You’ve diligently saved, you’ve patiently waited, and you’re finally ready to buy your first home. Where do you start? Being a first-time home buyer in Canada is tough—it’s a daunting process with many steps.
But you’re in the right place.
In this guide, we’ll lead you step-by-step through the entire process: deciding when to buy, sorting out buyer’s incentives, finding a mortgage, finding a home, and finally, making an offer and closing the deal.
A first-time home buyer is someone who is buying their first home (obviously).
In Canada, first-time home buyers qualify for many incentives (which we’ll review in the next section). Each of those incentives clearly defines “first-time home buyer,” and there are a few additional criteria.
Generally speaking, a first-time home buyer in Canada is all of the following:
Some of the incentives include people who have previously owned a home but are in similar circumstances to a first-time buyer. For example, recently divorced people who only owned a home with their former partner may qualify as first-time buyers under some programs.
It is possible to own a home without buying it.
For example, if you inherited a property, you could still be a first-time home buyer. However, to qualify (at least for the Home Buyer’s Plan), you must have gone at least 4 years without living in a home owned by you or your spouse.
Speaking of the Home Buyer’s Plan, let’s look at some financial incentives available to first-time home buyers in Canada.
In Canada, a first-time home buyer has access to several financial incentives. There are federal, provincial, and municipal programs, so the exact mix available to you depends on where you live.
The Home Buyer’s Plan (HBP) is a Government of Canada program launched in 1992. The HBP allows potential homeowners to withdraw money from their Registered Retirement Savings Plan (RRSP) to buy or build a home.
Normally, making an early withdrawal from one’s RRSP means paying extra taxes. The HBP allows first-time buyers to make a withdrawal while avoiding such a penalty.
Under this plan, each person may withdraw up to $35,000 from their RRSP to put towards their home. Couples may withdraw $35,000 each, for a total of $70,000. If someone has multiple RRSP accounts, they’re allowed to withdraw from more than one. However, some RRSPs are locked-in and can’t be accessed through this plan, nor can group RRSPs.
RRSP withdrawals under the HBP are not considered taxable income, but they do need to be repaid within 15 years.
How does one qualify for the HBP? The Canada Revenue Agency lists these four conditions:
Of course, for the HBP to be useful, you need to have money in your RRSP. Let’s look at another federal program that doesn’t require such savings:
The First-Time Home Buyer Incentive (FTHBI) is a shared-equity mortgage. The buyer borrows money from the Government of Canada. In exchange, the government gets a share in the property value.
Under this program, first-time buyers can borrow 5 or 10 percent of their potential home’s purchase price. This sum goes towards the down payment, which allows the buyer to take on a smaller mortgage. This, in turn, reduces the long-term cost of buying the home. The buyer then repays this percentage after 25 years or when they sell the home (whichever comes first).
Note that repayment is based on the percentage of the home’s value, not the actual dollar amount. If the home’s value has increased at the time of repayment, they will pay more than they borrowed. Conversely, they will pay less if the value dropped. Borrowers are also allowed to repay the incentive early, with no penalty.
For example:
If you received a 5 percent incentive to buy a home worth $300,000, you’d get $15,000 for your down payment. Then, at repayment time, if your home was worth $400,000, you would need to repay $20,000. On the other hand, if your home was only worth $200,000 at repayment time, you’d have to pay back just $10,000.
However, the repayment amount is capped; the government can only gain or lose so much on the loan. The cap is at 8% per year, whether it’s a gain or loss.
Possibly the most straightforward federal home buyer’s incentive, the First-Time Home Buyer’s Tax Credit is just that: a tax credit. You may also see it called the “Home buyer’s amount” or simply “Line 31270.”
Home buyers can claim up to $5,000 for the purchase of a home they acquired during any given tax year.
However, to qualify for this tax credit, the CRA names two conditions:
you (or your spouse or common-law partner) acquired a qualifying home
you did not live in another home owned by you (or your spouse or common-law partner) in the year of acquisition or in any of the four preceding years (first-time home buyer)
A “qualifying home” is one located in Canada and registered in the claimant’s name (or their spouse’s). It can be of many types, including single-family houses, mobile homes, condos, and more.
The main incentive for first-time buyers at the provincial and municipal levels comes in the form of property transfer tax rebates.
Property transfer taxes (a.k.a. land transfer taxes) are paid by the buyer to local governments, either provincial or municipal or both. We’ll talk more about these and other closing costs a little further down the page.
