The Ultimate First-Time Home Buyer's Guide

Incentive programs for first-time home buyers

In Canada, a first-time home buyer has access to several financial incentives. There are federal, provincial, and municipal programs, so the exact mix available to you depends on where you live.

Federal programs

The Home Buyer’s Plan

The Home Buyer’s Plan (HBP) is a Government of Canada program launched in 1992. The HBP allows potential homeowners to withdraw money from their Registered Retirement Savings Plan (RRSP) to buy or build a home.

Normally, making an early withdrawal from one’s RRSP means paying extra taxes. The HBP allows first-time buyers to make a withdrawal while avoiding such a penalty.

Under this plan, each person may withdraw up to $35,000 from their RRSP to put towards their home. Couples may withdraw $35,000 each, for a total of $70,000. If someone has multiple RRSP accounts, they’re allowed to withdraw from more than one. You can’t, however, use group RRSPs or locked-in RRSPs for this plan.

RRSP withdrawals under the HBP are not considered taxable income, but they do need to be repaid within 15 years.

How does one qualify for the HBP? The Canada Revenue Agency lists these four conditions:

you must be considered a first-time home buyer
you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability
you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built
you must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that the related person with a disability occupies the qualifying home as their principal place of residence

Source

Of course, for the HBP to be useful, you need to have money in your RRSP. Let’s look at another federal program that doesn’t require such savings:

The First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive (FTHBI) is a shared-equity mortgage. The buyer borrows money from the Government of Canada. In exchange, the government gets a share in the property value.

Under this program, first-time buyers can borrow 5 or 10 percent of their potential home’s purchase price. This sum goes towards the down payment, which allows the buyer to take on a smaller mortgage. This, in turn, reduces the long-term cost of buying the home. The buyer then repays this percentage after 25 years or when they sell the home (whichever comes first).

The repayment amount is based on a percentage of the home’s value. If the home’s value has increased at the time of repayment, they will pay more than they borrowed. That works the other way as well; if the value goes down, the repayment will be less. Borrowers are also allowed to repay the incentive early, with no penalty.

For example:

If you received a 5 percent incentive to buy a home worth $300,000, you’d get $15,000 for your down payment. Let’s say your home is worth $400,000 when repayment is due; you would owe $20,000. Alternatively, if the value is lower (say, $200,000) at repayment time, you’d owe less—just $10,000.

Graph of First-time Home Buyer's Incentive repayment amounts

One more thing: there’s a cap on the repayment amount that keeps the government from gaining or losing too much on the loan. That cap is 8% per year, whether it’s a gain or a loss.

First-Time Home Buyer’s Tax Credit

Possibly the most straightforward federal home buyer’s incentive, the First-Time Home Buyer’s Tax Credit is just that: a tax credit. You may also see it called the “Home buyer’s amount” or simply “Line 31270.”

Home buyers can claim up to $5,000 for the purchase of a home they acquired during any given tax year.

However, to qualify for this tax credit, the CRA names two conditions:

you (or your spouse or common-law partner) acquired a qualifying home
you did not live in another home owned by you (or your spouse or common-law partner) in the year of acquisition or in any of the four preceding years (first-time home buyer)

Source

A “qualifying home” is one located in Canada and registered in the claimant’s name (or their spouse’s). It can be of many types, including single-family homes, mobile homes, condos, and more.

Provincial and municipal programs

Property transfer tax rebates

The main incentive for first-time buyers at the provincial and municipal levels comes in the form of property transfer tax rebates.

Property transfer taxes (a.k.a. land transfer taxes) are paid by the buyer to local governments, either provincial or municipal or both. We’ll talk more about these and other closing costs a little further down the page.

In these provinces, a first-time home buyer can apply for a rebate on the transfer taxes:

British Columbia: In BC, many first-time home buyers qualify for a total exemption from the property transfer tax. To qualify, buyers must have lived in BC for at least one year or have filed at least 2 income tax returns in BC within the past 6 years. To qualify, the purchased property can be no larger than 0.5 hectares and can have a market value of no more than $500,000.
Ontario: Ontario’s land transfer tax refund applies only to buyers who have never owned a home, anywhere in the world, at any time. Under this incentive, first-time buyers pay no land transfer tax on the first $368,000 of the value of their home. If the home is more valuable than that, the maximum refund is $4,000.
Prince Edward Island: In PEI, eligible buyers may qualify for a full exemption from the property transfer tax. This incentive is available to Canadian citizens or permanent residents who have never owned a principal residence. Like in BC, the buyer must have lived in PEI for at least 6 months or filed income tax there in at least 2 of the previous 6 years.

