First-Time Home Buyer Guide

1

Tax-free savings

Open a First Home Savings Account (FHSA)

$8,000/year tax deduction. Tax-free growth. Tax-free withdrawal on your first home.

The FHSA combines the best features of the RRSP and TFSA. You deduct contributions from income (like an RRSP), investments grow tax-free (like a TFSA), and withdrawals for a qualifying home purchase are completely tax-free.

Annual contribution limit

$8,000

Unused room carries forward 1 year

Lifetime contribution limit

$40,000

Per individual — spouses can each contribute

Max account duration

15 years

Or until you turn 71

Can you combine with HBP?

Yes

Use FHSA + RRSP Home Buyers' Plan together

Who qualifies

Must be a Canadian resident, 18–71 years old, and a first-time buyer (no home owned in the current year or the prior 4 calendar years). Your spouse can also open one independently.

FHSA + HBP potential

Your annual income ($)

FHSA deep dive → Home Buyers' Plan guide →

2

What you'll need upfront

Save Your Down Payment

Minimum 5% on homes under $500K. The more you put down, the lower your CMHC premium.

Canadian down payment minimums are tiered by purchase price. Anything below 20% requires CMHC mortgage default insurance — but it lets you buy sooner with less saved.

Purchase Price	Minimum Down	Example ($600K home)
Under $500,000	5%	$25,000 on first $500K
$500,001 – $999,999	5% on first $500K + 10% on remainder	$35,000 total
$1,000,000+	20% (no CMHC)	$200,000+
$1,500,000+	20% (new limit, Aug 2024)	$300,000+

Gifted down payments

Family gifts are accepted by most lenders. You'll need a gift letter stating the funds are a gift (not a loan) and won't be repaid. The donor must be an immediate family member.

Affordability calculator → Compare current rates →

3

Qualifying rate

Pass the Mortgage Stress Test

You must qualify at the contract rate + 2% or 5.25%, whichever is higher.

The stress test is set by OSFI (Office of the Superintendent of Financial Institutions). It applies to all federally regulated lenders — TD, RBC, BMO, Scotiabank, CIBC, National Bank, and most credit unions.

Lenders use the GDS ratio (housing costs ÷ gross income) and TDS ratio (all debts ÷ gross income). Insured mortgages must pass GDS ≤ 39% and TDS ≤ 44%. Conventional mortgages may allow slightly higher ratios depending on the lender.

Annual gross income ($)

Your offered rate (%)

Down payment ($)

Monthly debts ($)

Full affordability calculator →

4

Mortgage default insurance

Understand CMHC Insurance

Required when your down payment is less than 20%. Premium is added to your mortgage balance.

CMHC insurance protects the lender — not you — if you default. You pay the premium, but in exchange you access lower interest rates (insured rates are generally lower than conventional). The premium is added to your mortgage, not paid upfront.

Down Payment	LTV Ratio	CMHC Premium	On $500K purchase
5%	95%	4.00%	$19,000
10%	90%	3.10%	$13,950
15%	85%	2.80%	$11,900
20%+	≤80%	None	$0

Important limits

CMHC insurance is only available on homes under $1,500,000 (raised from $1M in August 2024). Amortization must be 30 years or less for insured mortgages. The premium also has an 8% provincial sales tax in Ontario, Manitoba, and Quebec — paid upfront at closing.

Payment calculator →

5

Budget for the extra 1.5–4%

Estimate Your Closing Costs

Land transfer tax, legal fees, title insurance, home inspection — not included in your mortgage.

Closing costs are paid out of pocket on the closing date — they cannot be rolled into your mortgage. Budget 1.5%–4% of the purchase price. As a first-time buyer you may qualify for land transfer tax rebates.

Purchase price ($)

Province

Land transfer tax calculator →

6

Get your pre-approval

Apply for a Mortgage Pre-Approval

Lock in today's rate for 90–120 days while you shop for a home.

A mortgage pre-approval confirms how much you can borrow and locks in an interest rate — typically for 90–120 days. In competitive markets, sellers take pre-approved buyers more seriously than those without.

What you'll need

T4 slips, NOA, 3 months pay stubs, bank statements

Rate hold period

90–120 days

Rate moves in your favour, you get the lower rate

Pre-approval vs. pre-qualification

A pre-qualification is an estimate with no verification. A pre-approval reviews your credit and documents and is more credible. Always get the pre-approval before making offers.

Start pre-approval → Compare today's rates →

First-Time Home Buyer Guide

Ready to take the next step?