In these provinces, a first-time home buyer can apply for a rebate on the transfer taxes:
In some cities, most notably Toronto, you may also need to pay a municipal land transfer tax. You can also often get a rebate on these taxes as well. In the case of Toronto, there is a first-time home purchaser rebate.
If you happen to buy a home that’s newly built, or has been substantially renovated, you may be able to claim a GST/HST rebate. This isn’t exclusive to first-time buyers, but it’s an incentive nonetheless. The amount you can claim varies from province to province; if your home is a new build, make sure to check your eligibility.
Quebec also offers a tax rebate; first-time home buyers are eligible for a tax credit of up to $750 when they buy a qualifying home. This is known as the Home Buyers’ Tax Credit.
First-time home buyers in Quebec have access to a wide range of municipal programs to help them out financially with their purchase.
The majority of large municipalities in Quebec have one program or another. Some take the form of tax rebates, while others are interest-free loans. The type of benefit available to you depends on which city your future home is located in.
To read more about the home purchasing assistance available in some of Quebec’s largest cities, visit these sites:
Most municipalities in Quebec, even small ones, offer some form of incentive. Check your local government’s website to see what options they have for you.
Now that we’ve seen some of the benefits of being a first-time buyer, it’s time to figure out if you’re really ready to take the plunge.
At the beginning of your home buying journey is the most critical step: deciding if it’s the right time to buy.
Conventional wisdom holds that owning a home is the ultimate goal for Canadians. In fact, approximately two-thirds of Canadian families own their homes. But, homeownership isn’t automatically the right choice for everyone—especially for those living in cities with sky-high real estate costs.
Whether buying a home is the right move depends on your life’s present circumstances and your future goals.
Suppose you’ve got steady income and plan to stay put for the foreseeable future. In that case, you’re probably on the right track with homeownership. On the other hand, if you’re hopping around from job to job or dreaming of a stint overseas, you may want to hold off.
Buying a home makes sense if most or all of these points apply to you:
In the next section, we’ll go into more detail about analyzing your finances and considering what you want in a home. But first, when is renting the best choice?
Put simply, renting may be the better choice if you don’t meet the above criteria.
But there’s more:
As a renter, you’re not building equity in a home, and it can feel like you’re wasting money each month. But renters have a great deal of flexibility; if you don’t like your home, or you’re ready for an opportunity elsewhere, just give your 30-day notice (or whatever notice you’re required to give) and away you go. Plus, renters have predictable housing costs. Homeowners always need to be ready for out-of-the-blue maintenance expenses; renters get to pass those costs on to the landlord.
There’s also purely number-crunching reasons for renting over buying—known as the 5 percent rule. Essentially, if your annual rent amounts to less than 5 percent of your potential home’s price, there’s a valid financial argument for renting. Using the money you’d put down on the house to invest in stocks instead may be more profitable.
The rule may be an oversimplification, but it’s worth considering nonetheless.
Another way to decide is to use an online rent vs. buy calculator. These can help you crunch the numbers and get an idea of both options’ long-term costs (or profits).
If you’ve made the decision to buy your first home, what should you do next? Before you hit the real estate listings, here are a few things you need to get in order:
The number one factor in buying your first home is how much home you can afford. That’s more than just the down payment—there are closing costs and carrying costs to budget for, too.
Let’s break these down:
As briefly touched on above, your down payment needs to be at least 5 percent of the purchase price, but this varies depending on the purchase price:
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% of purchase price |
| $500,000 to $999,999 | 5% of first $500,000, 10% of remainder |
| $1 million and above | 20% of purchase price |
However, there are many good reasons to make a down payment greater than the minimum.
For example, if your down payment is less than 20% of the purchase price, you’ll need to buy mortgage loan insurance—an added cost. The premiums for mortgage loan insurance depend on how much down payment you made; they can be as high as 4% of the total loan if you only put down 5% as a down payment.
Plus, a large down payment saves money in the long run; when you pay more upfront, you need to borrow less. That means lower monthly mortgage payments, and less interest. A larger down payment can save thousands of dollars over the life of the mortgage.
On the other hand, it’s worth noting that having an insured mortgage may help you get a better rate. So, there is at least one positive side to putting down less than 20%.
Aside from the down payment, you must also be prepared for a bevy of closing costs. Closing costs are the extra fees and taxes you’ll need to pay before taking possession of a new house.
We mentioned land transfer taxes earlier; these vary depending on where the home is located. Most provinces use a progressive scale, meaning the tax rate goes up as the property’s sale price increases.
