A Guide for First-Time Home Buyers in Canada
Canada’s real estate market can be tough for first-time home buyers.
A lack of supply, strict mortgage guidelines and elevated prices are obstacles it can be hard to overcome.
Getting a grasp on the home buying process, the assistance programs you might be eligible for, and how to apply for your first mortgage will help you feel more confident about shopping for your first house. Here's how to get started.
Read the 2025 Canadian Home Buyer Report
Find out how would-be buyers and current home owners are feeling about the state of the market.
Figure out if you're actually ready to buy a house
Being financially ready for homeownership is one thing; being emotionally ready is another.
In Canada, where there is so much pressure to become a homeowner, it's easy to gloss over the challenges that come with it.
Answering all or most of the following questions with a 'yes' is a sign that you're prepared:
If buying a home means changing my lifestyle, or living someplace with fewer amenities than I'm used to, will I be happy?
Aside from building equity in my home, do I have a savings plan for the future?
If I have to buy a home that's smaller or older than I've imagined, will I still be satisfied?
Am I ready to maintain a home of my own?
Am I prepared to make sacrifices so I can make homeownership my top financial priority?
Asking yourself these tough questions might feel like you're talking yourself out of buying a home. But it's really about strengthening your resolve.
Find yourself saying 'no' a lot? That's OK. Give yourself some more time to prepare. Rushing into a major purchase can lead to regret and financial struggles, so there's no shame in admitting that you're not ready yet.
» Pressed for time? ⏰ Skip ahead to our first-time home buyer checklist.
Get a leg up with first-time home buyer assistance programs
Federal programs
The government of Canada offers a variety of national programs to help people who are buying their first home.
These programs may extend to Canadian citizens as well as permanent residents and non-permanent residents authorized to work in Canada.
Generally, you’ll be considered a first-time home buyer if you or your common-law partner has never owned a home or investment property. Some programs have exceptions, so you may be considered a first-time home buyer if you’ve previously owned a home but have recently experienced the breakdown of a marriage or common-law partnership.
The Home Buyers’ Plan
The Homebuyers' Plan allows you to withdraw up to $60,000, tax-free, from your registered retirement savings plan (RRSP) to put towards a home purchase.
Funds withdrawn through Home Buyers' Plan imust be paid back within 15 years to remain tax-free.
The Home Buyers’ Tax Credit
The Home Buyers' Tax Credit is a non-refundable income tax credit of up to $10,000 for first-time home buyers.
You can claim the HBT on the first tax return after you've bought a house. It results in a $1,500 tax rebate.
The First Home Savings Account
A First Home Savings Account works a little like an RRSP and a little like a TFSA. Deposits are tax-refundable, and the gains on those deposits are tax-free.
Each year, you can deposit up to $8,000 in your FHSA, up to a total limit of $40,000.
Provincial programs
Looking for even more help? The provincial assistance programs listed below include down payment loans, tax-reduction options and even some non-repayable grants.
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland
Getting a mortgage you can afford depends heavily on the size of your down payment. Learning more about Canada's minimum down payment requirements can help you better prepare for a mortgage application.
Outline a realistic home buying budget
How much house can you afford?
You can’t make an offer on a home until you know how large a mortgage you’ll be approved for. Skipping this step could lead to painful legal and financial headaches.
Here are two ways to determine your home buying budget:
Use a mortgage calculator. A mortgage affordability calculator estimates the maximum home price you can afford based on your income and debts. A mortgage payment calculator breaks down a home purchase into monthly payments. Both can be useful, but neither one is an official document you can base an offer on.
Get pre-approved for a mortgage. A mortgage pre-approval from a lender or mortgage broker tells you how much money you will be able to borrow for a future home purchase. This is an indispensable step in the home buying process.Â
Estimate upfront costs
Your down payment
The cash you pay upfront for a home is called a down payment. You must make a down payment to secure a mortgage.
To qualify for an insured mortgage, you'll have to adhere to Canada’s minimum down payment guidelines. Five percent of a home's purchase price is the bare minimum you can put down. For an uninsured mortgage, you'll have to put down at least 20%.
Many first-time buyers get their parents' help when making a down payment. It's important to understand the rules around gifted down payments.
Closing costs
Closing costs pay for things like land transfer taxes, appraisals and legal fees.
