From your first FHSA contribution to handing the lawyer your closing wire, here's the practitioner's roadmap to buying a home in Canada. Built around the real Canadian rules — OSFI B-20 stress test, CMHC premium tiers, FHSA + RRSP HBP stacking, provincial land transfer taxes — and the steps a licensed broker actually runs.
How much you actually need for a down payment
Down payment math in Canada is tiered. The federal minimum is 5% on the first $500,000, 10% on the portion from $500K to $1.5M, and 20% at $1.5M or more1. Anything below 20% requires default insurance: a one-time premium of 2.80% to 4.00% of the loan, usually added to your mortgage balance2.
These minimums apply to insured mortgages. If you have 20% or more, you can take an insurable or conventional mortgage and skip the premium, though insured rate sheets are often a little cheaper than conventional ones.
| Purchase price | Min down ($) | Min down (%) | CMHC premium est. |
|---|---|---|---|
| $300,000 | $15,000 | 5% | $11,400 (4.00%) |
| $500,000 | $25,000 | 5% | $19,000 (4.00%) |
| $700,000 | $45,000 | 6.4% | $26,200 (4.00%) |
| $1,000,000 | $75,000 | 7.5% | $37,000 (4.00%) |
| $1,400,000 | $115,000 | 8.2% | $51,400 (4.00%) |
| $1,500,000 | $300,000 | 20% | $0 (uninsured) |
FHSA + RRSP HBP — the most powerful down-payment stack in Canadian tax law
Two federal programs let first-time buyers fund their down payment with pre-tax dollars: the First Home Savings Account (FHSA), launched in 2023, and the RRSP Home Buyers' Plan (HBP), which has existed since 1992. They stack.
FHSA — $40K, tax-deductible AND tax-free withdrawal
Contribute up to $8,000 per year ($40,000 lifetime). Contributions are generally deductible, like an RRSP; growth is sheltered; and a qualifying withdrawal to buy your first home is tax-free3. That combination is what makes it more powerful than an RRSP.
Two spouses who each qualify can each have an FHSA, for up to $80,000 of household down-payment savings.
Eligibility: a Canadian resident, of legal age and 71 or younger, who is a first-time home buyer (broadly, you haven't lived in a home you or your spouse owned in the current year or the previous four calendar years)4.
RRSP HBP — $60K, tax-deferred
The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSPs for a first home5 (the limit was $35,000 before April 2024). You repay it over 15 years; any year's minimum repayment you miss is added to your taxable income.
The HBP is a loan from your own RRSP, not a tax-free withdrawal: the money has to go back in. The FHSA is structurally better, but the HBP is a useful supplement because $40K isn't always enough.
Two eligible spouses → up to $120,000 from the HBP.
Combined household max: ~$200,000
FHSA: $80K (two spouses). HBP: $120K (two spouses). Combined: $200,000 of tax-advantaged down payment funding for a first-time-buyer couple.
We model the optimal sequence (which account to deplete first) for your tax situation — usually FHSA first because the withdrawal is permanently tax-free, then HBP because repayment can be managed.
The stress test — what you'll actually qualify for
Federally regulated lenders must qualify you at the greater of your contract rate + 2% or 5.25%6; insured mortgages face the same federal test. So an illustrative 4.39% contract rate qualifies you at 6.39%.
The stress test doesn't change your monthly payment. It determines the maximum mortgage the lender will give you. Two debt-service ratios drive the math: GDS (housing costs ÷ gross income, max 39% for insured mortgages) and TDS (housing + all other debts ÷ gross income, max 44%)7.
Illustrative: a household with $150,000 gross income and $400/mo of other debt qualifies for noticeably less at the stress-test rate than the contract rate alone would allow. For many buyers the stress test, not the down payment, is the binding limit.
CMHC, Sagen, and Canada Guaranty — how default insurance works
Any mortgage from a federally regulated lender with less than 20% down requires default insurance. Three insurers operate in Canada: CMHC (a federal Crown corporation), Sagen (formerly Genworth Canada) and Canada Guaranty. Their core rules and premiums are very similar.
The premium is a percentage of the loan amount, usually added to the mortgage. It protects the lender against borrower default, not you. In Ontario, Quebec and Saskatchewan, provincial sales tax on the premium must be paid in cash at closing2.
Insurable mortgages (20%+ down, where the lender may insure the loan on the back end through portfolio insurance) carry no premium for you, and insurable rates are often a little lower than conventional ones.
| Down payment % | LTV | Premium |
|---|---|---|
| 5-9.99% | 90.01-95% | 4.00% |
| 10-14.99% | 85.01-90% | 3.10% |
| 15-19.99% | 80.01-85% | 2.80% |
| 20%+ | ≤ 80% | 0% (uninsured) |
Land transfer tax — by province + Toronto MLTT
Land transfer tax is paid when the transfer is registered on closing8. Most provinces charge a land transfer tax or an equivalent; Alberta and Saskatchewan charge title registration fees instead. The City of Toronto adds its own Municipal Land Transfer Tax, which roughly doubles the bill for homes inside the city.
First-time buyers can claim refunds: up to $4,000 on Ontario's tax9 and up to $4,475 on Toronto's10, so up to $8,475 combined for an eligible first-time buyer in Toronto. Other provinces have their own programs and thresholds.
| Where you buy | LTT structure | On an $800K home | First-time buyer refund |
|---|---|---|---|
| Ontario (outside Toronto) | Tiered 0.5-2.5% | $12,475 | Up to $4,000 |
| City of Toronto | Provincial + municipal (MLTT) | $24,950 | Up to $8,475 combined |
| Alberta | No LTT (title registration fees) | Fees only | — |
Closing costs — the full list, not just LTT
Budget 1.5-4% of purchase price for total closing costs. The biggest single line is land transfer tax (above), but it's far from the only one.