For example, BC’s land transfer tax starts at 1 percent on the first $200,000, increasing in steps to 5 percent on any amount over $3,000,000.
In Alberta, there is no provincial land transfer tax—the only province to entirely forego the tax. Quebec doesn’t charge a provincial transfer tax, but municipal taxes are provincially regulated, and everyone must pay them. Saskatchewan doesn’t technically charge a land transfer tax, but there is a transfer fee of 0.3 percent on properties valued at more than $8,401.
Land transfer taxes are but one closing cost—there are others:
Altogether, you should budget 2-4 percent of the purchase price for closing costs.
So, you’ve got enough in the bank to cover a down payment and the closing costs. All set, right?
Not quite.
Once you own the home, you need to budget for carrying costs. These are the ongoing expenses of owning the home. It’s important to determine beforehand that you’ll be able to afford the house you bought, lest you become house poor.
Here are the typical carrying costs of homeownership:
The last (and largest) ongoing cost is, of course, your mortgage payments.
Before you start looking for a home, you should find a mortgage lender and get your mortgage pre-approval squared away.
Pre-approval is important for two reasons:
Finding a mortgage lender is easy; choosing one is a little harder. The most important thing when searching for your mortgage is to shop around. Inquire at major banks, local credit unions, and mortgage brokers. There are many online mortgage comparison tools available as well.
To learn about choosing the right mortgage, check out our guide to home mortgages.
To sum up, you’re looking for a mortgage with the lowest interest rate. That means you’ll pay less in total once it’s all paid off.
The other big question is: fixed or variable?
Fixed mortgages have a steady interest rate locked in; variable mortgages have a rate that changes constantly. Fixed mortgages are steady and predictable, but variable mortgages often have lower rates.
For more on this subject, here’s our guide to fixed vs. variable mortgages.
Before you start your home search, think carefully about what you want in a home.
If you don’t know what you’re looking for, you’re going to have a tough time finding it. You don’t have to draw up blueprints for your dream house (unless you’re having it built). But, you should have a clear idea of what type of home you want. Which features are absolute requirements? Which features are simply nice-to-haves?
Homes come in many shapes and sizes. Do you want a detached house or a condo? A townhouse or a unit in a high-rise? Is a big yard important?
The main two forms of housing are condos and detached houses. Townhouses are somewhere in the middle; they share walls with neighbours, but normally have a yard attached.
Townhouses sometimes have a condo title. This means ownership of the townhouse comes with a share of the entire complex, shared with every other unit. It also means you have to comply with the condo board’s bylaws. These bylaws may restrict what you can do to the exterior of the home. For example, many townhouse complexes prefer that all the units maintain a uniform appearance.
One quick note:
Depending on where you are, you may hear the terms “strata” or “co-ownership” instead of “condo;” these are all essentially the same thing. We’re just going to keep using “condo” for simplicity’s sake. Also: a condo board is the same as a strata council, which is also the same as a syndicate in Quebec.
You can read more about the wrinkles of condo ownership in our guide to buying a condo.
Now, some townhouses have a freehold title instead of a condo title. A freehold title is the same as a detached house. A freehold townhouse has no condo corporation involved, and accordingly no bylaws.
Houses and condos each come with their own pros and cons:
Buying a house
|
Pros
|
Cons
|
Buying a condo
|
Pros
|
Cons
|
If you opt for a townhouse, the pros and cons will depend on whether it’s a condo-style townhouse or a freehold title. If it’s the former, the pros and cons will look a lot like those of a condo; if it’s a freehold townhouse, it will be similar to a detached house—with the obvious difference of sharing walls with your neighbours.
You’ll be able to narrow down your list of potential homes if you decide upfront which features are absolute must-haves.
Take the time to list everything you really want in your first home, from physical features to location to size. Then, separate the items on that list into things you can change after you buy and things you can’t.
Remember, after you buy the home it’s yours—you can renovate as you wish.
Your deal-breaker items should mostly be things that you can’t renovate away, like the location and lot size. You can always knock out a wall or build a new patio in the backyard. You can’t, however, move the house closer to public transit or schools.
You don’t need to go it alone when you’re buying your first home. In fact, it’s basically impossible to do it on your own. There are many professionals you’ll need to engage throughout the process, and it’s a good idea to get in touch with some before you even start looking.
While it’s possible to complete the process without a real estate agent, it means sacrificing the many benefits a great agent offers.
Realtors help with the search process, as they know the local market better than any search conglomeration website. They also may have access to private sales that aren’t listed publicly.
