Buying Your First Home in Canada: What You Need to Know

A first home purchase in Canada comes down to five things: knowing your real budget after the mortgage stress test, meeting the minimum down payment (5 percent up to $500,000, more above that), using the first-time-buyer programs (the FHSA, the Home Buyers' Plan, and provincial tax exemptions), understanding the offer-to-possession process, and keeping cash aside for closing costs of 1.5 to 4 percent on top of the down payment. This guide walks through each, with the current program limits and the BC specifics.

Your Real Budget: The Stress Test

Federally regulated lenders must qualify you not at your actual mortgage rate but at the higher of your contract rate plus 2 percentage points or 5.25 percent. So a rate in the mid-4s is tested around 6.5 percent. Your total housing costs — mortgage, property tax, heat, and half of any condo fee — generally can't exceed about 39 percent of gross income, and total debt payments about 44 percent.

Get a mortgage pre-approval before you shop. It confirms the amount a lender will advance based on your credit, income, and assets, and usually holds your quoted rate for 90 to 120 days while you look. If the numbers don't work yet, the rental market has softened in some cities, which buys time to save.

Minimum Down Payment

Purchase price	Minimum down payment
Up to $500,000	5%
$500,001 to $1,499,999	5% on the first $500,000, then 10% on the rest
$1.5 million and up	20%

Below 20 percent down, the mortgage is "high-ratio" and you must buy mortgage default insurance (from CMHC, Sagen, or Canada Guaranty). The premium — roughly 2.8 to 4 percent of the loan — is added to the mortgage, not paid in cash. First-time buyers purchasing a newly built home can now amortize over 30 years instead of 25, which lowers the monthly payment.

First-Time Buyer Programs

First Home Savings Account (FHSA)

Contribute up to $8,000 a year to a lifetime cap of $40,000. Contributions are tax-deductible like an RRSP, and growth and withdrawals for a qualifying home purchase are tax-free like a TFSA. It's the strongest single tool — open one as soon as you might buy within 15 years, because contribution room only starts accumulating once the account exists.

Home Buyers' Plan (HBP)

Withdraw up to $60,000 tax-free from your RRSP for the down payment — $120,000 for two qualifying first-time buyers together. It's a loan from yourself: repayment starts the second year after withdrawal and runs over 15 years. A missed yearly repayment is added to your taxable income for that year. The FHSA and HBP can be used together.

First-Time Home Buyers' Tax Credit

A federal non-refundable credit worth $1,500 off your tax bill in the year you buy.

BC Property Transfer Tax exemption

BC charges a Property Transfer Tax on every purchase — 1 percent on the first $200,000, 2 percent to $2 million, 3 percent above. First-time buyers get a full exemption on homes up to $835,000 (covering the tax on the first $500,000 of value), saving up to about $8,000 at closing, with a partial exemption to $860,000. Other provinces have their own land transfer taxes and rebates.

Note: the federal shared-equity First-Time Home Buyer Incentive has been discontinued — don't build it into a plan.

Programs at a Glance

Program	Maximum	Tax treatment	Use it for
FHSA	$8,000/yr, $40,000 lifetime	Deductible in, tax-free out	Compounding your down-payment savings tax-free
Home Buyers' Plan	$60,000 ($120,000/couple)	Tax-free RRSP loan, repay over 15 yrs	Unlocking existing RRSP savings for the down payment
First-Time Home Buyers' Tax Credit	$1,500	Federal tax credit	Offsetting closing costs the year you buy
BC PTT exemption	Full to $835,000 value	Cash saved at closing	Up to ~$8,000 off closing on a BC purchase

The Buying Process, Step by Step

Pre-approval — lender confirms your amount and holds a rate.
Search — with a realtor (the seller usually pays both agents' commission) or on your own.
Offer — typically with conditions ("subjects"): financing, inspection, and for a condo, review of the strata documents. You include a deposit, held in trust, that becomes part of your down payment.
Inspection — a certified inspector checks the structure, roof, electrical, plumbing, and moisture. Findings let you renegotiate or walk away.
Financing — the lender confirms the specific property and orders an appraisal.
Subject removal — you waive the conditions in writing; the deal is now firm and the deposit is at risk if you back out.
Completion — your lawyer or notary registers the transfer and mortgage, you pay the balance plus closing costs, and the Property Transfer Tax is paid.
Possession and adjustment — you get the keys; property tax and utilities are pro-rated between you and the seller.

