First-time buyer FAQ

The minimum depends on the purchase price. For homes under $500,000, the minimum is 5% of the purchase price. For homes between $500,000 and $999,999, it's 5% on the first $500,000 plus 10% on the remainder. On a $700,000 home, that works out to $45,000 minimum. For homes between $1 million and $1.499 million, you can still use an insured mortgage with 5% on the first $500,000 and 10% on the rest (this changed December 15, 2024). For homes $1.5 million and above, you need 20% minimum.

Putting less than 20% down means you'll pay CMHC mortgage insurance — a premium of up to 4% of the mortgage amount, added to your loan. On a $655,000 mortgage, that's $26,200 added to what you owe. Beyond the down payment, budget another 1.5–4% of the purchase price for closing costs: land transfer tax, legal fees, title insurance, home inspection, and others. First-time buyers in Ontario receive up to $4,000 off provincial land transfer tax, and up to $4,475 off Toronto municipal land transfer tax if buying in Toronto.

The mortgage stress test is a federal regulation that requires lenders to qualify you at a higher interest rate than what you're actually borrowing at. The qualifying rate is the higher of your actual contract rate plus 2 percentage points, or the government's minimum floor rate [verify current figures with a licensed agent or at realtor.ca]. So if you're borrowing at 5%, the bank qualifies you at 7%. If the floor is currently above that, you'd qualify at the floor instead.

Why does this matter? Because the bank calculates how much you can borrow at that higher rate — not your actual rate. This typically reduces your maximum purchase price by 15–20% compared to qualifying at the actual contract rate. A household that might qualify for an $800,000 home without the stress test may only qualify for $660,000 with it. The test was introduced to protect buyers from overextending at historically low rates. Even if you can afford a higher payment today, the stress test ensures you'd still be able to manage if rates rose after signing.

CMHC insurance (also called mortgage default insurance) is required when your down payment is less than 20% and the purchase price is under $1.5 million. The insurance protects the lender — not you — if you stop making payments. Despite protecting the lender, you pay the premium. It's charged as a percentage of your mortgage amount: 4.00% for a 5% down payment, dropping to 3.10% at 10% down and 2.40% at 15% down. The premium is added directly to your mortgage balance — you don't pay it upfront.

However, Ontario charges 8% provincial sales tax on the CMHC premium, and that portion must be paid in cash at closing. On a $25,000 CMHC premium, the Ontario PST is $2,000 — due at closing, not rolled into the mortgage. This is the most common closing cost that catches first-time buyers by surprise. On the positive side, CMHC insurance is what makes low-down-payment homeownership possible at all. Without it, lenders wouldn't offer mortgages above 80% LTV. Think of the premium as the cost of getting into the market sooner with less saved.

A home inspection is a visual assessment of a property's condition conducted by a licensed professional. The inspector examines the roof, foundation, structure, electrical system, plumbing, heating and cooling, insulation, windows, doors, and interior finishes. The inspection takes two to four hours and results in a written report with photos, typically delivered within 24 hours. In Ontario, inspectors must now be licensed through HIRAO. Inspections cost $400–$600 on average.

Do you need one? A home inspection is one of the best $400–$600 you'll spend in the entire buying process. It can reveal problems worth tens of thousands of dollars — a failing roof, foundation cracks, outdated electrical wiring, a furnace near the end of its life — before you're committed. Even if the inspection finds nothing major, you walk away with a clear picture of the home's condition and a maintenance timeline. In competitive markets, buyers sometimes feel pressure to waive the inspection condition to win a bidding war. That's a real risk — you're agreeing to take the property as-is, with no right to exit if something serious is found afterward. If you must waive the condition, try to arrange a pre-offer inspection first. Never skip the inspection entirely if you can avoid it.