In some cities, most notably Toronto, you may also need to pay a municipal land transfer tax. You can also often get a rebate on these taxes as well. In the case of Toronto, there is a first-time home purchaser rebate.

Other tax rebates

If you happen to buy a home that’s newly built, or has been substantially renovated, you may be able to claim a GST/HST rebate. This isn’t exclusive to first-time buyers, but it’s an incentive nonetheless. The amount you can claim varies from province to province; if your home is a new build, make sure to check your eligibility.

Quebec also offers a tax rebate; first-time home buyers are eligible for a tax credit of up to $750 when they buy a qualifying home. This is known as the Home Buyers’ Tax Credit.

Quebec municipal programs

First-time home buyers in Quebec have access to a wide range of municipal programs to help them out financially with their purchase.

The majority of large municipalities in Quebec have one program or another. Some take the form of tax rebates, while others are interest-free loans. The type of benefit available to you depends on which city your future home is located in.

To read more about the home purchasing assistance available in some of Quebec’s largest cities, visit these sites:

Most municipalities in Quebec, even small ones, offer some form of incentive. Check your local government’s website to see what options they have for you.

Now that we’ve seen some of the upside of being a first-time buyer, it’s time to figure out if you’re really ready to take the plunge.

Are you ready to buy a home?

At the beginning of your home buying journey is the most critical step: deciding if it’s the right time to buy.

Conventional wisdom holds that owning a home is the ultimate goal for Canadians. In fact, approximately two-thirds of Canadian families own their homes. But, there are alternatives to homeownership depending on where you are in your life and your future goals.

When buying makes sense

Whether buying a home is the right move depends on your life’s present circumstances and your future goals.

Suppose you’ve got steady income and plan to stay put for the foreseeable future. In that case, you’re probably on the right track with homeownership. On the other hand, if you’re hopping around from job to job or dreaming of a stint overseas, you may want to hold off.

Buying a home makes sense if most or all of these points apply to you:

You’ve got ample savings. You should have enough cash on hand to cover the down payment and closing costs. The minimum down payment requirement is 5 percent of the purchase price, but you should strive for at least 12-20 percent if you can—the more you put down, the better. If you put down less than 20 percent, you will need to purchase mortgage loan insurance. Closing costs add another 2-4 percent. On top of that, you should keep 3-6 months of living expenses in reserve.
You’ve got strong credit and a good debt-to-income ratio. A solid credit rating (at least 600-700) helps you get the best rate on your mortgage. If your credit is poor, you may have trouble getting a mortgage at all (at least from prime lenders). The debt-to-income ratio is the percentage of your gross monthly income that you use for paying debt. Lenders prefer a percentage of 36 percent or less. You can calculate your debt-to-income ratio easily with an online calculator.

Graph demonstrating debt-to-income ratio at monthly $4,200 incom

You know what you’re looking for. When you set out to buy a house, you should already know essentially what you need. To start with, you’ll probably know approximately where you want to live. It’s also important to know approximately how big your home should be. Are you planning to start a family in the next few years? That would have an impact on your decision making. Are you set on having plenty of space, or are you more into high-rise condo living? If you aren’t sure what you want in a home (at least the broad strokes), you may want to hold off on buying for a bit.

In the next section, we’ll go into more detail about analyzing your finances and considering what you want in a home. But first, when is renting the best choice?

When renting makes sense

Put simply, renting may be the better choice if you don’t meet the above criteria.

But there’s more:

A homeowner’s mortgage payments gain them equity in their home, but a renter’s monthly payments don’t build any financial asset for them. On the other hand, renters have a great deal of flexibility; if you don’t like your home, or you’re ready for an opportunity elsewhere, just give your 30-day notice and away you go. Plus, renters have the benefit of predictable housing costs. For example, homeowners have to keep savings on hand to cover unexpected maintenance costs. Renters don’t need to worry about maintenance—that’s the landlord’s job.

If you’re into number-crunching, there are also purely profit-based reasons for choosing to rent—for example, the five percent rule. Essentially, if your annual rent amounts to less than 5 percent of your potential home’s price, there’s a valid financial argument for renting. You may earn greater profits by simply investing the down payment.