Line up your closing cash — legal fees, inspection, title insurance, PTT if not exempt, and moving — separately from the down payment. Budget the move itself with the moving-day checklist.

Buying a Condo

A strata (condo) purchase adds documents to review during your subject period: the Form B information certificate (fees, any special levies, rules), the depreciation report (the building's long-term repair plan and whether it's funded), recent strata council and AGM minutes (look for water ingress, envelope work, litigation), and the contingency reserve fund balance. A cheap unit in a building facing a major special assessment is not cheap.

Taxes on New and Presale Homes

Resale homes have no GST. A newly built or presale home is subject to 5 percent GST, with a partial new housing rebate on homes under $450,000 (thresholds vary and phase out). Presale contracts also often let the developer pass through certain cost increases — read the disclosure statement.

Newcomers to Canada

Canada's ban on residential purchases by non-Canadians is in effect, but it has exemptions — permanent residents, and work-permit holders who meet residency and tax-filing conditions, can generally buy. Some lenders offer newcomer mortgage programs with alternative credit history. Confirm your status against the current rules before making an offer.

Related guides

Frequently Asked Questions

What's the minimum down payment for a first home in Canada?

5 percent on a home up to $500,000; 5 percent on the first $500,000 plus 10 percent on the portion above, up to $1.5 million; and 20 percent at $1.5 million and over. Under 20 percent down requires mortgage default insurance, added to the loan.

Can I use the FHSA and the Home Buyers' Plan together?

Yes. The FHSA gives you up to $40,000 of deductible, tax-free-on-withdrawal savings; the HBP lets you borrow up to $60,000 from your RRSP tax-free, repaid over 15 years. Using both maximizes your down payment.

How long do I have to repay the Home Buyers' Plan?

15 years, with repayments starting the second year after your withdrawal. The CRA sends an annual statement with the minimum. A missed payment is added to your taxable income for that year.

How much are closing costs?

Roughly 1.5 to 4 percent of the purchase price — legal fees, inspection, title insurance, provincial transfer tax if you're not exempt, and moving. Keep this cash separate from the down payment.

Is a home inspection worth it in a competitive market?

Yes. An inspector checks structure, roof, electrical, plumbing, and moisture — the expensive, hidden problems. Finding them before subject removal lets you renegotiate or walk away instead of inheriting a repair bill.

What's the Property Transfer Tax in BC, and am I exempt?

1 percent on the first $200,000, 2 percent to $2 million, 3 percent above. First-time buyers are fully exempt on homes up to $835,000 in value (partial to $860,000), saving up to about $8,000.

Sources

Department of Finance Canada; Canada Revenue Agency — First Home Savings Account limits, Home Buyers' Plan ($60,000) and repayment rules, First-Time Home Buyers' Tax Credit, mortgage stress test, 2026
Canada Mortgage and Housing Corporation — minimum down payment tiers, mortgage default insurance, 30-year amortization for first-time buyers of new builds, 2026
Government of BC — Property Transfer Tax rates and first-time buyers' exemption thresholds, 2026
Government of Canada — Prohibition on the Purchase of Residential Property by Non-Canadians Act and its exemptions, 2026

Moving Into Your First Home?

When the closing cash is tight, a fixed moving price matters. Tingsapp connects you with vetted local movers at an upfront price across the Lower Mainland and other hub cities — get a quote and book. New to the area? Best Vancouver neighbourhoods by rent and housing affordability in Canada give the lay of the land.