New-home rebates can reach $130,000, but will the money be there at closing?

The real estate market may be sluggish these days, but some first-time buyers are happy to be entering this market rather than the more competitive one we experienced a few years ago. New builds are getting particular attention, and the new GST/HST rebates are part of the attraction.

A couple of recent clients peppered me with questions about the rebates. I quickly realized I had some homework to do.

An eligible first-time buyer can recover up to $50,000 of the GST, or federal portion of the HST, on a new home priced at $1 million or less. In Ontario, up to another $80,000 in provincial relief may be available, bringing the maximum potential combined tax relief to $130,000.

But for mortgage professionals, the important question is not simply whether the buyer qualifies. It is whether that rebate is available when the buyer needs the money to close. A buyer can qualify for a large rebate and still have to produce that money on closing day.

The federal rebate: Up to $50,000

For eligible homes priced at $1 million or less, the federal rebate covers 100% of the GST or federal portion of the HST, to a maximum of $50,000.

Between $1 million and $1.5 million, the rebate declines proportionately. CRA’s example shows a $25,000 rebate on a home priced at $1.25 million. At $1.5 million or more, there is no federal first-time buyer rebate.

For a home and land purchased from a builder, the agreement of purchase and sale generally must be entered into on or after March 20, 2025, and before 2031. Construction or substantial renovation must begin before 2031, and the home must be substantially completed and ownership transferred before 2036.

Who qualifies as a first-time buyer?

For a builder purchase, first-time buyer status is assessed when ownership transfers. The buyer must be at least 18 and a Canadian citizen or permanent resident. They must not have lived in a home owned by them, their spouse or common-law partner, in Canada or elsewhere, as their primary residence at any time in that calendar year or the previous four calendar years.

Neither the buyer nor their spouse or common-law partner can have previously received the federal first-time home buyers’ GST/HST rebate. The new home must also be purchased for use as the buyer’s primary residence, and the buyer must be the first individual to occupy it as a residence after construction or substantial renovation is substantially completed.

What about the provinces?

In Ontario, eligible buyers may receive up to $80,000 in relief against the provincial portion of the HST.

Other provinces have separate programs, including Nova Scotia’s rebate of up to $3,000, Quebec’s QST rebate and Saskatchewan’s PST rebate, each with its own eligibility requirements. B.C.’s Newly Built Home Exemption provides property transfer tax relief rather than a GST or PST rebate.

Ontario has proposed a separate first-time buyer rebate covering the full 8% provincial portion of the HST, up to $80,000, with eligibility conditions and an agreement window aligned with the federal rebate. Combined with the federal maximum, that would provide up to $130,000 in tax relief.

Ontario also has a temporary Enhanced New Housing Rebate, or ENHR, available to eligible buyers whether or not they are first-time purchasers. Together with the existing Ontario New Housing Rebate, it can provide up to $80,000 in provincial HST relief. Eligible buyers may also receive up to $50,000 through the Ontario New Home Affordability Payment, or ONHAP, to offset the federal portion of the HST.

ONHAP is reduced by any federal New Housing Rebate or federal first-time home buyers’ GST/HST rebate the purchaser is entitled to receive. It is not an extra $50,000 on top of a full federal first-time buyer rebate.

For this temporary Ontario program, the agreement generally must be signed between April 1, 2026, and March 31, 2027. That deadline does not apply to the proposed separate first-time buyer rebate.

Together with the existing Ontario New Housing Rebate, the ENHR provides full relief of Ontario’s provincial HST up to $1 million and a flat $80,000 of combined relief above $1 million to $1.5 million. Relief declines above that, with only the existing rebate of up to $24,000 available at $1.85 million or more.

Where the rebate becomes a mortgage issue

Sometimes the builder credits the rebate and the benefit is already reflected in the closing numbers. Sometimes the buyer has to claim it later.

Consider two Ontario buyers each entitled to an $80,000 rebate. One has it credited by the builder. The other has to cover that amount at closing and wait to get it back. A future rebate is not cash on hand.

Do not automatically treat a rebate credited at closing as part of the buyer’s down payment. Lender and mortgage insurer treatment matters. Sagen’s current underwriting guidance says that where the borrower assigns the GST/HST rebate to the builder, the purchase price submitted for mortgage purposes is the purchase price net of the rebate.

So the rebate may reduce the purchase price and cash required to close without necessarily becoming part of the buyer’s equity. On an insured file, I would confirm the treatment with the lender and mortgage insurer before structuring the deal. Conventional lenders may also have their own approach.

Questions worth asking

• Which rebate is the purchaser expecting?
• Does the purchase agreement date fit the program?
• Is the rebate already reflected in the builder’s price?
• Will the builder credit it, or must the buyer claim afterwards?
• How much cash is actually required at closing?
• How will the lender or mortgage insurer treat it for down payment and LTV purposes?
• Does the financing still work if the rebate is delayed or denied?

Mortgage brokers can identify the issue, but where there is uncertainty, eligibility should be confirmed with a real estate lawyer or qualified tax adviser.

CRA advises applicants to anticipate 120 days for processing, and that is not a guaranteed payment date. Claims may be audited, with a possible additional delay of up to six months.

CRA has also said it expects to begin processing ENHR claims once the necessary system changes are implemented in fall 2026. Ontario issues ONHAP separately after CRA assesses the claim. If the builder is not crediting the rebate, make sure the deal can close without it.

The takeaway

These rebates can be worth a lot of money, potentially as much as $130,000 in Ontario. But for us, the important question is not just whether the client qualifies. It is whether that money is actually available when they need it to close.

We should understand enough to spot the issue early, confirm how the builder, lender and mortgage insurer will treat the rebate, and make sure the financing still works.

Mortgage brokers should not be the final word on eligibility; if there is any uncertainty, I would have the client confirm their position with a real estate lawyer. Do not treat an expected rebate as cash, or as part of the buyer’s down payment, until you know exactly how the transaction is being handled.

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Last modified: October 5, 2026