Buying Your First Home in Canada
The hard part of a first purchase isn't the paperwork — it's knowing your real number before you fall in love with a listing. Here's how lenders decide, and which first-time buyer programs actually move the needle.
The short answer
First-time buyers in Canada need at least 5% down on the first $500,000 of the price, 10% on the portion between $500,000 and $1.5 million, and 20% at $1.5 million or more. You qualify at the stress-test rate — the greater of your contract rate plus 2% or 5.25% — and can combine the FHSA, the RRSP Home Buyers' Plan and land transfer tax rebates. Budget roughly 1.5% of the price for closing costs.
Minimum down payment
| Purchase price | Minimum down payment |
|---|---|
| $500,000 or less | 5% of the price |
| $500,000 to $1,499,999 | 5% of the first $500,000 plus 10% of the rest |
| $1.5 million and above | 20% of the price |
Below 20% down your mortgage is insured, which adds a premium to the balance — but also gives access to insured pricing, which is often lower than uninsured pricing. Insured first-time buyers can also access a 30-year amortization on a newly built home.
The programs worth using
- First Home Savings Account (FHSA): contribute up to $8,000 a year to a $40,000 lifetime limit. Contributions are deductible and qualifying withdrawals are tax-free.
- RRSP Home Buyers' Plan: withdraw up to $60,000 per person tax-free, repaid over 15 years after a grace period.
- First-Time Home Buyers' Tax Credit: a federal credit worth up to $1,500.
- Ontario land transfer tax rebate: up to $4,000, plus up to $4,475 more on a Toronto purchase.
The FHSA and the Home Buyers' Plan can be used together, which is how many buyers reach a 10% down payment faster than they expect.
How lenders decide what you can borrow
Two ratios do most of the work. Gross debt service compares your housing costs — mortgage payment, property tax, heat and half of any condo fee — to your gross income. Total debt service adds every other monthly obligation, including credit card and line of credit minimums. Both are calculated at the stress-test rate, not the rate you'll actually pay.
Pre-approval versus pre-qualification
A pre-qualification is an estimate from unverified numbers. A real pre-approval means your income and credit have been reviewed and a rate is held for you, usually 90 to 120 days. Neither is a final approval — the lender still has to approve the property and appraisal once you have an accepted offer.
Closing costs to budget for
- Land transfer tax, less any first-time buyer rebate you qualify for.
- Legal fees and disbursements, commonly $1,500 to $2,500.
- Title insurance, home inspection and, in some files, an appraisal.
- Property tax and utility adjustments owed back to the seller.
Common questions
How much do first-time home buyers need for a down payment in Canada?
At least 5% of the first $500,000, 10% of any portion between $500,000 and $1.5 million, and 20% once the price reaches $1.5 million. Under 20% down, the mortgage must be insured.
Who counts as a first-time home buyer?
Program definitions vary. Most federal programs require that you haven't owned a home you lived in during the current year or the four preceding calendar years, and the Ontario land transfer tax rebate requires that you've never owned a home anywhere.
Can I use the FHSA and the RRSP Home Buyers' Plan together?
Yes. They're separate programs and can both be used for the same purchase, which is often the fastest route to a larger down payment.
What credit score do I need to buy a home?
Insured mortgages generally look for a score around 680, though some lenders go lower with strong income and down payment. Alternative lenders work with lower scores at a higher rate.
How long does pre-approval last?
Usually 90 to 120 days. If your search runs longer, the pre-approval can normally be refreshed with updated documents.
Your numbers
Estimated affordability
$660,739 – $734,781
- Income used
- $150,000
- Estimated mortgage (comfortable)
- $580,739
- Estimated mortgage (lender max)
- $654,781
- Estimated monthly payment
- $3,656.87
- Stress-tested payment at 6.59%
- $4,421.66
- Minimum down payment at top of range
- $48,478
Assumptions
- Comfortable range uses GDS 35% / TDS 42%; maximum uses GDS 39% / TDS 44%.
- Qualification is run at the stress-test rate, not your contract rate.
- Amortization is 25 years.
This is an illustration, not a mortgage approval or pre-approval. Real qualification depends on credit, documents, property and lender guidelines.
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