First-time homebuyers in Ontario could soon see a major break on the cost of new homes. Premier Doug Ford’s government plans to spend $470 million over three years to fund a new rebate that would remove the eight per cent provincial portion of the harmonized sales tax (HST) for certain buyers.
According to the province’s fall economic statement, the government expects to spend $35 million this year, $190 million in 2026–27, and $245 million in 2027. The rebate will provide eligible buyers with up to an $80,000 discount on new homes priced under $1 million.
“In the face of tariffs and global economic uncertainty, it’s never been more important to make life more affordable for the hardworking people of Ontario,” said Peter Bethlenfalvy, minister of finance. “Through our proposed HST rebate on new homes for qualifying first-time home buyers, we are leading by example and saving families money on one of the biggest financial transactions of their lives.”
The program is intended to complement a similar federal offer, which would remove the entire five per cent from the federal portion of the HST. This means some first-time buyers could avoid paying the full 13 per cent HST on new homes entirely. The measure will apply to homes worth up to $1 million, with a phased-out rebate for properties priced between $1 million and $1.5 million.
It’s expected that the provincial government will follow the federal rebate phase-out plan. For example, at the federal level, a home valued at $1.25 million would be eligible for a 50 per cent federal goods and services tax (GST) rebate. This cost reduction could add up to savings of up to $25,000.
The discount will only be available to those purchasing a new home as a primary residence. It is set to apply to buyers who signed a purchase agreement after May 27, 2025.
The Ontario Ministry of Finance has not estimated how many people will benefit from the rebate, saying the program’s funding was based on housing starts data. The government hopes the incentive will encourage builders to focus more on affordable starter homes priced at $1 million or less.
Bethlenfalvy said he expects the program to expand over time. Current funding would assist about 8,392 first-time homebuyers over three years, or roughly 2,700 annually. However, officials noted the $470 million figure represents a projection of total cost rather than a firm spending limit. If demand exceeds that estimate, additional funds could be unlocked.
What Ontario New Home Shoppers Should Do Now
- Track eligibility dates: The rebate applies to purchase agreements signed on or after May 27, 2025. Buyers should plan their timelines accordingly.
- Stay below the price threshold: Maximum savings apply to homes under $1 million. Consider options in that range to maximize the rebate.
- Work with builders: Ask developers whether their projects qualify for the HST rebate and if pricing reflects the provincial discount.
- Watch for updates: The government may adjust the program as it rolls out, so buyers should follow announcements closely.
- Prepare financially: Even with rebates, upfront costs and mortgage qualifications remain challenging. Budget accordingly.
The Bottom Line
Ontario’s new HST rebate could open the door for thousands of first-time buyers, particularly those eyeing new homes under $1 million. The incentive may also push builders to focus more on affordable housing, shaping the future of Ontario’s new home market.
