If you are a first-time home buyer in Ontario, 2026 is shaping up to be the “Year of the Strategic Buyer.” According to the TRREB December 2025 Market Watch, the average GTA home price has adjusted to $1,006,735, a 5.1% decrease from the previous year. With the Bank of Canada overnight rate at 2.3% and inflation stabilized at 2.2%, the market is finally offering some breathing room.
However, the real secret to affordability isn’t just finding the lowest mortgage rates in Canada; it’s stacking the government incentives that can save you over $60,000 upfront.
The FHSA: Your Tax-Free Secret Weapon
The First Home Savings Account (FHSA) is the most powerful tool in your belt. In 2026, you can contribute up to $8,000 per year (up to a $40,000 lifetime limit).
- Tax-Free Entry: Your contributions reduce your taxable income, much like an RRSP.
- Tax-Free Exit: Unlike an RRSP, you don’t pay a cent of tax on the money (or the investment growth) when you withdraw it to buy your home.
- Carry-Forward: If you opened your account in 2025 but didn’t max it out, you can carry forward up to $8,000 in unused room, potentially allowing for a $16,000 contribution in 2026.
The $60,000 RRSP Power Move (HBP)
The Home Buyers’ Plan (HBP) now allows you to withdraw up to $60,000 from your RRSP tax-free to use toward your down payment.
- Repayment: You have 15 years to pay it back into your RRSP.
- Important Note for 2026: While buyers who withdrew between 2022 and 2025 enjoyed a 5-year grace period, 2026 buyers must typically begin repayments in the second year following their withdrawal.
- Combined Power: You can use both the FHSA and the HBP together, putting over $100,000 toward your home before even looking at a personal loan in Canada.
The New Build “GST Exemption” (Up to $50,000 Savings)
If you are looking at real estate investment in Toronto through a new-build condo or townhome, the 2025/2026 tax changes are massive. The federal government has moved to eliminate the 5% GST for first-time buyers on new homes valued up to $1 million.
- For a home between $1 million and $1.5 million, the GST is significantly reduced.
- On a $1.25 million home, this could mean a rebate of $25,000, with the maximum savings reaching $50,000.
Land Transfer Tax (LTT) Rebates: Saving $8,475
One of the most expensive closing costs is the Land Transfer Tax. As a first-time home buyer in Ontario, you are eligible for:
- Ontario Provincial Rebate: Up to $4,000.
- Toronto Municipal Rebate: Up to $4,475.
- Total Savings: In Toronto, you can save a combined $8,475.
Mortgage Strategy: 2026 Reality Check
With 5-year mortgage rates at 6.09% (as of late 2025), your choice of lender is critical.
- Consult a Mortgage Broker Toronto: Brokers can often access private mortgage lenders in Toronto who provide more competitive “B-lender” rates if you are self-employed or have a non-traditional income.
- Refinance mortgage Canada: Always plan for a “re-entry” strategy. If rates drop further in 2027, ensure your initial mortgage allows you to refinance without massive penalties.
- Insurance Warning: Don’t forget that as of July 1, 2026, Ontario auto insurance is changing. If you decline “Income Replacement” to save money, a car accident could leave you unable to pay your new mortgage. Consider speaking with a personal injury lawyer in Ontario to understand how to protect your assets from these new risks.
The Bottom Line
With a Sales-to-New-Listings Ratio of 33.4%, the GTA is currently a buyer’s market. Sellers are more likely to accept conditions, and with these incentives, you can protect your cash flow.
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