A first-time home buyer mortgage in Canada comes down to a few numbers: a minimum down payment of 5% on the first $500,000, a stress test at the greater of your contract rate + 2% or 5.25%, and closing costs of roughly 1.5% to 4% of the price. This 2026 guide explains each one, plus CMHC insurance, the FHSA, the RRSP Home Buyers' Plan, land transfer tax rebates and 30-year amortizations, in the order you'll meet them.
First-time home buyer mortgage in Canada: the short answer
If you're buying your first home in Canada in 2026, you can get a mortgage with as little as 5% down on a home up to $500,000, plus 10% on the portion above that, up to $1.5 million. Put down less than 20% and your mortgage needs default insurance, usually through CMHC. Every federally regulated lender will qualify you at a stress-test rate rather than the rate you'll actually pay, and you'll need cash for closing costs on top of the down payment.
The good news is that first-time buyers get tools other buyers don't. The First Home Savings Account (FHSA) and the RRSP Home Buyers' Plan let you build a down payment with tax advantages. Ontario and the City of Toronto offer land transfer tax rebates. And first-time buyers can access a 30-year amortization on an insured mortgage. The rest of this guide explains each piece, then puts them in order as a step-by-step process.
Minimum down payment for first-time buyers
Canada's minimum down payment is tiered, not flat. You need 5% on the first $500,000 of the purchase price, 10% on the portion between $500,000 and $1.5 million, and 20% on homes priced at $1.5 million or more1. Each rate applies only to the slice of the price in its band, so a home just over $500,000 doesn't suddenly need 10% on the whole amount. These tiers apply to one- and two-unit homes; an owner-occupied three- or four-unit property needs at least 10% down.
The 20% figure everyone quotes is the level that lets you skip mortgage insurance, not the minimum to buy. At $1.5 million or more, though, default insurance isn't available at all, so 20% becomes the floor. Test your own price with the down payment calculator, or see more worked examples on our minimum down payment page.
- Savings, including money built up in an FHSA or withdrawn through the RRSP Home Buyers' Plan.
- A gift from immediate family, which lenders accept with a signed gift letter confirming it isn't a loan. See gifted down payment mortgages.
- Proceeds from investments you sell to fund the purchase.
| Purchase price | How the minimum is calculated | Minimum down payment |
|---|---|---|
| $400,000 | 5% of $400,000 | $20,000 |
| $500,000 | 5% of $500,000 | $25,000 |
| $700,000 | 5% of $500,000 + 10% of $200,000 | $45,000 |
| $800,000 | 5% of $500,000 + 10% of $300,000 | $55,000 |
| $1,600,000 | 20% of the full price (no insurance available) | $320,000 |
CMHC mortgage insurance, explained
With less than 20% down, your mortgage is high-ratio and must carry mortgage default insurance from CMHC, Sagen or Canada Guaranty. The insurance protects the lender, not you, if the loan defaults. It's also the reason 5%-down ownership exists at all: without it, every buyer would need 20%.
The premium is a percentage of your mortgage, and that percentage rises as your down payment shrinks. It's usually added to your mortgage balance rather than paid in cash, so it doesn't increase the deposit you bring. One catch: in Ontario, Quebec and Saskatchewan, provincial sales tax applies to the premium, can't be added to the loan and is payable at closing2, so budget for it.
Insured mortgages often come with lower interest rates than uninsured ones, because the insurer covers the lender's risk. A smaller down payment doesn't automatically mean a worse rate, and waiting years to reach 20% isn't always the better path. Estimate your premium with the CMHC insurance calculator, and read how pricing works on our CMHC mortgage insurance page.
| Down payment | Mortgage type | Default insurance |
|---|---|---|
| Under 20% (home up to $1.5M) | High-ratio (insured) | Required, premium usually added to the loan |
| 20% or more | Conventional | Not required |
| Home priced at $1.5M or more | Conventional only | Not available, 20% minimum |
The FHSA and the RRSP Home Buyers' Plan
These two accounts are the core of a tax-smart down payment for first-time buyers, and you don't have to choose between them.