The rule may be an oversimplification, but it’s worth considering nonetheless.

Another way to decide is to use an online rent vs. buy calculator. These can help you crunch the numbers and get an idea of both options’ long-term costs (or profits).

Preparing to buy a home

If you’ve made the decision to buy your first home, what should you do next? Before you hit the real estate listings, here are a few things you need to get in order:

Determine your budget

The number one factor in buying your first home is how much home you can afford. That’s more than just the down payment—there are closing costs and carrying costs to budget for, too.

Let’s break these down:

Figuring out your down payment

As briefly touched on above, your down payment needs to be at least 5 percent of the purchase price, but this varies depending on the purchase price:

Purchase price	Minimum down payment
Up to $500,000	5% of purchase price
$500,000 to $999,999	5% of first $500,000, 10% of remainder
$1 million and above	20% of purchase price

However, there are many good reasons to make a down payment greater than the minimum.

For example, if your down payment is less than 20% of the purchase price, you’ll need to buy mortgage loan insurance—an added cost. The premiums for mortgage loan insurance depend on how much down payment you made; they can be as high as 4% of the total loan if you only put down 5% as a down payment.

Plus, a large down payment saves money in the long run; when you pay more upfront, you need to borrow less. That means smaller payments and less interest—a big win. A larger down payment can save thousands of dollars over the life of the mortgage.

Closing costs

Aside from the down payment, you must also be prepared for a bevy of closing costs. “Closing costs” refers to the various taxes and fees that the buyer is responsible for before taking possession of their new home.

We mentioned land transfer taxes earlier; these vary depending on where the home is located. Most provinces use a progressive scale, meaning the tax rate goes up as the property’s sale price increases.

For example, BC’s land transfer tax starts at 1 percent on the first $200,000, increasing in steps to 5 percent on any amount over $3,000,000.

In Alberta, buyers don’t have to pay a land transfer tax at all. Quebec doesn’t charge a provincial transfer tax, but municipal taxes are provincially regulated, and everyone must pay them. Saskatchewan doesn’t technically charge a land transfer tax, but there is a transfer fee of 0.3 percent on properties valued at more than $8,401.

Land transfer taxes are but one closing cost—there are others:

Legal fees and disbursements. The purchase process requires lawyers or notaries, and fees for these professionals can total over $1,000.
Appraisal fees. The cost of getting the home’s value appraised, ranging from $250 to $500.
Home inspection. You should definitely have the home inspected (more on that further down). This costs approximately $350-500.
Property taxes. Depending on when you take possession, you’ll need to pay prorated property taxes for the rest of the year.
Utilities. There are usually hookup fees involved when you get your hydro, gas, and telecommunications set up.
Surveying. Your mortgage lender may ask for a survey of your new property; this can cost $800 or more.
Title insurance. Title insurance helps protect you in the event that there’s a legal dispute over ownership of the property. It typically costs around $300.

Altogether, you should budget 2-4 percent of the purchase price for closing costs.

Carrying costs

So, you’ve got enough in the bank to cover a down payment and the closing costs. All set, right?

Just about—one more thing to budget for.

Once you own the home, you need to budget for carrying costs (recurrent housing expenses). It’s important to determine beforehand that you’ll be able to afford the house you bought, lest you become house poor.

Here are the typical carrying costs of homeownership:

Property taxes. These are based on a percentage of the assessed market value of the home, typically between 0.5 and 2.5 percent, paid annually. Each municipality sets its own tax rates.
Maintenance. You should set aside 1 to 4 percent of your home’s purchase price annually, to be used for maintenance. The age of the home affects how much maintenance it will need, with new homes typically needing less than old ones. Even if you don’t use your annual budget, keep it stocked up for significant repair or replacement projects.
Utilities. The cost of electricity, gas, telecommunications, and other utilities varies a lot depending on the location and type of home (not to mention the season). Expect to pay at least a few hundred dollars per month.
Condo fees. If your new home is a condo or strata title, you’ll need to pay monthly condo fees. These typically range from $300 to $500 per month. You’ll be able to find the condo fees for your target home before you make an offer.
Home insurance. Your mortgage lender will require that you maintain an active home insurance policy for the duration of the mortgage. You should insure your home even without a mortgage, too. Home insurance costs vary widely based on the type of home and location, but typically land around $80-100 per month for a house, or $30-50 per month for a condo. We’ll talk more about home insurance further down the page.

