Quick answer — what a new build can save you
- Canadian new build homebuyers can save through three stackable channels: the federal GST/HST New Housing Rebate on tax paid at closing, provincial rebates (Ontario, British Columbia, and Quebec) that layer on top, and land transfer tax rebates for first-time buyers in Ontario, British Columbia, Prince Edward Island, and the City of Toronto.
- Combined, these programs can offset tens of thousands of dollars on a qualifying primary residence.
- Progress-draw mortgages let buyers finance pre-construction homes in stages, and mandatory new home warranty programs — Tarion in Ontario, HPO in British Columbia, GCR in Quebec, and NHWPA in Alberta — protect deposits and cover defects at no direct cost to the buyer.
- Eligibility rules, price ceilings, and application procedures vary by program and province.
Opening the door — why new build savings matter in 2026
For many Canadians, a new build home feels like a stretch. The sticker price on a pre-construction condo or freehold townhouse can look higher than a resale property on the same street, and the paperwork feels denser. Once the rebate stack is factored in — federal, provincial, and municipal — the real out-of-pocket number can shift meaningfully.
The 2025 federal budget signalled expanded rebate relief for first-time buyers of new homes, which has pushed new-build affordability up the search charts in 2026. Buyers are asking harder questions: is it actually cheaper to buy new once the rebates land? What has to happen at closing to claim them?
This guide answers those questions in plain English. It covers where the savings live, how the paperwork moves, and the mortgage mechanics that make pre-construction financing different from resale. Our why work with a broker page explains how independent brokers shop the whole market for you.
Quick Start — pick your path
Not every rebate applies to every buyer. Match your situation to one of these paths before diving into the mechanics.
You have never owned a home. All rebates on the table: federal GST/HST New Housing Rebate, provincial rebate, and LTT rebates in Ontario, BC, PEI, or the City of Toronto. FHSA and RRSP HBP can fund the deposit.
You have owned before. Federal and provincial New Housing Rebates may still apply if the new build is your primary residence. LTT first-time buyer rebates are typically off the table.
The new build will be rented, not lived in. The New Housing Rebate does not apply, but the New Residential Rental Property Rebate can — different rules and paperwork.
Our instant pre-approval certificate surfaces your borrowing range in minutes.
Where your savings come from — the rebate stack
Federal GST/HST New Housing Rebate
When you buy a new or substantially renovated home from a builder, GST or the federal portion of HST is charged. The Canada Revenue Agency (CRA) offers a partial rebate when the home is your primary residence. The rebate is tiered — it phases down as price rises, with a ceiling above which no rebate applies. Verify current thresholds with the CRA before signing.
Provincial rebates
Ontario offers a separate rebate on the provincial portion of HST, capped at a fixed dollar amount. British Columbia offers a rebate on its provincial portion. Quebec operates a distinct QST rebate through Revenu Québec, with notarial closing required on all Quebec transactions.
Land transfer tax rebates
Ontario and the City of Toronto offer LTT rebates for eligible first-time buyers — and Toronto’s rebate stacks on top of Ontario’s. British Columbia offers a Property Transfer Tax exemption. Prince Edward Island offers its own first-time buyer LTT rebate. Each has its own cap, income test, and residency requirement.
The rebates typically layer against the same purchase, provided eligibility is met and paperwork is filed correctly. Our down payment calculator can help you model your effective cash-to-close.
Pegasus Mortgage Lending
Where new build savings come from
Illustrative rebate stack — eligible first-time buyer, $700,000 new build in Ontario. Verify current program caps directly with the CRA and provincial regulators before signing.
Source: CRA GST/HST New Housing Rebate (RC4028); Ontario new housing rebate; Ontario LTT first-time buyer rebate; City of Toronto MLTT rebate. Illustrative figures — actual amounts depend on price, eligibility, and province. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.
New build vs. resale — side-by-side cost snapshot
New builds carry GST or HST at closing, which is not typical on used-home purchases. The federal and provincial New Housing Rebates offset a meaningful share of that tax but rarely erase it entirely on higher-priced homes. Development-charge adjustments — the builder passing on municipal levies for water, sewer, and parks — also land at closing.
Resale homes typically avoid GST/HST but carry their own frictions: bidding-war premiums, home-inspection costs new builds do not require, and older systems that may need replacement sooner. Land transfer tax applies to both, and first-time buyer LTT rebates are available on either.
New home warranty programs are mandatory on new builds and typically cost the buyer nothing directly. Our mortgage affordability calculator can help you model both scenarios side-by-side.
Pegasus Mortgage Lending
New build vs. resale — what changes at closing
Side-by-side view of where new construction and resale purchases carry different costs and paperwork at closing.
Source: CRA GST/HST guidance; provincial regulator pages (Ontario, BC, Quebec); Tarion, HPO, GCR, NHWPA program pages. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.
Roadmap — from deposit to closing keys
- 1Pre-approvalConfirm your borrowing range under the OSFI B-20 stress test — the greater of contract rate plus 2% or 5.25% — before you visit builder showrooms.
- 2APS and initial depositSign the Agreement of Purchase and Sale (APS) with the builder and pay the first tranche (typically 5%). This is where you assign your GST/HST rebate to the builder so the rebate is credited up front.
- 3Staged deposit tranchesBuilders often collect additional deposits at 30 days, 90 days, and at framing or occupancy on pre-construction contracts. Plan cash flow accordingly.
- 4Interim occupancy (Ontario high-rises)For a pre-construction condo in Ontario, you may take interim occupancy before the building registers. You pay an occupancy fee monthly — this is not a mortgage payment and does not build equity.
