First-time buyers now take an average of 4.4 years to save for a down payment, and 41% rely on a financial gift from family to make the leap. Many don’t realise that the total cost of buying goes far beyond the purchase price — and that ignoring a few key programs can cost them tens of thousands.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
These numbers come from a mix of mortgage surveys and buyer behaviour reports. The picture is clear: entry into Canadian real estate is harder, slower, and more expensive than most people expect. That’s especially true if you’re relying on your own savings alone. Here’s what you actually need to know.
What to Know Before You Make an Offer
One term you’ll hear repeatedly is the First Home Savings Account (FHSA). It’s a registered account that lets you save up to $8,000 per year (lifetime max $40,000) with tax-deductible contributions and tax-free withdrawals for a home purchase. What I tend to notice is that many buyers only learn about the FHSA after missing a year or two of contribution room. Open it as soon as you’re eligible — even if you’ve only got a small amount to put in.
Full Cost Picture: What a First Home Actually Costs
Most buyers focus on the purchase price and the down payment. But the real cost includes several unavoidable fees. A $500,000 home with a 5% down payment ($25,000) requires mortgage default insurance (CMHC) because the down payment is under 20%. That insurance can add 0.6% to 3.1% of the mortgage amount, depending on your loan-to-value ratio. On top of that, you’ll pay land transfer tax (with province-specific rebates for first-timers), legal fees, a home inspection, and moving costs. The table below shows typical costs for a $500,000 purchase in Ontario.
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| Cost Item | Amount | Notes |
|---|---|---|
| Down payment (5%) | $25,000 | Minimum for homes under $500,000 |
| CMHC insurance (3.1% of mortgage) | ~$14,725 | For 95% LTV; added to mortgage |
| Land transfer tax (Ontario) | ~$5,475 | First-time buyer rebate of $4,000 reduces it |
| Legal fees | $1,000–$2,500 | Includes title search, registration |
| Home inspection | $500–$800 | Essential for resale homes |
| Moving expenses | $500–$2,000 | Depends on distance and volume |
| Total upfront cash needed | ~$33,000–$36,000 | Excluding CMHC (added to mortgage) |
If you’re buying in British Columbia, you can also claim a land transfer tax rebate of up to $8,000. In Toronto, the city adds another $4,475 rebate. These rebates are often overlooked because they require a separate application after closing.
Common Mistakes First-Time Buyers Make
Not opening an FHSA early enough
The FHSA lets you carry forward unused contribution room, but the lifetime cap is fixed at $40,000. If you wait until you’re ready to buy, you might only have a year or two of contributions — missing out on thousands in tax savings. The earlier you open it, the more room you can accumulate. A buyer who opens an FHSA at age 25 and contributes $8,000 annually for five years saves $40,000 tax-free toward a down payment. A buyer who starts at 30 with the same timeline only gets $24,000 in contributions before purchase.
Underestimating closing costs
Many first-timers budget only for the down payment and then scramble to cover land transfer tax, legal fees, and moving costs. The total can easily reach $15,000–$25,000 on a $500,000 home. One way to avoid this is to set aside 1.5%–2.5% of the purchase price as a closing cost fund. What I notice most often is that buyers who skip this step end up dipping into their emergency savings or using credit cards.
Not shopping around for mortgage rates
According to Nesto’s 2026 survey, 88% of mortgage consumers compare rates, but many still accept the first offer from their bank. A rate difference of just 0.25% on a $650,000 mortgage with 25-year amortisation saves about $89 per month and roughly $7,767 in interest over a five-year term. A broker can help you compare multiple lenders, including ones that aren’t advertised to the public.
Ignoring provincial and local programs
Most buyers know about the federal FHSA and HBP, but few check what their province or city offers. For example, Montreal’s Home Purchase Assistance Program gives up to $15,000 for families with children buying new homes. Prince Edward Island offers an interest-free loan of 5% of the purchase price. Nova Scotia’s pilot program lets you put down as little as 2%. Missing these can cost you thousands.
How to Navigate the Buying Process Step by Step
Open and fund your FHSA first
You can open an FHSA at most Canadian banks, credit unions, or online brokerages. The key requirement: you must be a Canadian resident, at least 18 years old, and a first-time home buyer (meaning you haven’t owned a home in the current calendar year or the previous four years). You can contribute up to $8,000 per year, with unused room carried forward. The account stays open for up to 15 years or until the year you make a qualifying withdrawal. If you don’t use it, you can transfer the funds to an RRSP or RRIF without tax consequences.
Combine the FHSA with the RRSP Home Buyers’ Plan
The HBP lets you withdraw up to $60,000 from your RRSP for a down payment, tax-free. You must repay the amount over 15 years (starting two years after withdrawal under current rules). The key: you can use both the FHSA and HBP together, giving you up to $100,000 in tax-advantaged buying power. The funds must be in your RRSP for at least 90 days before withdrawal, so plan ahead. If you’re part of a couple, each person can open their own FHSA and RRSP, doubling the total to $200,000.
Apply for provincial rebates and the GST exemption
After closing, you’ll need to file for the land transfer tax rebate in your province (Ontario, BC, PEI, Toronto). The GST/HST New Housing Rebate requires Form GST190 (or GST191 for self-builds) plus supporting documents. For new builds, the builder often applies the rebate at closing, but you should verify with your lawyer. The Ontario ZURI program (Zero-Rated Underutilized Resale Income) offers federal GST and Ontario HST rebates for certain resale properties, but rules are strict — a tax advisor is recommended. Foreign buyer restrictions also affect who can claim these rebates.
Consider the 30-year amortisation option for new builds
Starting in 2026, first-time buyers can choose a 30-year amortisation period on new construction homes. This reduces monthly payments by about 8–12% compared to the standard 25-year term. However, total interest paid over the life of the mortgage increases by roughly $80,000 on a $475,000 loan at 4.5%. This option is only available for new builds, not resale homes. If you’re stretching to qualify, the lower monthly payment can help, but run the numbers to see if the extra interest is worth it.
Frequently Asked Questions
Can I use the FHSA and HBP together? ▾
What if I receive a gift from my parents for the down payment? ▾
How long does it take to save a down payment in Toronto? ▾
Do I need CMHC insurance if I put 20% down? ▾
What is the 30-year amortisation rule? ▾
When should I open an FHSA? ▾
The Bottom Line: Policies Are Shifting — Don’t Rely on Yesterday’s Rules
The Canadian housing market is in a period of rapid policy change. The 30-year amortisation for new builds, the expanded GST rebate, and provincial tax cuts are all recent. But policy lag is real — an announcement date is not the same as the effective date. If you’re starting your search now, verify the in-force dates for every rebate and program you plan to use. A missed deadline could mean losing thousands.
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 Will Canada Ever See Affordable Housing Again? Or Is It a Permanent Crisis?.
Sources and Further Reading
Will Canada’s housing market ever be affordable for the middle class again? — Explores the broader affordability trends behind the numbers.
How immigration trends are influencing Canada’s housing supply and demand — Understand the demographic forces driving home prices.
Nesto (2026). Strategies Canadian homebuyers are using to enter the housing market. 🔗
ViewHomes.ca (2025). First-Time Home Buyer Statistics in Canada. 🔗
Ratehub.ca (2026). First-Time Home Buyer Programs in Canada. 🔗
MortgagesLab.ca (2026). First-Time Home Buyer Guide Canada 2026. 🔗
