First-Time Home Buyer Guide: Canada 2026
Buying your first home in Canada is one of the biggest financial decisions you will make. This guide covers everything — from saving for your down payment to closing day — so you can buy with confidence and avoid costly mistakes.
Step 1: How Much Down Payment Do You Need?
The minimum down payment depends on the home's purchase price:
| Purchase Price | Min Down Payment | CMHC Required? |
|---|---|---|
| Up to $500,000 | 5% | Yes |
| $500,001 – $999,999 | 5% on first $500K + 10% on remainder | Yes |
| $1,000,000+ | 20% | No |
Step 2: CMHC Mortgage Default Insurance
If your down payment is less than 20%, your lender requires CMHC default insurance. The premium is added to your mortgage:
| Down Payment | CMHC Premium | On a $600K Mortgage |
|---|---|---|
| 5% – 9.99% | 4.00% | +$24,000 |
| 10% – 14.99% | 3.10% | +$18,600 |
| 15% – 19.99% | 2.80% | +$16,800 |
| 20%+ | None | — |
Step 3: The Mortgage Stress Test
All federally regulated lenders apply the B-20 stress test. You must qualify at the higher of:
- Your actual mortgage rate + 2%
- The minimum qualifying rate of 5.25%
Example:
At a 5.25% rate, you must qualify at 7.25%. GDS ratio (housing costs/gross income) must be ≤39%, and TDS (all debts/gross income) must be ≤44%.
Step 4: Government Programs for First-Time Buyers
First Home Savings Account (FHSA)
Contribute up to $8,000/year (max $40,000 lifetime). Tax-deductible contributions + tax-free qualifying withdrawals. Open one even if you're years away from buying — contribution room accumulates.
CRA FHSA details →RRSP Home Buyers' Plan (HBP)
Withdraw up to $60,000 per person ($120,000 per couple) tax-free from your RRSP. Funds must be on deposit 90+ days. Repay over 15 years.
First-Time Home Buyers' Tax Credit
A $10,000 non-refundable federal tax credit worth up to $1,500 in tax savings, claimable in the year you buy.
GST/HST New Housing Rebate
If buying a newly built home under $450,000, you may qualify for a partial rebate of the GST/HST paid on purchase.
Step 5: Budget for Closing Costs (1.5%–4%)
Step 6: Mortgage Pre-Approval
A pre-approval confirms how much a lender will lend, locks in a rate for 90–120 days, and signals to sellers you're serious. Documents typically required:
Documents Needed
- 2 years of T4s or NOAs
- Recent pay stubs (last 90 days)
- 3 months of bank statements
- Down payment proof
- Employment letter
- SIN and government ID
What Lenders Check
- Credit score (680+ preferred)
- GDS ratio ≤39%
- TDS ratio ≤44%
- Employment stability
- Down payment source
- Stress test qualification
6 Mistakes First-Time Buyers Make
Ready to Take the Next Step?
Use our free tools to check affordability, compare rates, and calculate your CMHC premium — no credit impact.
Frequently Asked Questions
How much do I need for a down payment on my first home in Canada?
The minimum down payment is 5% for homes up to $500,000. For $500,001–$999,999 you need 5% on the first $500K plus 10% on the remainder. For homes $1M+, the minimum is 20% and CMHC insurance is not available.
What is the First Home Savings Account (FHSA)?
Introduced in 2023, the FHSA lets first-time buyers contribute up to $8,000/year (lifetime max $40,000). Contributions are tax-deductible like an RRSP, and qualifying withdrawals are completely tax-free like a TFSA.
What is the mortgage stress test?
The federal stress test requires you to qualify at the higher of your actual rate + 2%, or 5.25%. This ensures you could afford payments if rates rise, and is applied by all federally regulated lenders.
Can I use my RRSP to buy a home?
Yes. The RRSP Home Buyers' Plan lets first-time buyers withdraw up to $60,000 per person ($120,000 for couples) tax-free. You have 15 years to repay the amount back into your RRSP.
What closing costs should I budget for?
Budget 1.5%–4% of the purchase price for closing costs, including land transfer tax, legal fees ($1,500–$3,000), title insurance ($300–$500), home inspection ($400–$600), and property tax adjustment.
How does CMHC mortgage insurance work?
CMHC provides mortgage default insurance for down payments under 20%. The premium is 2.8%–4.0% of the mortgage amount added to your mortgage balance. It protects the lender, not you. PST on the premium must be paid at closing in ON, QC, MB, and SK.
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