When you find the right home, a realtor also helps with making an offer. They’ll know how much to offer, and how to handle any negotiations.
Plus (as we’ll shortly see) the home purchase process involves tons of paperwork, and coordination between many parties. A realtor helps streamline the process and ensure that the deal closes smoothly.
A real estate agent can also help you find the other professionals you’ll need through the process, like inspectors or appraisers.
To find a real estate agent, the best place to start is asking friends, family, or colleagues if they have a recommendation. You can also search for realtors online. It’s important to find someone who knows your local market, and with whom you have a good rapport. It’s okay to get in touch with a few potential realtors to see how you feel about them before you get totally on board.
It’s important to get a home inspection from a trusted and qualified inspector before you close the deal.
To find a good home inspector, start by asking for recommendations from people you know. Alternatively, you can search online as you would for any service. Just be aware that home inspectors are largely unregulated in Canada.
One organization regulating the profession is the Canadian Association of Home & Property Inspectors. You can use their online search tool to find inspectors in your area.
You don’t need to have the inspector go through every home you look at (the inspections do cost money). Instead, you should make your offer conditional on a passing inspection—more on that later.
We’ve already gone over mortgages. Make sure you’ve chosen a lender or broker and gotten pre-approval before you start the house search.
You may need to have an up-to-date survey of the property as part of your mortgage application. It’s possible that the seller has one for you. If not, you can ask your own realtor if they might have access to a previous survey. Failing that, you may need to hire a surveyor.
Similarly, your mortgage lender may want to have a formal appraisal of the property’s value. The appraisal is a determination of the home’s market value. If the sale price is significantly higher than the appraisal, the mortgage lender may be wary of financing the full cost. In such a case, they’d have problems recovering their investment if the borrower were to default on the mortgage.
As mentioned, buying a home involves plenty of paperwork. A real estate lawyer helps make sure all your legal documents are in order, and answers questions you have about those documents.
They’ll also help you with due diligence, making sure property taxes are up to date and there are no other claims against the property. Plus, they can act as a liaison between you and your mortgage lender. Finally, they’ll help with the closing process, holding funds in trust and helping transfer the payment to the seller.
You won’t always need a contractor or a builder. But, if you’re buying a home and planning extensive renovations right off the bat, you may want to have a contractor involved early. They can help you figure out if the home meets your needs (and what your desired renovations might cost).
You’ll need to have an active home insurance policy before your mortgage lender releases any funds. So, you should have an idea of where you’ll turn for your home insurance needs when the time comes.
There are plenty of options out there, but the easiest way is getting an online home insurance quote. When you buy online, you can often receive the policy right away, which helps during the stressful period of closing on the sale.
Okay! You’ve figured out where to live, what you’re looking for, and who’s going to help you get it. Now it’s time to actually hit the pavement and start trying to find a home to buy.
There is no shortage of places to search for houses up for sale.
If you have a realtor, they will help you find relevant options and set up viewings. If you’d like to browse options yourself, there are many websites in Canada that amalgamate real estate listings. These sites let you search your target neighbourhood and add search filters to narrow down the results.
If you find a home you’re interested in through such a site, send the listing to your realtor so they can arrange a viewing.
Here are some popular sites in Canada to search real estate listings:
Real estate companies like RE/MAX, Royal LePage, or Berkshire Hathaway HomeServices also have search features on their sites to browse their listings.
Once you’ve found some options you like and you’ve got viewings set up, what should you be paying attention to?
At this point, you should have already figured out the most important features for your potential new home. So obviously, you’re looking for those features.
At the same time, keep a lookout for deal breaking flaws.
If you’ve found a house that ticks most of your boxes, and doesn’t have any red flags, what comes next? It’s almost time to put in an offer—almost.
When you think you’ve found the right home, it’s time to do some final due diligence.
Knowing the home and the likely sale price, run through the theoretical budget again to be sure you can afford it. Try to get as much information as possible from the seller: utility costs, property taxes, and so on.
Check out the home’s history, like previous sales and how much it went for. Look at comparable homes for sale in the neighbourhood, plus those recently sold. If your target home’s asking price is wildly out of line with these other benchmarks, it might signal something fishy.
If possible, take a second walk through the house. You may notice things (good or bad) on the second viewing that slipped by you the first time.
If you have any questions about the upcoming purchase process, now is the time to ask them. Your realtor or your lawyer can both answer your questions. It’s best to be sure before you start signing binding documents.
