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% above $1.5M. Anything below 20% requires default insurance — a one-time premium of 2.80% to 4.00% added to your mortgage balance and amortized over the loan life.
These minimums apply to insured mortgages. If you have 20% or more, you can take an insurable or conventional mortgage and skip the premium — though you'll lose access to insured rate sheets, which are typically 15-30 bps cheaper than conventional.
| Purchase price | Min down ($) | 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%) |
| $1,500,000 | $125,000 | 8.3% | $55,000 (4.00%) |
| $2,000,000 | $400,000 | 20% | $0 (uninsured) |
FHSA + RRSP HBP — the most powerful down-payment stack in Canadian tax law
Two government 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). Each dollar is tax-deductible the year you contribute, like an RRSP. Each dollar grows tax-sheltered, like a TFSA. When you withdraw to buy your first qualifying home, the withdrawal is fully tax-free — that's the part that makes it more powerful than an RRSP.
Two spouses can each have an FHSA → household max $80,000 of tax-deductible, tax-free-withdrawn down payment.
Eligibility: Canadian tax resident, 18+, has not owned a home you lived in as a principal residence in the current year or the 4 prior calendar years.
RRSP HBP — $60K, tax-deferred
The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP for a first home (was $35K before April 2024). Repay over 15 years, starting in year 2, with no tax consequence as long as you repay each year's minimum.
The HBP is tax-DEFERRED, not tax-free — you'll pay tax on the funds eventually when they re-enter your taxable income if you don't repay. The FHSA is structurally superior, but the HBP is a useful supplement because $40K isn't always enough.
Two spouses → household max $120,000 from 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
OSFI's B-20 guideline (in effect since 2018) requires every federally regulated lender in Canada to qualify you at the greater of your contract rate + 2% or 5.25%. So a 4.39% offered rate qualifies you at 6.39%.
The stress test doesn't change your monthly payment. It determines the maximum mortgage size the lender will give you. Two debt-service ratios drive the math: GDS (housing costs ÷ gross income, max 39%) and TDS (housing + all other debts ÷ gross income, max 44%).
A household with $150,000 gross income, $400/mo in other debt, and 5% down would qualify for a maximum mortgage of roughly $700,000 at the stress-test rate — even if the offered rate would technically allow them to carry $850,000. The stress test is binding.
CMHC, Sagen, and Canada Guaranty — how default insurance works
Any Canadian mortgage with less than 20% down requires default insurance. Three insurers operate in Canada: CMHC (a federal Crown corporation), Sagen (formerly Genworth), and Canada Guaranty. They have nearly identical pricing and rules.
The premium is a percentage of the loan amount, paid once at closing, almost always financed into the mortgage. It protects the lender against borrower default — not you. Despite the name, default insurance doesn't help you if you can't pay; it pays the lender, who then comes after you for the shortfall.
Insurable mortgages (20%+ down but the lender insures themselves on the back end via a bulk-insurance program) get a 0.60-1.50% lender-paid premium. You don't pay it directly, but the rate sheet typically reflects this — insurable rates are usually 15-25 bps below conventional.
| 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 a provincial tax paid at closing. Most provinces charge it (Ontario, BC, Manitoba, Quebec, NB, PEI, NS, NL). Alberta and Saskatchewan don't — they charge a smaller title-registration fee instead. Toronto adds a matching Municipal Land Transfer Tax that effectively doubles the bill within the 416 area code.
First-time buyers get rebates in most provinces: up to $4,000 in Ontario, $4,475 in Toronto (so $8,475 stacked for first-time Toronto buyers), $8,000 in BC up to $500K purchase, and various amounts elsewhere.
| Province | LTT structure | On $800K purchase | First-time rebate |
|---|---|---|---|
| Ontario | Tiered 0.5-2.5% | $12,950 | Up to $4,000 |
| Toronto | Doubled (prov + MLTT) | $25,900 | Up to $8,475 |
| BC | Tiered 1-3% | $14,000 | Up to $8,000 |
| AB | None (small reg fee) | ~$300 | n/a |
| QC | Tiered 0.5-3% | $13,250 | Variable by municipality |
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 pay (most insured purchases are appraisal-free)
- Status certificate — $100-300 on condo purchases — your lawyer reviews the condo corporation's finances + bylaws
- Mortgage default insurance PST — only in ON, QC, SK, MB — provincial sales tax on the CMHC premium, paid at closing (not financed)
- 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 bureau pull, document submission, written commitment, 120-day rate hold.
- 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 for the insurable rate, not the conventional rate. 20-25 bps savings.
- 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 to your bank's branch instead of a broker — branches access one lender's rate sheet. A brokerage accesses 50+. The same bank often quotes 20-30 bps lower through a brokerage than at the branch.
Programs you can stack as a Canadian first-time buyer
- FHSA — $40K lifetime, fully tax-deductible AND tax-free withdrawal. Two spouses → $80K household.
- RRSP HBP — $60K per spouse, tax-deferred, 15-year repayment. Two spouses → $120K household.
- Ontario FTHB land transfer tax rebate — up to $4,000.
- Toronto MLTT first-time buyer rebate — up to $4,475 (stacks with provincial = $8,475 combined).
- BC first-time buyer LTT exemption — full exemption up to $500K purchase, partial to $525K.
- GST/HST New Housing Rebate — on new-build purchases under $450K (federal), with provincial portions in some provinces.
- 30-year insured amortization for new builds — federal policy since late 2024 allows first-time buyers to take 30-year amortization on insured purchases of new-build homes.
- Insured 5% down up to $1.5M — federal policy since late 2024 expanded the insured-mortgage cap from $1M to $1.5M (with tiered down-payment minimums 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.