a key role in articulating these programs. By analyzing each first-time buyer client's situation, they can develop a financing plan that maximizes available resources: early opening of an FHSA to accumulate savings, planning the HBP withdrawal based on purchase timeline, and integrating the tax credit into overall financial planning. Brokers should also be aware of Quebec provincial programs that supplement fédéral measures, including the provincial first-time buyer tax credit and municipal programs in certain cities.

Complementary Provincial Programs in Quebec

In addition to fédéral programs, Quebec offers provincial measures that add to first-time buyer advantages. The Quebec refundable tax credit for first-time home purchase provides up to $1,500 (base amount of $5,000 x provincial rate). The welcome tax (land transfer duties) is subject to exemptions in certain municipalities for first-time buyers or specific types of transfers. Some Quebec municipalities also offer local assistance programs, such as down payment grants or partial transfer duty refunds. The well-informed mortgage broker knows these programs and integrates them into the overall financial planning of each first-time buyer client, maximizing available resources and demonstrating significant added value in the purchase process.

Brokers should maintain an updated database of municipal programs available in their practice area. Cities like Montreal, Quebec City, Laval, and Longueuil have specific programs that can represent significant savings for first-time buyers. The optimal combination of all available programs (fédéral, provincial, and municipal) can represent a total financial advantage of $5,000 to $15,000 or more, not counting the recurring tax savings from the FHSA.

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Federal Assistance Programs