The last (and largest) ongoing cost is, of course, your mortgage payments.

Get pre-approved for a mortgage

One of the most important things you’ll want to take care of right off the bat is mortgage pre-approval. Before you start looking for a home, you should find a mortgage lender get yourself pre-approved.

Pre-approval is important for two reasons:

You need to be able to close your mortgage quickly if your offer on a home is accepted.
You need to know how much mortgage lenders are willing to offer you.

Here are a few mortgage tips to keep in mind as a first-time home shopper:

Mortgage tips

Choose the right lender. Finding a mortgage lender is easy; choosing one is a little harder. The most important thing when searching for your mortgage is to shop around. Inquire at major banks, local credit unions, and mortgage brokers. There are many online mortgage comparison tools available as well.
Apply for pre-approval. Once you’ve chosen a mortgage lender, you can apply for pre-approval. For starters, mortgage lenders will probably check your credit reports to learn your credit score. They’ll also ask for documentation about your income, debts, expenses, and similar information.
Find a good interest rate. Choosing a mortgage is a topic all its own (check out our guide to home mortgages), but to sum up: you’re looking for a mortgage with the lowest interest rate. That means you’ll pay less in total once it’s all paid off. Keep in mind the mortgage loan term—you’ll have the opportunity to renegotiate the terms every 5 years or so.
Fixed or variable? The other big question is about your mortgage loan options, namely: fixed or variable? These are the two primary mortgage types. Fixed mortgages have a steady interest rate locked in; variable mortgages have a rate that changes constantly. Fixed mortgages are steady and predictable, but variable mortgages often have lower rates (at least, they did pre-2023). For more on this subject, here’s our guide to fixed vs. variable mortgages.

Think carefully about what you want in a home

Before you start your home search, think carefully about what you want in a home.

If you don’t know what you’re looking for, you’re going to have a tough time finding it. You don’t have to draw up blueprints for your dream home (unless you’re having it built). You should, however, have a clear idea of what type of home you want. Which features are absolute requirements? Which features are simply nice-to-haves?

What type of home?

Homes come in many shapes and sizes. Do you want a detached house or a condo? A townhouse or a unit in a high-rise? Is a big yard important?

The main two forms of housing are condos and detached houses. Townhouses are somewhere in the middle; they share walls with neighbours, but normally have a yard attached.

Composite picture of a condo, a detached house, and a townhouse row

Townhouses sometimes have a condo title. This means ownership of the townhouse comes with a share of the entire complex, shared with every other unit. It also means you have to comply with the condo board’s bylaws. Condo bylaws may govern what you can do to the exterior of the home. For example, many townhouse complexes prefer that all the units maintain a uniform appearance.

One quick note:

Depending on where you are, you may hear the terms “strata” or “co-ownership” instead of “condo;” these are all essentially the same thing. We’re just going to keep calling them “condos” to keep things easy. Also: a condo board is the same as a strata council, which is also the same as a syndicate in Quebec.

You can read more about the wrinkles of condo ownership in our guide to buying a condo.

Now, some townhouses have a freehold title instead of a condo title. A freehold title is the same as a detached house. A freehold townhouse has no condo corporation involved, and accordingly no bylaws.

Houses and condos each come with their own pros and cons:

Buying a house

Pros

More space and privacy
No restrictions on remodelling or usage
Higher potential for value growth over time

Cons

Higher purchase costs
Higher maintenance and insurance costs
Low availability in major urban centres

Buying a condo

Pros

More affordable purchase cost
Lower maintenance and insurance costs
Often comes with amenities like a pool or a gym

Cons

Condo fees
Lower potential growth potential
Less space, sharing walls with neighbours

If you opt for a townhouse, the pros and cons will depend on whether it’s a condo-style townhouse or a freehold title. If it’s the former, the pros and cons will look a lot like those of a condo; if it’s a freehold townhouse, it will be similar to a detached house—with the obvious difference of sharing walls with your neighbours.

What home features do you want?

You’ll be able to narrow down your list of potential homes if you decide upfront which features are absolute must-haves.

Take the time to list everything you really want in your first home, from physical features to location to size. Then, separate the items on that list into things you can change after you buy and things you can’t.