| Feature | FHSA | RRSP Home Buyers' Plan |
|---|---|---|
| Maximum | $8,000 a year, $40,000 lifetime | $60,000 withdrawal per person |
| Tax on contributions | Deductible | Deductible, as with any RRSP contribution |
| Tax on a first-home withdrawal | Tax-free | Tax-free |
| Repayment | None required | Repaid to your RRSP over 15 years |
| Couples | Each spouse can open their own | Up to $120,000 combined |
First Home Savings Account (FHSA)
The FHSA lets you contribute up to $8,000 a year, to a $40,000 lifetime maximum3. Contributions are tax-deductible like an RRSP, and qualifying withdrawals for a first home come out tax-free like a TFSA, with no repayment. You must be a first-time buyer, a Canadian resident and of legal age (up to 71) to open one4, and the account can stay open for up to 15 years (or until the end of the year you turn 71). Because it pairs a deduction going in with a tax-free withdrawal coming out, it's usually the first account a first-time buyer should look at.
RRSP Home Buyers' Plan (HBP)
The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP tax-free toward a first home, then repay it to your RRSP over 15 years5. A couple buying together can withdraw up to $120,000 combined. RRSP contributions made within 90 days before an HBP withdrawal may not be deductible, so a contribution made just before closing may not give you the tax break.
Stacking both accounts
Because both programs are separate and individual, you can use them together: up to $40,000 from an FHSA plus up to $60,000 through the HBP, or up to $100,000 of tax-advantaged down payment per person. Two spouses can each use both. The order you draw from them affects your taxes and your repayment schedule, so model the sequence before you withdraw a dollar.
Land transfer tax rebates and the GST/HST new housing rebate
Land transfer tax is often the largest closing cost, and it's where first-time buyer rebates do the most work. Several provinces that charge land transfer tax offer first-time buyer relief that reduces or eliminates the bill, and you usually claim it at closing through your lawyer.
In Ontario, first-time buyers can claim a provincial refund of up to $4,0006. Inside the City of Toronto you pay a second, municipal land transfer tax on top, and first-time buyers can claim a Toronto rebate of up to $4,4757, for up to $8,475 combined. Outside the City of Toronto there's no municipal land transfer tax, so a buyer in Vaughan pays the provincial tax only. Eligibility generally requires that you've never owned a home anywhere and that you'll live in the property. Estimate your bill and rebate with the land transfer tax calculator.
If you're buying a newly built or substantially renovated home, you may also recover part of the GST, or the federal portion of the HST, through the GST/HST new housing rebate. The amount depends on the home's price. Builders often credit it directly into the purchase price, so confirm in writing how your builder is handling it. It doesn't apply to resale homes, which is worth factoring in when you compare a new build with a resale.
Many provinces and cities also run their own first-time buyer incentives, such as extra rebates, property tax deferrals or local down payment help. These change often and vary widely by location, so confirm current rules with your broker before you count on one.
One program you may still see mentioned is gone: the federal First-Time Home Buyer Incentive (a shared-equity loan) closed to new applications on March 21, 202411. Nothing replaced it one-for-one; the FHSA, the larger Home Buyers' Plan limit and 30-year insured amortization are separate measures.
Amortization options: 25 or 30 years
Amortization is the total time it takes to pay off your mortgage. Insured mortgages have a standard 25-year amortization, but since December 15, 2024 first-time buyers, and buyers of newly built homes, can access a 30-year amortization on an insured mortgage8.
Stretching to 30 years lowers each monthly payment, which lowers the qualifying payment lenders test and can make a tight budget work. The trade-off is more interest over the life of the loan, and it doesn't remove the stress test. Compare the two on our 25 vs 30-year amortization page, or run both through the affordability calculator.
Amortization isn't your only structural choice. You'll also pick a term and a rate type, and each behaves differently when rates move. Our guide to fixed vs variable mortgage rates in Canada walks through both so you can match the choice to your budget and your comfort with risk. For today's pricing, check current mortgage rates rather than relying on a number in an article.
The stress test and your debt ratios
Lenders must qualify you at the greater of your contract rate + 2% or 5.25%9. For illustration, if you were offered an assumed 4.5% rate, you'd be qualified as though you were paying 6.5%. Your real payment is still based on your actual rate; the stress-test rate only decides how large a mortgage you qualify for. It applies to every insured mortgage (under 20% down) at any lender, and to uninsured mortgages at banks and other federally regulated lenders, so nearly every first-time buyer goes through it.
