First-time home buyer guide: down payment, FHSA and rebates

Step 1: Save the down payment

The smallest down payment depends on the price:

On a $600,000 home that’s $25,000 plus $10,000: $35,000. Two accounts help you save it:

• First Home Savings Account (FHSA): put in up to $8,000 a year and $40,000 in total. You get a tax deduction for what you put in, like an RRSP, and take it out tax-free for your first home, like a TFSA. Unused room carries forward, up to $8,000. See the FHSA explained.
• Home Buyers’ Plan (HBP): take up to $60,000 out of your RRSP without tax, and pay it back over 15 years. For withdrawals up to the end of 2028, repayments start in the fifth year after: take it out in 2026 and your first repayment is for 2031.

You can use both for the same home, so one buyer could put $100,000 plus growth towards it, and a couple $200,000. Our FHSA calculator shows the refund and what your savings grow to.

You count as a first-time buyer for both if you haven’t lived in a home that you, or your spouse or common-law partner, owned in this calendar year or the four before it.

Step 2: Work out how much you can borrow

Lenders look at your income, debts and the stress test: you must be able to afford the payments at your mortgage rate plus 2%, or 5.25%, whichever is higher. That usually limits you more than the down payment does. See the stress test explained, or try our mortgage affordability calculator.

With less than 20% down, your mortgage must be insured, usually by CMHC, and the home must cost less than $1.5 million. The premium, from 2.80% to 4.00% of the mortgage, is added to the loan. First-time buyers can take a 30-year amortization on an insured mortgage instead of 25 years, for 0.20% more in premium. See CMHC insurance explained, or work out yours with our CMHC calculator.

Step 3: Claim the first-time buyer tax breaks

• First-time home buyers’ tax credit: claim $10,000 on line 31270 of your tax return for the year you buy, which cuts your federal tax by $1,400 in 2026 (14% of $10,000). A couple can split it, but not claim more than $1,400 between them.
• First-time buyers’ GST rebate: on a newly built home costing up to $1 million, you get back all of the 5% GST, up to $50,000. The rebate shrinks evenly between $1 million and $1.5 million, and there’s none at $1.5 million or more. In Ontario, the province also rebates its 8% part of the HST on the same homes.
• Land transfer tax rebates, in some provinces:

Alberta and Saskatchewan have no land transfer tax, only registration fees. Our land transfer tax calculator works out what you’ll pay in every province, rebates included, and land transfer tax by province explains the rules.

Step 4: Budget for closing costs

On top of the down payment, plan for closing costs of about 1.5% to 4% of the price:

• land transfer tax (paid in cash, not added to the mortgage)
• provincial sales tax on the CMHC premium, in Ontario, Quebec and Saskatchewan
• legal fees and title insurance
• a home inspection and appraisal
• adjustments for property tax or condo fees the seller has prepaid
• GST/HST on a newly built home, if it isn’t included in the price, less any first-time buyers’ rebate

Here’s what that comes to for a first-time buyer with the minimum down payment:

Our closing costs calculator adds them up for your province.

Step 5: Get pre-approved and make an offer

A mortgage pre-approval tells you how much a lender will likely lend, and holds a rate for 90 to 120 days. Once your offer is accepted, the lender approves the mortgage on the home itself, your lawyer or notary checks the title and pays the land transfer tax, and you get the keys on the closing date.

Work it out

See your payments with our mortgage calculator, and compare an RRSP and a TFSA if you’re also saving for retirement.