Ontario’s latest housing measures are aimed at improving affordability for newly built homes and increasing supply. HST relief has the potential to reduce the cost of new homes more directly, while efforts to lower development charges are intended to support future construction and help bring more supply to market over time.

HST Relief

New homes in Ontario are typically subject to 13% HST:
• 5% federal (GST)
• 8% provincial

What’s changed

Combined federal and provincial relief can effectively eliminate the 13% HST on new homes up to $1M, with total savings of up to $130,000:

• Full benefit up to $1M
• $130,000 in savings is maintained for purchases between $1M and $1.5M
• Above $1.5M, relief declines and returns to existing rebate levels (up to $24,000 provincially)

Simple takeaway

• Up to $1M → full HST effectively removed
• $1M–$1.5M → strong relief, capped at $130K
• Above $1.5M → reduced relief

What qualifies

Eligible properties include newly constructed homes — including unsold builder inventory — that have never been occupied and are purchased directly from the builder.

Timing Matters

These changes are tied to a specific window. To qualify for the enhanced HST relief, purchase agreements are expected to be signed between April 1, 2026 and March 31, 2027. In addition, the home must meet construction timelines, with building generally required to begin by December 31, 2028 and be substantially completed by December 31, 2031.

This means timing isn’t just about when you buy — it also depends on when the project is built and completed.

Lower Development Charges

A second part of the plan targets development charges — one of the largest cost drivers behind new home pricing. These are fees builders pay to municipalities to fund infrastructure such as roads, water, sewer, and community services. They are built into the cost of new homes.

The current framework includes:

• approximately $8.8 billion in combined federal and provincial funding
• an expectation that municipalities reduce development charges by up to 50%
• a targeted three-year window for these reductions

Lower development charges can improve project viability and are intended to support more construction and increase housing supply over time.

Financing a New Build

Financing a newly built home depends on whether you’re buying a completed home, pre-construction, or building your own.

Completed new homes (inventory)

Financing works much like a resale purchase:

• standard mortgage qualification based on income, credit, and debt
• typical rate holds and closing timelines
• appraisal completed at or near closing

Pre-construction purchases

Pre-construction from a builder involves a different timeline:

• mortgage rates are not locked for the full build period
• buyers must requalify at closing
• final approval depends on income, credit, and market conditions at completion
• the property is appraised at completion, not at purchase

Here are five important factors to keep in mind:

• Always ensure that you cap your closing costs.
• Be prepared for changes in interest rates over time.
• Maintain a strong credit profile throughout the process.
• Plan your financing early, not just at the time of purchase.
• Work with Joe early to ensure you have a clear financial strategy in place.

Building your own home

If you’re planning to build a home yourself rather than buying from a builder, financing works differently. Construction financing is typically done through a draw mortgage, where funds are released in stages as the home is built. This usually requires:

• a larger upfront down payment
• approvals based on the projected “as-completed” value
• inspections at each stage of construction

It’s a more involved process than a standard mortgage and requires upfront planning to ensure timelines, budgets, and financing align.

Additional consideration

Rule changes expanded access to longer amortizations (up to 30 years) for certain buyers purchasing newly constructed homes, which can help improve affordability.

Bottom Line

Affordability is improving for new builds — but the impact depends on timing and the type of purchase. Buyers who understand how these changes apply — and plan accordingly — are best positioned to benefit.

Work With an Expert

Joe Purewal has extensive experience helping clients navigate new build purchases, long closing timelines, and changing lending conditions.

Contact Joe Purewal to make sure you are set up for success as you navigate the new build buying process.