- 5Final closingTitle transfers, your mortgage funds, land transfer tax is paid, LTT rebates are claimed, and the balance is settled. Legal fees and warranty enrolment land here too.
- 6Move-in and warranty activationStatutory new-home warranty coverage begins — deposit protection, delay compensation, and defect repair for a set period.
Our mortgage payment calculator can help you plan for the payment that starts once the mortgage funds.
Pegasus Mortgage Lending
Typical new build purchase timeline
Six milestones from pre-approval to move-in. Actual timelines vary by builder, market, and property type.
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Milestone 1Pre-approvalConfirm your borrowing range under the OSFI B-20 stress test before visiting builder showrooms.
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Milestone 2APS + initial depositSign the APS, pay the first tranche (typically 5%), assign the GST/HST rebate to the builder.
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Milestone 3Deposit tranchesAdditional deposits at 30 days, 90 days, and at framing or occupancy in most pre-construction contracts.
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Milestone 4Interim occupancyOntario high-rise buyers may occupy the unit before final closing and pay a monthly occupancy fee to the builder.
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Milestone 5Final closingTitle transfers, mortgage funds, land transfer tax is paid, LTT rebates are claimed, and legal disbursements settle.
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Milestone 6Move-in + warrantyStatutory warranty coverage activates — deposit protection, delay compensation, and defect repair for a set period.
Source: Tarion consumer materials; provincial builder-consumer guides. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.
How new-build mortgages actually work
Pre-construction financing works differently from a resale purchase. The building might not exist yet when you sign, and your mortgage funds cannot advance until it does.
Progress-draw mortgages
For a freehold pre-construction home where you are effectively building on land you own, lenders advance mortgage funds in stages as construction milestones complete — foundation, framing, drywall, occupancy. Each draw requires an appraiser to verify the milestone.
Completion mortgages
For most pre-construction condos and many freehold builds, the mortgage does not fund until final closing — the point at which title actually transfers to you. Between APS signing and final closing, your deposits with the builder are your only equity in the property.
Either way, the OSFI B-20 stress test applies. For down payments under 20%, the mortgage must be insured through CMHC, Sagen, or Canada Guaranty — the three federally regulated mortgage default insurers — and the property must fall within their insurable price limits.
Complex files — self-employed income, non-conforming builds, or multiple deposit sources — are the ones we spend the most time on at Pegasus. Razi Khan, Founder and Mortgage Broker at Pegasus, reviews every complex-file structure personally.
Common mistakes new build buyers make
- •Under-estimating closing costs. New-build closings include HST net of rebate, development-charge adjustments, Tarion (or provincial equivalent) enrolment, and legal disbursements. Budget three to four percent of the purchase price on top of the down payment.
- •Missing the rebate assignment on the APS. If the assignment-of-rebate box is not signed, the builder charges you the full tax and you claim the rebate later from the CRA — which can tie up cash for months.
- •Assuming assignments are tax-free. Since May 2022, all assignment sales of new housing are taxable for GST/HST purposes. Selling your APS before final closing has tax consequences.
- •Ignoring development-charge caps. Ask the builder to cap or disclose development-charge adjustments in writing before signing.
- •Misreading progress-draw timing. Draws pay for work already completed — plan your cash flow for the gap between milestones.
Our post on hidden costs first-time buyers miss breaks these down further.
Frequently asked questions
How much can I actually save buying a new build home in Canada?
Do I qualify for the GST rebate if I am not a first-time buyer?
What is the difference between the federal GST/HST rebate and the Ontario new housing rebate?
Can I still claim the rebate if I plan to rent out the new build?
Does the land transfer tax rebate stack with the GST/HST rebate?
How does a mortgage on a pre-construction home actually work?
Is the new home warranty like Tarion free, or does it add to my closing costs?
Are new builds cheaper than resale homes once all the rebates are counted?
Our full FAQ page covers a wider set of common questions.
Pegasus Mortgage Lending
Where your closing-day dollars go on a new build
Illustrative breakdown of net closing-day costs on a mid-priced Ontario new build. Actual mix varies by builder, price, and municipality.
Source: Illustrative composite from CRA guidance, provincial LTT schedules, and Tarion enrolment fee tables. Actual closing costs vary. Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479.
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About the author
Razi Khan
Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479
Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.
Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.
Learn more about Razi Khan →Sources & references
- Canada Revenue Agency — GST/HST New Housing Rebate (RC4028) — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028.html
- Government of Ontario — Harmonized Sales Tax (HST) and new housing rebate — https://www.ontario.ca/document/harmonized-sales-tax-hst
- Government of Ontario — Land Transfer Tax (first-time buyer rebate) — https://www.ontario.ca/page/land-transfer-tax
- City of Toronto — Municipal Land Transfer Tax and first-time buyer rebate — https://www.toronto.ca/services-payments/property-taxes-utilities/municipal-land-transfer-tax-mltt/
- Government of British Columbia — Property Transfer Tax and first-time buyers exemption — https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax
- Revenu Québec — QST rebate on new housing — https://www.revenuquebec.ca/
- Tarion — Ontario new home warranty — https://www.tarion.com/
- BC Housing — Homeowner Protection Office — https://www.bchousing.org/
- Garantie de construction résidentielle (Quebec) — https://www.garantiegcr.com/
- Alberta New Home Warranty Program — https://www.homewarranty.ca/
- OSFI Guideline B-20 — Residential Mortgage Underwriting Practices — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-b-20
- Canada Mortgage and Housing Corporation (CMHC) — https://www.cmhc-schl.gc.ca/
- Sagen (mortgage default insurer) — https://www.sagen.ca/
- Canada Guaranty (mortgage default insurer) — https://www.canadaguaranty.ca/