Making an offer on your potential new home can be daunting. Here’s where having a realtor comes in very handy. There are several steps to the process, and you need to be sure you’re covering all your bases.
The first, most important part of an offer is the amount of that offer. There’s always room for negotiation; you don’t need to offer exactly the asking price.
The amount you offer for the home depends on many factors: the asking price, the local market, how long it’s been up for sale, and more. Plus, you want to get a good deal.
If it’s a buyer’s market (lots of homes available, not so many buyers) you might be able to get away with an offer well below the asking price. Of course, if it’s too low, the sellers will simply reject it.
In a seller’s market (few homes available, many buyers) on the other hand, you may have to offer more than the asking price to stay competitive. When multiple buyers are interested in one home, it may lead to a bidding war. Taking part in a bidding war may be inadvisable, as you may need to spend more than you planned to if you want to win it.
Your realtor knows about bidding wars and the local market and can help you decide what the right offer is. They’ll also help you put together the other elements of the offer—it’s more than just a dollar amount.
Every offer on a home is different, but there are certainly some common features. Keep in mind, too, that almost every element of an offer is negotiable; the buyer might not accept your offer in its original form.
There are two types of offers you can make on a home: firm offers (also known as irrevocable offers), and conditional offers.
Realistically, most offers you make will have at least a few conditions. Those conditions protect you from certain circumstances. You (with your realtor) may have to negotiate some of these conditions with the seller.
Here are some of the common conditions found in residential real estate offers:
Note that these conditions have to be part of your offer to apply—they’re not automatic.
In addition to an offered purchase price and potential conditions, an offer to buy a home should include:
Once again, your realtor or lawyer will help you get the paperwork together. Altogether, your offer is known as an “offer to purchase” or an “agreement of purchase and sale.” It’s a formal legal document, so you must ensure you’ve prepared it correctly—hence the realtor and lawyer.
You put everything together, sent it off to the seller, and they’ve accepted (perhaps after some negotiation). What happens next?
When your offer is accepted, you’ll put down a deposit on the home as a show of good faith. This deposit will eventually form part of your down payment (assuming the deal closes). The seller decides the amount of the deposit, but around 5% of the purchase price is common.
If any of the agreed-upon conditions aren’t met, and you need to walk away from the deal, you’ll get your deposit back—but only under those conditions.
Typically, you don’t need to hand over a deposit until the subject removal date—more on that shortly.
Once your offer is accepted, you’ll need to meet with your mortgage lender to secure the funds. In order for them to release any money, they’ll ask for most (or all) of the following:
If the lender grants your mortgage, they won’t hand you a sack of money with a dollar sign on it; a lawyer will hold the funds in trust before transferring them to the seller along with your down payment.
Before your mortgage lender releases any funds, you need to show that you’ve insured the new home.
Buying home insurance is a process all its own (see our complete guide here), but it doesn’t need to be daunting. For example, you can get a home insurance quote online from Square One in as little as 5 minutes.
You’ll need to provide details about the home during the quote process. If there’s any information you don’t have, make sure to get it from the seller (or your agent).
After you’ve purchased a home insurance policy, you’ll receive a binder (also known as Confirmation of Insurance). This is a document that confirms the insurance company is insuring the home.
All that’s left before the deal closes is one of the biggest steps in the process: subject removal.
ready for an online quote? Policies start at $12/month if you rent your home and $40/month if you own your home. To see how much you can save with Square One, get a personalized online quote now.
Subject removal is a big step in the purchase process.
The conditions in your offer are also known as “subjects” because your offer is subject to those conditions. The subject removal period is when the buyer and seller work to satisfy the conditions of the offer. It’s typically just 7 days, so expect to be busy.
During this period, you’ll get your mortgage funds set up, have the house inspected and appraised, and so on. The sellers will take care of any last-minute repairs.
This is also the point in time where you’ll buy a home insurance policy, complete your mortgage, and get your down payment together.
Closing day, or completion day, is the day you finally take possession of the new house. On this day, the last documents get signed, and the money changes hands.
On completion day, you’ll pay a visit to your lawyer or notary to sign several documents that they’ll have prepared. These documents relate to the mortgage and the actual property transfer.
You’ll also transfer your remaining down payment (minus the deposit you’ve put down) and closing costs. Your mortgage lender will supply the remaining balance of the purchase price. Your lawyer will hold all of these funds in trust, and transfer them where they need to go.
Once the papers are signed, and all the money is accounted for, that’s it! You’ve closed the deal, and the new house will be yours.