Don’t forget, after you buy the home it’s yours—you can renovate as you wish.

Your deal-breaker items should mostly be things that you can’t renovate away, like the location and lot size. You can always knock out a wall or build a new patio in the backyard. You can’t, however, move the house closer to public transit or schools.

Get your home buying team together

You don’t need to go it alone when you’re buying your first home. There are many experts you’ll need to engage throughout the process, and it’s a good idea to get in touch with some before you even start looking.

Real estate agent

While it’s possible to complete the process without a real estate agent, it means sacrificing the many benefits a great agent offers.

Realtors help with the search process, as they know the local market better than any search conglomeration website. They also may have access to private sales that aren’t listed publicly.

When you find the right home, a realtor also helps with making an offer. They’ll know how much to offer, and how to handle any negotiations.

Plus (as we’ll shortly see) the home purchase process involves tons of paperwork, and coordination between many parties. A realtor helps streamline the process and ensure that the deal closes smoothly.

A real estate agent can also help you find the other professionals you’ll need through the process, like inspectors or appraisers.

To find a real estate agent, the best place to start is asking friends, family, or colleagues if they have a recommendation. You can also search for realtors online. It’s important to find someone who knows your local market, and with whom you have a good rapport. It’s okay to get in touch with a few potential realtors to see how you feel about them before you get totally on board.

Home inspector

It’s important to get a home inspection from a trusted and qualified inspector before you close the deal.

To find a good home inspector, start by asking for recommendations from people you know. Alternatively, you can search online as you would for any service. Just be aware that home inspection regulation is very different from province to province.

One organization regulating the profession is the Canadian Association of Home & Property Inspectors. You can use their online search tool to find inspectors in your area.

You don’t need to have the inspector go through every home you look at (the inspections do cost money). Instead, you should make your offer conditional on a passing inspection—more on that later.

Mortgage lender

We’ve already gone over mortgages. Make sure you’ve chosen a lender or broker and gotten pre-approval before you start the house search.

Surveyor

You may need to have an up-to-date survey of the property as part of your mortgage application. It’s possible that the seller has one for you, but otherwise you may need to hire a surveyor.

Appraiser

Similarly, your mortgage lender may want to have a formal appraisal of the property’s value. The appraisal is a determination of the home’s market value. What the mortgage lender wants to see is an appraisal that’s more or less in line with the sale price. Lenders typically only offer mortgages based on the home’s appraised value.

Lawyer

As mentioned, buying a home involves plenty of paperwork. A real estate lawyer helps make sure all your legal documents are in order, and answers questions you have about those documents.

They’ll also help you with due diligence, making sure property taxes are up to date and there are no other claims against the property. Plus, they can act as a liaison between you and your mortgage lender. Finally, they’ll help with the closing process, holding funds in trust and helping transfer the payment to the seller.

Contractor/builder

You won’t always need a contractor or a builder. But, if you’re buying a home and planning extensive renovations right off the bat, you may want to have a contractor involved early. They can help you figure out if the home meets your needs (and what your desired renovations might cost).

Insurance provider

You’ll need to have an active home insurance policy before your mortgage lender releases any funds. So, you should have an idea of where you’ll turn for your home insurance needs when the time comes.

There are plenty of options out there, but the easiest way is getting an online home insurance quote. When you buy online, you can often receive the policy right away, which helps during the stressful period of closing on the sale.

Making an offer

Making an offer on your potential new home can be intimidating. Here’s where having a realtor comes in very handy. There are several steps to the process, and you need to be sure you’re covering all your bases

Decide how much to offer

The first, most important part of an offer is the amount of that offer. There’s always room for negotiation; you don’t need to offer exactly the asking price.

The amount you offer for the home depends on many factors: the asking price, the local market, how long it’s been up for sale, and more. Plus, you want to get a good deal.

If it’s a buyer’s market (lots of homes available, not so many buyers) you might be able to get away with an offer well below the asking price (though the sellers can always decline).

In a seller’s market (few homes available with many home shoppers competing) on the other hand, you may have to offer more than the asking price to stay competitive. When multiple buyers are interested in one home, it may lead to a bidding war. You might wish to pass if a bidding war is involved; victory could require expanding your budget beyond what’s comfortable.

Your realtor knows about bidding wars and the local market and can help you decide what the right offer is. They’ll also help you put together the other elements of the offer—it’s more than just a dollar amount.

