The numbers have shifted for anyone trying to buy a home in Canada. Since December 2024, first‑time buyers can stretch their mortgage over 30 years instead of 25, which lowers the monthly payment. The federal government also plans to remove the 5% GST on new homes priced up to $1 million for first‑time buyers — a saving that can reach tens of thousands. But those headline figures only tell part of the story. Municipal development charges, land transfer taxes, and the time it takes to build a down payment all affect what a mortgage‑free (or low‑mortgage) purchase actually looks like.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Each of these numbers pulls in a different direction. Longer amortizations reduce monthly pressure but increase total interest over the life of the loan. GST removal cuts the upfront price but only applies to new builds. Development charges push that price right back up in certain regions. The trick is knowing which levers matter most for your situation. Here’s what you actually need to know.
Throughout this article you’ll come across the term insured mortgage — that’s a mortgage with a down payment under 20% of the purchase price, which requires mortgage default insurance. The 30‑year amortization rule and several other programs are tied directly to this category.
What I tend to notice is that people focus on interest rates and forget the rest of the equation. The programs above can shift the real cost of buying more than a fraction of a percentage point on the mortgage rate. Worth weighing the full picture before deciding how much to borrow.
What a Home Really Costs in Canada in 2025
The purchase price is never the only number that matters. In Canada, the gap between the advertised price and the total cash you need to close can surprise buyers who haven’t accounted for municipal charges, land transfer taxes, and legal fees.
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| Cost item | Typical amount | Who pays |
|---|---|---|
| Development charges (GTA single‑detached) | ~$180,600 | Buyer of new build (rolled into price) |
| GST (new home, $900k) | $45,000 — fully rebated for FTHB | First‑time buyer (rebated) |
| Land transfer tax (Ontario, $500k home) | ~$5,975 + municipal top‑up | Buyer at closing |
| Legal fees & disbursements | $1,000 – $2,500 | Buyer |
| Home inspection | $400 – $700 | Buyer |
| Mortgage default insurance (5% down) | ~4% of mortgage principal | Buyer (added to mortgage) |
The development charge figure stands out. In Toronto, that single cost can equal several years of mortgage payments on a smaller loan. In April 2025 the city council voted to hold rates flat instead of increasing them by 4%, which offers temporary relief, but the underlying trend is upward across most Ontario municipalities. Buyers looking at new builds should ask the builder for a line‑by‑line breakdown of what’s included in the base price — development charges are often embedded rather than listed separately.
On the plus side, the Ontario land transfer tax rebate gives first‑time buyers up to $4,000 back on the provincial portion. If you’re in Toronto, the municipal land transfer tax adds another layer, but the city also offers a rebate of up to $4,475 for first‑time buyers. These rebates don’t eliminate the tax, but they reduce the bite. The key is knowing they exist and budgeting for the upfront payment before the rebate arrives later.
Where First‑Time Buyers Trip Up
Treating the 30‑year amortization as free money
A longer amortization lowers the monthly payment, which helps with cash flow and qualification. What gets overlooked is the total interest cost. On a $400,000 insured mortgage at 5%, stretching from 25 to 30 years adds roughly $60,000 in interest over the life of the loan. The trade‑off is real: lower payments now versus higher total cost later. The CMHC survey found that 68% of buyers still expect home values to rise over the next year, which can make the extra interest feel manageable, but it’s a bet on appreciation, not a guaranteed win. Run the numbers at current rates before deciding on the term length.
Assuming the GST rebate applies to any home
The 5% GST elimination is for new homes only, priced up to $1 million for first‑time buyers. A resale condo or a house built before 2025 doesn’t qualify. The old rebate system capped eligibility well below $450,000 in many cases, so the new threshold is a real improvement — but it’s still tied to new construction. If you’re buying a resale property, the GST angle doesn’t apply. Buyers who plan around a rebate they won’t receive end up short at closing. Check whether the property is a new build and whether your first‑time buyer status is confirmed before assuming the saving is yours.
Ignoring development charges until it’s too late
Development charges are set by the municipality and vary wildly. In the GTA they can push the effective price of a new home 25% higher than the base list price. Outside Ontario, charges are lower but still significant in cities like Vancouver and Calgary. Buyers often discover the charge only when the builder’s final price arrives, weeks before closing. By then, switching to a resale property or renegotiating is difficult. The fix is simple: ask for the development charge amount in writing before you sign anything. If the builder won’t disclose it, that’s a red flag worth walking away from.
