Ottawa pushes for policy changes to boost first-time homeownership

A real estate sold sign is shown in Oakville, Ont. THE CANADIAN PRESS/Richard Buchan

The federal government is moving forward with policies aimed at assisting first-time home buyers in the New Year.

Prime Minister Mark Carney’s government plans to help through a combination of tax cuts, expanded withdrawal limits and continue with increased mortgage amortization periods.

The measures are designed to provide significant financial relief on monthly payments and upfront costs to make homeownership more accessible for Canadians in 2026 and beyond.

The new rules proposed

Ottawa plans to eliminate the Goods and Services Tax (GST) for first-time buyers on newly constructed homes valued up to $1 million. The government says it could save buyers as much as $50,000.

The Liberals wants to increase the withdrawal limit for the Home Buyer’s Plan (HBP) from $35,000 to $60,000 enabling first-time buyers access to a larger, tax-free sum from their Registered Retirement Savings Plans (RRSP) for a down payment.

The moves follow the implementation of expanded mortgage amortization rules that allowed first-time buyers of newly constructed homes the option to opt for an insured mortgage with an amortization period of up to 30 years, an increase from the 25-year limit, which the government said will lower monthly payments.

Impact of tax incentives

Phil Soper, CEO of Royal LePage acknowledged the immediate benefit of tax cuts as proposed in Budget 2025 and said it could get people in the housing market.

“They can be helpful and get people off the fence and into the market at a time when house prices are stable and not going places quickly,” Soper told BNN Bloomberg in an interview.

Justin Herlick, CEO and co-founder of Pine is encouraged to see relief from the government.

“I’m happy they’re doing this,” said Herlick. “They’re making it easier for first-time homebuyers to get into newly constructed properties, which is a good first step.”

He said the average age of a homeowner is increasing because people can’t enter the market.

Pine is a digital mortgage lender offering a homeownership platform with online applications. It surpassed $1 billion of mortgages under administration.

Will it be enough?

Though Herlick likes the tax breaks, he said the government needs to make more affordable houses suitable for first-time home buyers.

“The kind of property price to income ratio keeps going up,” said Herlick. “Property prices have been going up way faster than income is going up.”

The national average home price was around $690,195 with prices in the Greater Toronto Area averaging over $1 million as of late 2025.

Soper said the incentives can help in the current housing market but cautious about the long-term impact on the overall market if prices grow.

“If we move out of a dip in the housing cycle into a growth cycle... you could be incentivizing people to get into a market where there is more demand than supply, causing home prices to rise more rapidly than the benefit you’re providing them,” said Soper.

He stresses true affordability hinges on increasing supply, particularly of medium-density and ground-oriented homes.

Government action and market realities

The Carney administration announced Build Canada Homes, a new federal agency to double the pace of housing construction over the past decade.

The government further said it plans to spend $25 billion on new housing over the next five years to boost supply, build affordable units and support prefabricated housing.

The Canada Mortgage and Housing Corporation (CMHC) estimates Canada needs to build 430,000 to 480,000 new housing units annually over the next decade to bring housing affordability back to 2019 levels.

The Parliamentary Budget Office meanwhile said the government has not provided a clear plan to achieve the goal or what types of homes would be built.

“It’s a very hard environment for first-time home buyers,” said Herlick. “Even though there’s these tools that are helping them, the prices have gone up more than they can afford.”