The exact amount can vary, but be prepared to pay 3-5% of the home’s market value. Use a closing costs calculator to estimate what you might pay in a particular province.
When saving for a down payment, a First Home Savings Account, Tax-Free Savings Account or the Home Buyers’ Plan may be better options than a regular savings account. These tools each have their own rules and benefits, so compare them before you start using one.
Factor in other expenses
Your mortgage payment is just one homeownership expense. To get a clear idea of how much your first home might cost, you have to factor in other expenses, including:
Commuting costs.
Lifestyle spending like shopping, socializing and subscriptions.
Utility bills that aren’t factored into your mortgage pre-approval.
Parking.
Seasonal maintenance costs.
Make your housing market survival plan
It's rough out there, especially when you're doing everything for the first time. Don't go it alone (and make sure your expectations are rooted in reality).
Assemble your real estate team
As a first-timer, it’s inevitable that you’ll bring in a professional or two to help complete the home buying process. You’ll generally need to find:
A real estate agent or Realtor. You don’t need to hire an agent to help you find a home, but their local expertise and negotiating experience may be invaluable. As a buyer, you don’t pay commission to an agent or Realtor.
A mortgage professional. You can’t get a mortgage without either a bank’s mortgage advisor or an independent mortgage broker underwriting your loan and explaining the terms of your mortgage.Â
A real estate lawyer. Another must-have, if only to look over the details of your purchase agreement and ensure you understand them.Â
Finding real estate professionals can be somewhat stressful since you’ll want to find people you can trust. Start by asking your friends and family for recommendations.
If necessary, expand your search to the internet. Look for a combination of positive customer reviews and extensive local experience.
Understand local housing conditions
One of the biggest challenges first-time home buyers face is entering a competitive housing market. Navigating it in a productive way requires focusing on current, local conditions. Ignore national average prices.
To get an accurate sense of how much properties cost where you intend to buy, get familiar with Realtor.ca, where you can search current listings based on location, price and property details.
If you want data, focus on what’s made available by either your provincial or municipal real estate board. Much of the information you seek should be provided by the agent or realtor you decide to work with.
Brace for a bidding war
There’s a possibility that several other buyers might challenge you for the home you want. It's not uncommon for first-time buyers to find themselves in a bidding war.
Bidding wars are risky. The emotions involved can cloud your judgment and lead to overbidding. It’s important to put a hard cap on the amount you offer on a property, even if that means missing out on multiple homes.
When the housing market is slow, real estate agents often price homes below their expected selling price to create more competition. Keep that in mind if you find a home that's priced suspiciously low.
Best mortgage rates in Canada
Compare offers from Canada’s top mortgage lenders and brokers.
Getting approved for your first mortgage
Even if you’re a first-time home buyer, everyone plays by the same rules when it’s time to get a mortgage.
👉 Tap into the tabs below to get answers to common questions first-time buyers have about the mortgage process.
How do I get the best mortgage rate?
Mortgage rates are all about risk. The less risky you seem as a borrower, the lower the rate you'll be offered. A steady income, high credit score and positive credit report provide evidence to lenders that you'll be able to pay back your mortgage.
Comparing mortgage rates from lenders and mortgage brokers is another way to get a better rate. Just as you’d probably go to multiple dealerships if you were car shopping, you stand to benefit from speaking to multiple mortgage lenders.
And just because it’s your first time getting a mortgage doesn’t mean you shouldn’t negotiate your rate. Always ask if your lender or broker can improve on their initial offer.
How do lenders decide how much I can borrow?
Lenders use debt service ratios two common formulas to find maximum loan amounts. In most cases:
Your gross debt service ratio, which includes your projected mortgage, property taxes and utilities, can’t exceed 39% of your income.
Your total debt service ratio, which includes your housing expenses and your monthly debts (car payments, student loans, credit card payments, child support, etc.) can’t exceed 44% of your income.
Don’t feel like you have to construct your budget around the highest possible amount you can borrow. Even if a lender is willing to approve a particular amount, it may not be affordable” for you in the long run.
Can I get a mortgage if I have bad credit?
The minimum credit score for a traditional mortgage with a mainstream lender is usually around 680. You might still qualify for a mortgage with a B-lender if your credit score is lower, though they typically charge higher interest rates.
