This recent measure fully eliminates the federal GST on newly built homes — exclusively for first-time buyers.
From March 2025, eligible first-time buyers get an even bigger break. Here’s what changed, how far back it reaches, and why it matters for first-home affordability.
Ottawa’s recent GST rebate top-up helps to move first-time buyers to the front of the line for a brand-new home (from detached houses to condos).
Passed into law in March 2026, but retroactive to March 20, 2025, this federal government program eliminates the 5% GST closing cost for qualifying first-time buyers of new builds — from detached houses to condos. The savings can be significant:
For first-time buyers already stretching to cover a down payment and closing costs, removing the GST from the equation helps make homeownership more achievable and, ideally, gives new-home construction activity a good nudge.
When buying a new home, unless the builder's advertised price includes or mentions GST, many buyers get sticker shock when they realize they often have to pay GST in cash at closing. It's essentially an expensive closing cost that can't be rolled into your mortgage.
For years, the older GST/HST New Housing Rebate, which applied to all buyers of newly built homes, capped out at $6,300 for GST (with the provincial HST rebate portion varying by provinces that use this combined tax). This threshold was far below today's average home prices, especially in more expensive city centres like Vancouver and Toronto.
With access to savings of up to $50,000, this federal GST rebate can make more new homes financially accessible to first-time buyers, helping more of them break the rent cycle or afford a home closer to where they work.
For builders, a demand spark in the home construction sector can help move inventory, restore market confidence, and keep projects viable in areas where supply growth has been slow to start.
Typically, the GST rebate doesn't reduce the new home's price upfront but reduces the final amount owed — or provides a tidy sum back in a crisp cheque (or directly deposited amount) from the CRA (Canada Revenue Agency).
Builder-applied rebate (most common). For new homes bought directly from a builder, the rebate is usually applied at closing. You pay the net amount (minus the rebate), and the builder claims it from the government after your purchase finalizes.
Buyer-claimed rebate. If you build your own home (or hire a contractor to do it) and you pay the GST in full, you would then submit a rebate claim to the CRA once your home is substantially complete.
Either way, the rebate process eventually ensures your savings.
No, the GST rebate doesn't help with the down payment itself. Your down payment is calculated on the purchase price (pre-tax), so you'll still need to come up with that full amount regardless of the rebate.
Because the rebate isn't guaranteed until the CRA approves it, lenders won't treat it as an asset for down payment purposes, even with a builder credit. Down payment funds typically need to be verified and 'seasoned' (sitting in your account for 30-90 days), and a rebate you haven't received yet doesn't qualify.
To claim the rebate as a first-time home buyer, you (or your spouse or common-law partner) must:
To be eligible for this (new) rebate, your home purchase agreement must be signed on or after March 20, 2025.
In addition to qualifying as a first-time home buyer, you're eligible if you:
Resale homes don't qualify — they're exempt from GST, so there's no tax to rebate.
| Program | Type | Applies to | Max Benefit |
|---|---|---|---|
| GST Rebate | Rebate on purchase | New homes only (first-timers) | Up to 5%, depending on home price (≈ $50K) |
| FTHB Tax Credit | Non-refundable tax credit | New or resale homes (first-timers) | $1,500 in tax savings |
Housing and builder groups, including the Canadian Home Builders’ Association, are pressing Ottawa to broaden the rebate beyond first-time buyers or, at the least, increase the full rebate limit in expensive markets, like Greater Toronto and Greater Vancouver, to $1.5M (scaling the rebate up to $2.0M).
For now, however, this rebate program focuses on helping new buyers enter the real estate market — perhaps this policy will evolve if affordability and housing construction challenges persist.
From rebates to better rates and mortgage options, our expert brokers know how to line up every savings opportunity to help first-time buyers get their foot in the real estate door.
Get a rough idea of your home affordability with our calculator below.
Then, apply or talk to us (in your preferred language) today — we’ll walk you through what you can qualify for and help you find the lowest rate and flexible mortgage options to turn your dream home into reality.
As a first-time, new-build buyer, if you're applying for an insured mortgage (required when putting less than 20% down), the down payment can't be borrowed. It needs to come from your own saved funds, a gift, or other approved sources.
Uninsured mortgages (20% down or more) have more flexible rules surrounding down payments. However, the borrowed amount can work against your mortgage qualifying ratios.
If you apply for the GST rebate money from the CRA (Canada Revenue Agency) after closing, you can use the funds to pay down the mortgage principal (according to your prepayment privileges) or replenish your savings.
If the builder applied the credit upon purchase, the GST cash you need to supply at closing is eliminated or significantly reduced.
GST (Goods and Services Tax) is a federal tax applied to most goods and services in Canada.
HST (Harmonized Sales Tax) combines the federal GST with a provincial sales tax into a single tax, used in Ontario, New Brunswick, Nova Scotia, Newfoundland & Labrador, and PEI and several other provinces. In Ontario, the provincial portion is 8%, resulting in a combined HST rate of 13%.
According to Bill C-4, it's a straight-line reduction — for every $100,000 increase in price above $1M, the rebate is reduced by $10,000. At $1.5M, it hits zero exactly.
Get the best start and save a pile of cash with our mortgage experts.
This federal tax credit program can help with your first-timer costs.
When buying a newly built home, insured mortgages can measure out 30 years (instead of 25).
