In a move aimed at improving housing affordability, the Ontario government announced on March 25, 2026 a proposed enhanced HST rebate on eligible new homes. If implemented, this program can materially reduce a borrower’s cash-to-close and/or overall financing requirement—particularly on homes up to $1 million—making it a key planning item for pre-approvals, builder deals, and closing instructions.
Rebate structure (impact on purchase price economics)
| Home price range | HST reduction amount (proposed) |
|---|---|
| Up to $1,000,000 | Full 13% HST rebate (up to $130,000) |
| $1,000,001–$1,500,000 | Flat $130,000 reduction |
| $1,500,001–$1,850,000 | Declining reduction from $130,000 down to $24,000 |
| Over $1,850,000 | $24,000 (status quo provincial reduction) |
Broker/lender lens: why this matters
- For eligible transactions, the rebate may reduce the client’s required equity/down payment and closing funds, and may improve affordability metrics.
- You should expect more clients trying to time signing dates and closing/construction milestones to fit the eligibility window.
- Builder pricing/APS terms may start referencing the enhanced rebate—important for reviewing how the tax is treated in the contract (included vs. added, assignment of rebate, and who receives the rebate at closing).
Federal legislation risk (timing and certainty)
Because the rebate requires amendments to the federal Excise Tax Act, the announcement is unusual in that it was made by Ontario without a concurrent federal release. Ontario has indicated the federal government has agreed to “approximately” cover the 5% federal portion of the HST, but the changes remain subject to federal legislative approval.
Broker/lender takeaway: treat as “proposed” until enacted
- Avoid underwriting or advising clients on the assumption the full rebate will apply unless/ until confirmed in binding legislation and reflected in closing statements.
- Consider adding a borrower acknowledgement in your file notes (or internal condition) that rebates are subject to legislative change and CRA eligibility.
Eligibility — “qualifying new home” categories (what to screen early)
- Owner-occupied (primary residence) new home Eligible where the home is acquired for use as the buyer’s primary place of residence and the purchase agreement with the builder is signed between:
- April 1, 2026 and March 31, 2027
- Purpose-built rental / new rental supply (construction started early) Eligible where construction began before March 31, 2026 and the home is intended for use as a residential rental property, and:
- the purchase agreement with the builder is signed between April 1, 2026 and March 31, 2027, and
- construction is substantially completed on or before December 31, 2029
Broker/lender practice point
- Capture (i) APS signing date, (ii) intended occupancy (owner-occupied vs rental), (iii) construction start evidence (where relevant), and (iv) anticipated substantial completion date for new builds. These drive eligibility and can affect the borrower’s liquidity plan.
First-time home buyer rebate alignment (stacking potential)
Ontario has also previously announced a separate provincial HST rebate for first-time home buyers, expected to align with the federal First Time Home Buyers’ rebate effective March 20, 2025. If a first-time buyer signs an APS with a builder for a new home between March 20, 2025 and December 31, 2030, both provincial and federal rebates may be available.
Broker/lender takeaway
- First-time buyers may have multiple rebate pathways depending on timing and transaction type; ensure clients are directed to confirm eligibility with their lawyer/accountant and that your funding plan is resilient if a rebate is reduced or delayed.
Operational considerations for mortgage funding and closings
- Closing adjustments: New home rebates are often handled through statement-of-adjustments mechanics; confirm whether the builder credits the rebate on closing or the buyer applies post-closing. This changes cash-to-close.
- Qualification and LTV: If the rebate is treated as a reduction to total cost rather than cash back, it can shift the effective financing need. Ensure consistency between underwriting assumptions and the lawyer’s closing adjustments.
- Builder contract review: Watch for clauses assigning the rebate to the builder, conditions precedent, or buyer indemnities if CRA later denies the rebate.
Bottom line (what to tell clients)
The key planning date for the main enhanced rebate is that the APS must be signed between April 1, 2026 and March 31, 2027 (with additional construction timing rules for certain rental-focused transactions). Both the provincial and federal components remain subject to federal Excise Tax Act amendments. Clients should confirm eligibility and closing mechanics with their real estate lawyer and tax advisor before relying on the rebate for affordability or down payment planning.