What is the first-time home buyers' tax credit?
A federal non-refundable credit you claim on the tax return for the year you buy your first home. It is not automatic, nobody reminds you, and it is separate from the Ontario land transfer tax rebate.
It reduces federal tax owing for the year of purchase, for a buyer who did not live in a home they or their spouse owned in the year of purchase or the four preceding years. Being non-refundable, it reduces tax payable rather than producing a refund on its own.
It is claimed on your return, which means the benefit lands months after closing when your cash need was on closing day. Diarize it now for filing season.
Do not confuse it with the other first-time buyer measures, which are separate and claimed differently: the Ontario land transfer tax rebate and Toronto's municipal equivalent, claimed by your lawyer on registration, and the RRSP Home Buyers' Plan and first home savings account, which are savings vehicles rather than credits. You may qualify for several at once, and each has its own eligibility test.
Next questions
Do I count as a first-time buyer for the land transfer tax rebate?
Only if you have never owned a home anywhere in the world, neither has your spouse while you were spouses, and you are a Canadian citizen or permanent resident. The spousal rule and the status rule each disqualify more people than they expect.
Ontario
Can I use my RRSP or FHSA for a down payment?
Yes to both, and they work differently. A Home Buyers' Plan withdrawal from an RRSP must be repaid over fifteen years; an FHSA withdrawal for a qualifying home is not repaid and not taxed.
Canada-wide