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Buying Your First Home in Canada

Thinking about homeownership? Learn about down payments, mortgages, and the steps to buying your first home.

Is Homeownership Right for You?

Buying a home is a major financial commitment. While homeownership has benefits—building equity, stability, and freedom to renovate—it also comes with responsibilities like maintenance, property taxes, and unexpected repairs.

Before buying, consider: How long do you plan to stay? Can you afford monthly payments plus unexpected costs? Do you have stable income? Are you ready to commit to one location?

Down Payment Requirements

In Canada, the minimum down payment depends on the home price:

  • Up to $500,000 — Minimum 5% down payment
  • $500,001 to $999,999 — 5% on first $500,000, 10% on remainder
  • $1 million or more — Minimum 20% down payment (no CMHC insurance)

CMHC Mortgage Insurance

If your down payment is less than 20%, you must purchase mortgage default insurance from CMHC. This protects lenders if you default. Insurance premiums range from 0.6% to 4.5% of your mortgage amount, added to your monthly payments.

Additional Costs

Budget for these additional expenses:

  • Legal fees — $1,000-$2,500 for a real estate lawyer
  • Land transfer tax — 0.5-2% of purchase price (varies by province)
  • Home inspection — $300-$600
  • Appraisal fee — $300-$500
  • Title insurance — $200-$400
  • Property taxes (prorated) — Up to several months

Government Programs

First-time homebuyers can access several programs:

  • First-Time Home Buyer Tax Credit — Up to $1,500 credit on your tax return
  • Home Buyers Plan (HBP) — Withdraw up to $35,000 from RRSPs tax-free
  • Provincial programs — Land transfer tax rebates (Ontario, BC, Manitoba)

Types of Mortgages

  • Fixed-rate mortgage — Interest rate locked for 1-10 years
  • Variable-rate mortgage — Rate changes with the prime rate
  • Open mortgage — Pay off any amount without penalty
  • Closed mortgage — Prepayment penalties apply

The Home Buying Process

  • Determine your budget — Use mortgage calculators online
  • Get pre-approved — Know your borrowing limit
  • Find a real estate agent — They represent your interests
  • Start shopping — Attend open houses, view listings
  • Make an offer — Include conditions (inspection, financing)
  • Negotiate and accept — Both parties sign
  • Complete conditions — Inspection, financing, insurance
  • Close the deal — Sign documents, receive keys