That qualifying rate feeds two debt ratios. GDS (Gross Debt Service) covers your housing costs, meaning the mortgage payment, property tax, heat and half of any condo fees, divided by your gross income. For insured mortgages it generally needs to stay under 39%. TDS (Total Debt Service) adds your other debts, such as car loans, credit cards and lines of credit, and generally needs to stay under 44%10. Existing debts can shrink your maximum even on a solid income. Our GDS and TDS guide explains the math.
- Pay down other debt. Clearing a car loan or credit-card balance frees up TDS room.
- Add a co-applicant. A second income is added to the qualifying calculation.
- Consider a 30-year amortization. A lower qualifying payment can raise your maximum.
- With 20% or more down, ask about credit unions. Some provincially regulated credit unions set their own qualifying rules for uninsured mortgages.
Getting pre-approved
A pre-approval should come before house-hunting, not after. A lender reviews your income, credit and down payment, confirms how much they'll lend, and commonly holds a rate for 90 to 120 days (lender-dependent) so you're protected if rates rise while you shop. It also tells sellers your offer is serious.
Don't confuse it with a pre-qualification, which is a quick estimate based on numbers you provide. Our comparison of mortgage pre-approval vs pre-qualification explains when each is enough. When you're ready, follow our step-by-step mortgage pre-approval process. Most lenders will ask for:
- Government-issued photo ID
- Proof of income: recent pay stubs, an employment letter, and T4s or Notices of Assessment (self-employed buyers generally show two years of income)
- Recent bank statements showing your down payment
- A signed gift letter if any of the funds are a gift
- Details of your current debts, such as car loans, lines of credit and credit cards
Closing costs: the cash you need beyond the down payment
Your down payment isn't the only cash you'll need on closing day. Budget roughly 1.5% to 4% of the purchase price for closing costs. The exact amount depends on your province, your city and the property, and land transfer tax is usually the largest single item before rebates. Typical costs include:
- Land transfer tax, provincial and, in Toronto, municipal, less any first-time buyer rebate
- Legal fees for the real estate lawyer who handles your closing and registers your title
- Title insurance arranged through your lawyer
- A home inspection, and an appraisal in some cases
- Adjustments for property tax or other costs the seller has prepaid
- Provincial sales tax on your default insurance premium, in Ontario, Quebec and Saskatchewan
The first-time buyer mortgage process, step by step
Here's the order most first-time buyers move through, from the first question to keys in hand.
- 1. Set your budget. Work out what your income, debts and down payment support at the stress-test rate, and what monthly payment you're comfortable living with. Start with the affordability calculator.
- 2. Build your down payment. Open an FHSA, plan any Home Buyers' Plan withdrawal, line up gift letters, and give your funds time to sit in your account.
- 3. Check your credit and gather documents. Fix small issues early, and assemble your ID, income proof, bank statements and debt details once.
- 4. Get pre-approved. Secure a rate hold and a documented budget before you tour homes.
- 5. Shop inside your number. Factor in closing costs, property tax, heat and condo fees, not just the list price.
- 6. Make an offer with conditions. A financing condition and a home inspection condition protect you while the lender reviews the property.
- 7. Finalize the mortgage. The lender approves the specific home, often with an appraisal, and your deal firms up.
- 8. Close with your lawyer. Your lawyer reviews title, applies your land transfer tax rebate, collects your down payment and closing costs, and registers the home in your name.
Why first-time buyers work with a mortgage broker
A bank can only offer its own products. A mortgage broker takes one application to many lenders, which matters for first-time buyers whose files don't fit a single bank's box: newcomers, the self-employed, buyers with thinner credit, or anyone stretching for a first place. Mortgage Squad Advisors is an FSRA-licensed brokerage (#13737) with access to 100+ lenders, including banks, credit unions, monolines and alternative lenders. On standard residential deals we're paid by the lender, so our guidance and pre-approval are typically free to you, and any fee on a specialized file is disclosed in writing before you commit.
If you'd like to understand how brokers work before you choose one, read our complete guide to working with a mortgage broker in Canada. For the lender's side of qualifying, see first-time buyer mortgage requirements, and when you're ready to start, our first-time home buyer mortgage page is the place to begin.
Find your local mortgage broker: start at our mortgage broker page, or go straight to a mortgage broker in Toronto, Vaughan or Mississauga.
Frequently asked questions
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