- Land transfer tax — provincial + municipal (Toronto), the big one
- Legal fees — $1,500-2,500 typical for a residential purchase including disbursements
- Title insurance — $300-500, one-time, protects against title defects + fraud
- Home inspection — $400-700 if you choose to have one (strongly recommended on resale)
- Appraisal: $300-500 if the lender doesn't cover it (some insured purchases don't need a full appraisal)
- Status certificate — $100-300 on condo purchases — your lawyer reviews the condo corporation's finances + bylaws
- Mortgage default insurance PST: in Ontario, Quebec and Saskatchewan, provincial sales tax on the insurance premium, paid at closing (it can't be added to the mortgage)
- Property tax adjustment — you reimburse the seller for property taxes they've prepaid past the closing date
- Utility adjustments — same idea for water, gas, etc.
- Moving costs — $500-3,000 depending on distance and contents
The Canadian home-buying process, step by step
From your first FHSA contribution to handing the lawyer your closing wire, here's the realistic timeline.
- Year -3 to -1: Open FHSA, start contributing. Build credit (2+ trade lines reporting clean for 12+ months). Pay down high-interest debt.
- Month -4 to -3: Get pre-qualified by a broker. No bureau pull, 5-minute conversation, get your stress-tested max.
- Month -3 to -2: Get formally pre-approved. One credit check, document submission, and a rate hold (often 90-120 days, depending on the lender).
- Month -2 to 0: House-hunt within your stress-tested budget. Make firm offers (with the broker's written pre-approval, you can usually skip the financing condition if the market demands it).
- Offer accepted (day 0): Engage your real-estate lawyer. We firm the file with the lender — appraisal, final underwriting, written commitment.
- Days 0 to 21 (financing condition): Lender approves the file. Appraisal complete. Insurance confirmed. We waive financing condition.
- Days 21 to closing: Lawyer prepares title transfer + status certificate + insurance binders. You wire down-payment funds to the lawyer's trust 3-5 days before closing.
- Closing day: Lender funds the mortgage to the lawyer's trust. Lawyer pays the seller and registers title in your name. Keys typically released 1-2pm.
- Year 2+: Reset rate at first renewal. Plan your next move — refinance, second property, or pay-down acceleration.
The 7 most common mistakes Canadian first-time buyers make
- Shopping at nominal max, not stress-tested max — the stress test is binding. House-hunt at the qualifying rate.
- Skipping pre-approval to ‘save time’ — sellers don't take pre-qualification letters seriously. Pre-approval IS the cost of entry in competitive markets.
- Not stacking FHSA + HBP — leaves real tax dollars on the table. Even if you don't max both, use both.
- Forgetting closing costs — budgeting only for the down payment + mortgage payment, then scrambling at closing for an extra $20K of LTT + legal + adjustments.
- Locking in conventional when insurable is available: if you have 20%+ down, ask whether your file qualifies for insurable pricing, which is often lower.
- Waiving financing condition without a written pre-approval — if the lender pulls the offer at appraisal, you forfeit the deposit. Don't go firm without confirmed lender appetite.
- Going only to your bank's branch: a branch offers one lender's products. A brokerage compares many lenders, and broker-channel rates are often below a branch's first offer.
Programs you can stack as a Canadian first-time buyer
- FHSA: $40K lifetime, deductible contributions and tax-free qualifying withdrawals. Two eligible spouses → up to $80K.
- RRSP HBP: up to $60K each, repaid over 15 years. Two eligible spouses → up to $120K.
- Ontario first-time buyer land transfer tax refund: up to $4,000.
- Toronto MLTT first-time buyer rebate: up to $4,475 (up to $8,475 combined with Ontario's).
- GST/HST new housing rebates: on qualifying newly built homes, including a first-time home buyers' GST/HST rebate and Ontario's new housing rebate; eligibility depends on price, dates and occupancy13.
- 30-year insured amortization: since December 15, 2024, all first-time buyers and all buyers of newly built homes can take a 30-year amortization on an insured (under 20% down) purchase14.
- Insured mortgages up to $1.5M: since December 15, 2024, the insured-mortgage price cap is $1.5M (up from $1M), with the tiered minimum down payment above $500K.
Your next step
If you've read this far, you're either 0-3 months from buying or seriously considering it within 12 months. Both timelines benefit from a 5-minute pre-qualification call — no bureau pull, no commitment, just an honest read on your stress-tested max + the down-payment stack you should be optimizing.
Or if you'd rather just play with the numbers first, our affordability calculator + stress test + CMHC premium calculators are all free and Canadian-correct.
Frequently asked questions
Don’t see yours? Ask Maya.
How much down payment do I need to buy a home in Canada?
What is the First Home Savings Account (FHSA)?
Can I combine the FHSA with the RRSP Home Buyers' Plan?
What is the Canadian mortgage stress test?
How long does a Canadian mortgage take to close?
What are the closing costs when buying a home in Canada?
Do I need a home inspection?
What's the difference between pre-qualified and pre-approved?
Can I back out if my financing falls through?
What is land transfer tax and how much will I pay?
How do I qualify if I'm self-employed?
Can newcomers to Canada buy a home in their first year?
Talk to a real Canadian advisor.
No bureau pull to begin. 5-minute pre-qualification. We respond within the next business hour.