All thanks to the trade war uncertainties, the long road to recovery for the housing market just got longer. The Canadian Real Estate Association (CREA) reported that home sales fell by 10.4% annually in February 2025 while the average home prices dipped by 3.3%. However, according to real estate experts, this market pause is actually a golden opportunity for buyers like you. Not only are mortgage rates more affordable now, but home prices are also lower, and there’s less competition in the market. So, now could be a perfect time for you to become a homeowner by taking the help of a down payment assistance program. 

Below, we have answered the most common questions that home buyers usually ask about down payment assistance programs. Reading this will give you a clear understanding of these programs and how they can help you become a homeowner. 

Top Questions About First-Time Home Buyer Programs and Their Answers

Which down payment assistance program in Canada will be best for me?

This is a question that has no one-size-fits-all answer. That’s because each down payment assistance program in Canada has its own set of rules, benefits, and eligibility criteria. What might be the best program for one might not be the right fit for someone else. So, you must explore all the available options and choose one that fits your income, lifestyle, and home-buying goals the best.

That said, here are some down payment assistance programs that are especially popular among first-time home buyers in Canada –

• Government Down Payment Programs

1. Home-Buyer’s Plan (HBP)

This federal program lets you withdraw up to $60,000 from your Registered Retirement Savings Plan. The best part about HBP is you won’t be taxed on the withdrawn amount, as long as you pay it back over 15 years. 

2. Tax-Free First Home Savings Account (FHSA)

Launched in 2023, the FHSA lets you contribute up to $8,000 annually (to a maximum of $40,000) to save for your first home. Your contributions are tax-deductible, and you won’t pay taxes when you withdraw the money to buy a house. Best of all, you and your spouse can each contribute to your FHSA individually. So, as a couple, you can potentially save a combined $80,000 in FHSAs – a huge tax-free savings opportunity for your first home.

3. First-Time Home Buyers’ Tax Credit

This non-refundable tax credit program gives you up to $1,500 when you buy your first home. While this tax credit won’t directly cover your down payment, it can help offset closing costs like legal fees and land transfer tax.

• Private Down Payment Programs

1. Ourboro’s Co-Ownership Program

The Ourboro program helps first-time buyers by contributing around 5% to 15% of the home’s purchase price. In exchange, they become co-owners of your property – they get a share of any future appreciation (or depreciation).

2. Tonsto Down Payment Assistance Program

This real estate platform offers a down payment boost to help buyers get into a home sooner. This down payment assistance program gives you back 2% of the commission they charge for representing you during the buying process. With this down payment assistance, you won’t have to repay the money or share equity in your new home. 

What’s the biggest drawback of using down payment assistance?

The biggest drawback with many down payment assistance programs is that they often come with strings attached. In other words, there are conditions you have to meet. For example, a few programs require you to live in the home for specific years. Some programs also restrict the type of home you can buy or require you to repay the assistance immediately. So, always read the fine print of a down payment assistance program – ensure you fully understand your obligations before accepting the funds from the program.

Can I use the down payment assistance funds to pay for closing costs?

Yes – and no. It really depends on the down payment assistance program. 

Some first-time home buyer programs usually allow you to use the funds for down payment, closing costs, and other home-buying expenses. For instance, you can use the $1,500 tax credit from the First-Time Home Buyers’ Tax Credit to cover closing costs. However, the Country of Simcoe’s Homeownership Program specifies that you can use their provided money only for the down payment. 

What’s the typical wait time for down payment assistance?

Each down payment assistance program has its own approval and funding timeline. In general, government-backed programs tend to take longer because of a higher number of applications, extra paperwork, and multiple layers of approval. You may have to wait weeks – or even a couple of months – to get approved and receive your funds.

On the other hand, private down payment assistance programs like the Tonsto usually move faster. When you buy a home through a real estate agent partnered with their platform, you get a portion of their commission back as cash on closing day.

Is it possible to use the FHSA and the Home Buyer’s Plan together for the down payment?

Yes, you absolutely can! Here’s how that works: let’s say you have saved $60,000 in your RRSP and another $30,000 in your FHSA. You could use both ($90,000) toward your down payment without paying any income tax on those withdrawals. However, remember that you’ll still need to repay the amount withdrawn from your RRSP over the 15 years. The FHSA portion, however, does not need to be repaid.

Where can you open an FHSA?

Questrade was the first financial institution in Canada to offer an FHSA, starting April 1, 2023. Since then, more than 20 financial institutions, including the big six banks, have rolled out the FHSA.

Here are some financial institutions where you can open an FHSA right now –

Source – MoneySense.ca

Got More Questions About Down Payment Assistance?

That’s perfectly okay! Down payment programs come with many fine details, so it’s okay if you want to know more about them. The good news? You don’t have to figure it all out alone. An expert realtor can guide you through it all. The realtor can explain which programs you qualify for and guide you through the application process. Some down payment assistance initiatives even have expert realtors in their team to guide home buyers like you. 

So, ready to take the next step towards your new home? Search for the first-time home buyer programs in Canada and connect with an expert realtor today.