Closing costs are everything you pay at closing beyond the down payment itself. The biggest item in Ontario is land transfer tax. On a $700,000 Toronto purchase, the combined Ontario and Toronto land transfer tax (before first-time buyer rebates) is approximately $19,450. With both FTB rebates, a first-time buyer pays about $10,975 in net land transfer tax. Outside Toronto, you'd only pay the provincial tax: approximately $8,975 before the $4,000 rebate, leaving $4,975.

Beyond land transfer tax, expect to pay: legal fees ($1,000–$2,500), title insurance ($200–$600 for an owner's policy), home inspection ($400–$600), property tax adjustment (if the seller has prepaid taxes beyond your closing date, you reimburse the pro-rated portion), CMHC insurance PST (Ontario 8% of your mortgage insurance premium, paid in cash if your mortgage is insured), and utility hookup fees ($200–$300). Total closing costs in Ontario typically run 1.5–4% of the purchase price, above the down payment. On a $700,000 Toronto purchase with first-time buyer rebates, budget $15,000–$20,000 for total closing costs.

The First Home Savings Account (FHSA) launched in April 2023. It's a registered savings account designed specifically for Canadian first-time buyers. It combines the tax advantages of both an RRSP and a TFSA: contributions are tax-deductible (like an RRSP), meaning they reduce your taxable income for the year you contribute. Growth inside the account is tax-free. Qualifying withdrawals for a home purchase are also tax-free. No other registered account gives you the deduction on the way in and the tax-free withdrawal on the way out.

You can contribute up to $8,000 per year with a lifetime limit of $40,000. Unused room carries forward one year — if you contribute only $3,000 in year one, you can contribute up to $13,000 in year two. But carry-forward doesn't accumulate beyond one year. To be eligible, you must be a Canadian resident, 18–71 years old, and a first-time buyer — meaning you haven't owned a principal residence in the current or the four preceding calendar years. If you don't end up buying, you can transfer your FHSA balance to your RRSP with no tax consequences. Open one as soon as you're eligible, even with a small initial contribution, to start the clock on your contribution room.

Yes, through the RRSP Home Buyers' Plan (HBP). This program lets first-time buyers withdraw up to $60,000 from their RRSP tax-free to use as part of a home down payment. The federal government raised the limit from $35,000 to $60,000 in the April 2024 budget. A couple buying together can each withdraw up to $60,000, for a combined total of $120,000. Used alongside the FHSA ($40,000 lifetime), a single buyer can access up to $100,000 in tax-advantaged funds ($60,000 HBP + $40,000 FHSA). A couple can access up to $200,000 combined.

The catch: the money must be in your RRSP for at least 90 days before the withdrawal. You can't contribute $60,000 the week before closing and withdraw it immediately. More importantly, the withdrawal isn't permanent. You must repay the full amount to your RRSP over 15 years (at minimum 1/15 per year). If you miss a year's repayment, that amount is added to your taxable income for that year — you effectively pay income tax on it. [verify current figures with a licensed agent or at realtor.ca]. The HBP is a genuine benefit, but understand the repayment obligation before you withdraw. Missing repayments has real tax consequences.

From the moment you start seriously preparing to buy, to the day you get the keys, the process typically takes three to twelve months — sometimes longer. The timeline breaks down roughly like this: getting your finances in order and improving your credit score (1–3 months if needed), opening an FHSA and beginning to save (months to years, ideally started well before you're ready to buy), getting pre-approved (1–2 weeks of gathering documents and meeting with a broker or lender), finding a buyer's agent and searching (weeks to months depending on market and your criteria), making offers and having one accepted (could be the first offer, could take many attempts), and the conditional period and closing (typically 30–90 days from accepted offer to closing).

The biggest variable is the search itself. In a competitive market, you might view 20+ homes and lose multiple bidding wars before one works out. In a slower market, the right home at the right price might come up within your first few viewings. Set a realistic timeline expectation: most first-time buyers take 3–6 months of active searching before a successful purchase. The steps that take the longest are usually the ones that can be done in advance — getting pre-approved, opening your FHSA, hiring your agent. Do those early and the search timeline is the only variable you can't fully control.