Overlooking the First Home Savings Account (FHSA)
The FHSA allows up to $8,000 in annual contributions, with a $40,000 lifetime cap. Contributions are tax‑deductible, and withdrawals for a first home are tax‑free. The CMHC survey reports that it now takes buyers an average of 4.4 years to save a down payment — the FHSA can accelerate that timeline significantly because the tax savings stay in your pocket. Yet many eligible buyers haven’t opened an account. The mistake is treating the FHSA as optional rather than a primary savings vehicle. Combined with the Home Buyers’ Plan (up to $60,000 from RRSPs), a couple can access up to $120,000+ in tax‑advantaged down‑payment funds.
How to Build a Low‑Mortgage Purchase Plan
Phase 1: Maximise your down payment with tax‑advantaged accounts
Start by opening a First Home Savings Account as early as possible. Contribute the full $8,000 each year. The money grows tax‑free, and when you withdraw for a qualifying home purchase, the government doesn’t take a cut. At the same time, use the Home Buyers’ Plan to pull up to $60,000 from your RRSP (or $120,000 for a couple) without triggering tax, as long as you repay it over 15 years. The two accounts can be used together. A couple saving the maximum over a few years could accumulate well over $100,000 in tax‑favoured down‑payment money — enough to put 20% down on a $500,000 home and avoid mortgage insurance entirely.
Phase 2: Target new builds to capture the GST removal
If you qualify as a first‑time buyer and the property is priced at $1 million or less, a new build gives you a 5% discount that a resale doesn’t. On a $900,000 pre‑construction townhome, that’s $45,000 off the price. The catch is timing: pre‑construction closings can be delayed, and the development charge may be added after the initial price quote. Check the builder’s contract for any language that passes municipal costs to you after signing. Also verify your first‑time buyer status with the Canada Revenue Agency before assuming the rebate is automatic. If you’re buying with a partner who has owned before, the rebate may be limited to the eligible portion.
Phase 3: Choose between 25‑ and 30‑year amortization strategically
The 30‑year option is available to first‑time buyers with an insured mortgage (less than 20% down) on any home — new or resale. It’s also available to any buyer of a newly built home, regardless of buyer status. The monthly saving is real, but the total interest cost is higher. One practical approach: take the 30‑year term to qualify for a larger mortgage or lower monthly payments, then make prepayments when possible. Most lenders allow you to increase payments by 10–20% annually or make lump‑sum prepayments without penalty. That way you get the lower commitment level while keeping the ability to shorten the effective term when your cash flow allows.
Phase 4: Verify and negotiate the hidden fees
Before closing, get a full cost breakdown from your lawyer or notary. Ontario first‑time buyers should confirm their land transfer tax rebate is applied. Ask the seller or builder for a detailed list of all municipal charges included in the price. If the development charge is listed separately, negotiate for the builder to absorb part of it — some builders will eat a portion to close the deal. Keep all paperwork organised in a secure place; a fire‑resistant safe is useful for storing the purchase agreement, title documents, and mortgage paperwork.
Frequently Asked Questions
Can I use the FHSA and the Home Buyers’ Plan together? ▾
Does the 30‑year amortization apply to resale homes? ▾
What happens if the home I’m buying is priced over $1 million? ▾
Are development charges negotiable? ▾
Do I need a lawyer to buy a home in Canada? ▾
What’s the Ontario land transfer tax rebate for first‑time buyers? ▾
What the 2025 Policy Shift Means for Buyers Right Now
The combination of longer amortizations, GST removal, and expanded savings accounts is the most significant first‑time buyer package Canada has introduced in years. But it only helps if you act on the details. Development charges and land transfer taxes still take a real bite, and the 30‑year term costs more over time if you don’t make prepayments. The buyers who come out ahead will be the ones who treat the down‑payment phase as a tax‑optimised project, pick new builds where the GST saving is real, and keep a close eye on municipal fees that can inflate the final price. The window on these programs may not stay open indefinitely, and market conditions can shift quickly.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Real Estate Red Flags: Spotting Trouble Before You Buy in Canada.
Sources and Further Reading
Tips for Property Ownership Verification When Buying in Canada — Practical steps to confirm ownership history, title issues, and liens before you close.
Stop Paying Your Landlord’s Mortgage: The Ultimate CA Home Buying Timeline — A month‑by‑month guide from starting your search to moving in.
CMHC (2026). Mortgage Consumer Survey 2026. 🔗
CMHC (2025). Development Charges Report — Greater Toronto Area. 🔗
Government of Canada (2025). GST/HST New Housing Rebate — First‑Time Homebuyers. 🔗
City of Toronto (April 2025). Decision on Development Charge Rates. 🔗
