First-Time Home Buyer Mortgage Guide Canada

How the First-Time Buyer Mortgage Process Works

Buying your first home involves more steps than most people expect. Understanding the full journey — from saving to closing — helps you avoid surprises and move with confidence.

Down Payment Rules for First-Time Buyers

Example: $700,000 purchase → 5% × $500,000 + 10% × $200,000 = $25,000 + $20,000 = $45,000 minimum down payment.

CMHC Mortgage Insurance: What Every First-Time Buyer Pays

If your down payment is less than 20%, CMHC (or Sagen/Canada Guaranty) mortgage default insurance is mandatory. The premium is added to your mortgage balance.

The CMHC premium is significant but enables homeownership with a smaller down payment. Use the CMHC calculator to see the exact cost for your purchase.

First-Time Buyer Programs in Canada 2026

First Home Savings Account (FHSA)

The FHSA is the most powerful tool available to first-time buyers. You can contribute up to $8,000/year (lifetime max $40,000) and deduct contributions from your taxes — like an RRSP. Withdrawals for a qualifying home purchase are completely tax-free — like a TFSA. See the full FHSA guide.

RRSP Home Buyers' Plan (HBP)

First-time buyers can withdraw up to $35,000 from their RRSP tax-free for a home purchase ($70,000 for couples). The withdrawal must be repaid to the RRSP over 15 years or the annual repayment amount is added to your income.

First-Time Home Buyer's Tax Credit

A non-refundable federal tax credit worth up to $1,500 (based on a $100 amount at the 15% federal tax rate). Provincial first-time buyer credits may also apply.

Land Transfer Tax Rebate

Ontario, BC, and Prince Edward Island offer land transfer tax rebates for first-time buyers. In Ontario, the rebate is up to $4,000 on the provincial tax plus up to $4,475 on Toronto's municipal LTT (Toronto properties only).

30-Year Amortization for First-Time Buyers

As of August 2024, first-time buyers purchasing new construction can access insured mortgages with 30-year amortization (up from 25 years). Lower monthly payments make housing more accessible but increase total lifetime interest paid.

The Stress Test for First-Time Buyers

Every first-time buyer must pass the mortgage stress test, qualifying at the higher of your contract rate + 2% or 5.25%. This significantly reduces maximum purchase price. At a 5% contract rate with $120,000 household income, the stress test means qualifying at 7% — reducing your maximum mortgage by approximately 15% versus qualifying at the contract rate.

Use the calculator at the top of this page or our dedicated stress test calculator to see your qualifying power.

Closing Costs to Budget For

• Land transfer tax: 0.5–2.5% of purchase price (varies by province and municipality)
• Legal fees: $1,200–$2,500
• Home inspection: $400–$700
• Title insurance: $200–$400
• Moving costs: $1,000–$5,000+
• Adjustments: Prorated property taxes, utility deposits
• Home insurance: First year's premium often required at closing

Budget approximately 1.5–4% of the purchase price for closing costs in addition to your down payment.

Choosing Between Fixed and Variable Rate

First-time buyers often benefit from the predictability of a fixed rate — knowing exactly what your payment will be for the next 5 years makes budgeting far easier when you're also adjusting to property taxes, maintenance costs, and other ownership expenses. Variable rates offer potential savings but require comfort with payment fluctuation.