After completion day comes possession day—the day you actually get the keys to the new home. This is often just 1-3 days after completion day.
Your original contract of purchase and sale should specify the date and time that you’re supposed to receive your new keys.
From now on, the process looks a lot more like the typical moving process. You can arrange for a moving company to move your stuff into the new house right away, or leave it empty while you paint or renovate.
At this point, it’s your house, so you can do pretty much anything you like.
After you’ve got the keys, you should take the time to get to know your new home—especially safety features:
There’s a lot to stay on top of as a new homeowner.
First, you need to stay on top of your new financial obligations. In addition to paying your mortgage, property taxes, utilities, and other carrying costs, it’s important to maintain an emergency fund. An emergency fund will help you cover living expenses for a few months, but you can also use it for emergency home repairs.
It’s also important to pay regular attention to home maintenance.
Maintenance is a big category; we’re talking about everything from clearing gutters to fixing leaky plumbing. Some things you’ll need to take care of yourself on an ongoing basis. Other things, you’ll need to hire a qualified professional. It’s important to stay on top of regular maintenance, because it’s typically a lot cheaper to maintain something than to fix or replace it.
Fortunately, we’ve got you covered—we’ve got hundreds of articles for new homeowners.
Here are a few resources you may find helpful to get you started:
Or, check out our complete list of resource centres for all the info you’ll need as a homeowner.
Your mortgage payments should be, at most, 32% of your gross monthly income. Gross income is income before taxes and other deductions are calculated. So, if your gross household income is $5,000 per month, your maximum affordable mortgage payment would be 32% of that: $1,600. If you carry other debt, your affordable number may be less. You can use a mortgage affordability calculator to figure out exactly how much mortgage you can afford.
Federally regulated mortgage lenders in Canada require mortgage applicants to pass a stress test to qualify. The stress test involves proving that you could afford a mortgage at a qualifying interest rate. This test rate is often higher than the rate you will end up with in your actual mortgage.
Since June 2021, the stress test interest rate is the higher of 5.25%, or the rate you already have with your lender plus 2%.
In addition to the stress test, mortgage lenders qualify borrowers based on income, current living expenses, and debt levels. You can use an online mortgage qualification tool to calculate it for yourself.
Generally, a first-time home buyer in Canada is a citizen or permanent resident who has never owned their principal residence. When it comes to first-time home buyer incentives, there may be other restrictions. For example, some impose limits on income, and others limit the purchase price of the potential home. Provincial programs often require the buyer to have lived in the province for a certain time, commonly one year.
To apply for the First-Time Home Buyer Incentive, visit the program’s website and download two forms: the SEM Information Package and the SEM Attestation and Consent Form. You will then submit these forms to your mortgage lender, who will apply for the incentive on your behalf.
Yes. Through the Government of Canada’s Home Buyers’ Plan, you can borrow up to $35,000 per person (so, $70,000 for a couple) from your RRSP to use for your down payment.
If you borrow money from your RRSP through the Home Buyers’ Plan, you must repay those funds within 15 years.
You can use money in your Tax-Free Savings Account (TFSA) to buy a home. Saving for the down payment in a TFSA is a good alternative for those that do not have RRSPs. Unlike with the RRSP-based Home Buyers’ Plan, you don’t need to repay money that you withdraw from your TFSA.
Your down payment needs to be at least 5% of the purchase price of your new home. However, if your down payment is less than 20%, you will have to purchase mortgage insurance. The greater your down payment, the lower your mortgage costs will be, so it’s worth saving for a large down payment.
The minimum down payment for mortgages in Canada is 5%. Those who make down payments of less than 20% must purchase mortgage insurance.
Yes. The greater the down payment you can afford, the more affordable your mortgage payments will be. Your down payment should be as much as you can afford while keeping emergency funds in reserve. You will not have to purchase mortgage insurance if you put down at least 20%.
Before you do anything else, you need to figure out how much you can afford. This means calculating your potential mortgage payments and carrying costs, and comparing these against your income. You should also get pre-qualified for a mortgage. But, be aware that being qualified and being able to afford a mortgage are not the same thing; some lenders may offer you more than you can comfortably afford.
Want to learn more? Visit our Home Buying, Selling and Moving resource centre for everything you need to know about real estate, buying a home, or moving. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Mike Kelly
Mike Kelly is no stranger to working under pressure, Mike works hard for his clients in the Toronto real estate market while always maintaining a relaxed, low-stress environment. He builds trust with his clients through open and honest lines of communication.
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