If you have the option of waiting, you could put buying on hold in order to build your savings, improve your credit score and try to qualify with an A-lender.
How long should my amortization period be?
The amortization period is how long it will take you to pay off your mortgage in full. Most Canadians choose amortizations of 25 years or less. Your monthly payment will be smaller if you pay off your mortgage over a longer period of time, but you could pay much more in interest.
30-year amortizations are also available to all first-time home buyers and anyone purchasing new construction.
What is pre-approval?
During a mortgage pre-approval, a lender or mortgage broker will look at your finances and determine how much they're willing to lend you. Once pre-approval is complete, you can make a legitimate offer on a home.
During pre-approval, you'll make other decisions regarding your mortgage, such as the interest rate type and how long you'd like your mortgage term to be.
Your choices will often be determined by cost, qualification requirements or convenience. Your mortgage advisor can explain how each option will affect your mortgage, but the ultimate decision is yours.
You’ll need to pass a mortgage stress test
To qualify for a mortgage in Canada, all home buyers must pass the mortgage stress test.
You must show that you can afford mortgage payments based on an interest rate of 2% over the rate you’re offered, or 5.25%, whichever is higher.
If the bank is offering you a rate of 4%, for example, you would need to prove that you can still afford to make monthly mortgage payments if interest rates rose to 6%.
Do I pay taxes with my mortgage?
In some cases, you can opt to pay your property taxes as part of your monthly mortgage payment. This isn’t mandatory, but bundling the two costs means one less payment for you to keep track of.Â
Should I get my mortgage from a bank or a mortgage broker?
Typically, a mortgage broker will provide more options than a Big Six bank’s mortgage advisor, who can't recommend another lender's products.
A mortgage broker works with multiple lenders, some of which might have less stringent lending criteria. A bank, on the other hand, has one strict set of lending standards to hold you to.
Do first-time home buyers have to go through a mortgage stress test?
If you're getting a mortgage from one of Canada's Big Six banks, you must pass the mortgage stress test. The stress test determines whether you could afford your mortgage payment if your interest rate increases.
The stress test only applies at federally regulated financial institutions. Credit unions and alternative lenders won't put you through one, though they will have their own metrics for deciding how much mortgage you can handle.
 First-time home buyer checklist
âś… Firm up your credit score:
Access your credit score for free to see where you stand now.
Check the report for any lingering issues or mistakes.
Decide if there are debts that can be paid down quickly, which could improve your score.
âś… Create an initial budget:
Confirm the down payment savings you have available.
Add up your household monthly income and subtract recurring debt payments and monthly expenses.
Use a mortgage affordability calculator to estimate mortgage payment amounts.Â
âś… Get pre-approved for a mortgage:
Contact your bank or a mortgage broker and assemble the list of documents required for pre-approval.
When pre-approval is complete, review your mortgage options.
✅ Decide what you’re looking for:
Based on your pre-approval amount, research homes available within your budget.
Make a list of “must-haves” for the home you buy, including location and neighbourhood amenities.
Make a list of “nice-to-haves” that you’re willing to compromise on.
âś… Find a real estate agent to work with:
Ask friends and family if there’s a local agent they would recommend.Â
Interview a few agents until you find one you’re comfortable with.
Discuss your must-haves and nice-to-haves with your agent.Â
âś… View properties and make offers:
Ask your agent to explain the various conditions sellers might require when accepting offers.Factor in the taxes, insurance, upkeep and repairs you’d be paying for as a homeowner.
Frequently asked questions
What assistance is available for first-time home buyers in Canada?
What assistance is available for first-time home buyers in Canada?
Canadian first-time home buyers can use the Home Buyers’ Plan, the First Home Savings Account and the Home Buyers’ Tax Credit to help make home buying more affordable. They can also access several provincial and municipal programs.
Should I keep renting or buy my first house?
Should I keep renting or buy my first house?
The long-term benefits of homeownership are hard to deny, but paying off a home at today’s prices can mean making significant lifestyle and spending sacrifices not everyone is ready for. The decision to rent or buy ultimately comes down to what you can afford and what you’re willing to give up.
DIVE EVEN DEEPER
Clay Jarvis
Clay Jarvis
Clay Jarvis