What your offer should include

Every offer on a home is different, but there are certainly some common features. Keep in mind, too, that almost every element of an offer is negotiable; the buyer might not accept your offer in its original form.

Conditions

There are two types of offers you can make on a home: firm offers, and conditional offers (also known as irrevocable offers).

Firm offers are just that: firm, inflexible. “I’m willing to pay exactly this amount for your house, take it or leave it.” If the seller accepts a firm offer, the buyer typically cannot back out.
Conditional offers include stipulations along with the dollar amount of the offer. “I’m willing to pay this amount for your house, as long as the following conditions are met.”

Realistically, most offers you make will have at least a few conditions. Those conditions protect you from certain circumstances. You (with your realtor) may have to negotiate some of these conditions with the seller.

Here are some of the common conditions found in residential real estate offers:

Inspection. This is an important one—the offer is conditional on the house passing an inspection. If the inspector uncovers anything problematic, you can back out of the deal, offer less for the house, or require the seller to fix issues themselves.
Appraisal. If you have the house appraised, and the appraisal value is a lot less than the agreed purchase price, this condition allows you to walk away from the deal.
Financing. The offer is conditional on the buyer being able to secure financing—their mortgage. It shouldn’t be an issue if you get pre-qualified, but it’s a safeguard if your mortgage doesn’t come through.
Repairs. If you know the home needs repairs, you can make the offer conditional on the seller completing those repairs.
Tenants. If the home has tenants living in it, your offer can be conditional on those tenants moving out.

Note that these conditions have to be part of your offer to apply—they’re not automatic.

Other information

In addition to an offered purchase price and potential conditions, an offer to buy a home should include:

The buyer’s and seller’s legal names and the address of the property
Items to be included in the sale (window coverings, appliances, light fixtures, etc.)
The date the buyer will take possession
The date the offer expires
A request for a current land survey

Once again, your realtor or lawyer will help you get the paperwork together. Altogether, your offer is known as an “offer to purchase” or an “agreement of purchase and sale.” It’s a formal legal document, so you must ensure you’ve prepared it correctly—hence the realtor and lawyer.

When your offer is accepted

You put everything together, sent it off to the seller, and they’ve accepted (perhaps after some negotiation). What happens next?

Putting down a deposit

When your offer is accepted, you’ll put down a deposit on the home as a show of good faith. This deposit will eventually form part of your down payment (assuming the deal closes). The seller decides the amount of the deposit, but around 5% of the purchase price is common.

If any of the agreed-upon conditions aren’t met, and you need to walk away from the deal, you’ll get your deposit back—but only under those conditions.

Typically, you don’t need to hand over a deposit until the subject removal date—more on that shortly.

Finalizing your mortgage

Once your offer is accepted, you’ll need to meet with your mortgage lender to secure the funds. In order for them to release any money, they’ll ask for most (or all) of the following:

The sale listing
Any estimates for planned renovations or improvements
A legal description of the property and building specifications
The home inspection report
An up-to-date land survey
The most recent property tax assessment
Heating and utility cost estimates
An appraisal
A signed offer to purchase
Title search documentation
Confirmation of home insurance

If you have a realtor and a lawyer, chances are they’ll be helping you keep track of all this paperwork. But, to keep yourself organized, it doesn’t hurt to keep digital copies of everything in an online cloud storage drive.

If the lender grants your mortgage, they won’t hand you a sack of money with a dollar sign on it; a lawyer will hold the funds in trust before transferring them to the seller along with your down payment.

Insuring your new home

Before your mortgage lender releases any funds, you need to show that you’ve insured the new home.

Buying home insurance is a process all its own (see our complete guide here), but it doesn’t need to be daunting. For example, you can get a home insurance quote online from Square One in as little as 5 minutes.

You’ll need to provide details about the home during the quote process. If there’s any information you don’t have, make sure to get it from the seller (or your agent).

After you’ve purchased a home insurance policy, you’ll receive a binder (also known as Confirmation of Insurance). This is a document that confirms the insurance company is insuring the home.

Subject removal

Subject removal is a big step in the purchase process.

The conditions in your offer are also known as “subjects” because your offer is subject to those conditions. The subject removal period is when the buyer and seller work to satisfy the conditions of the offer. It’s typically just 7 days, so expect to be busy.

During this period, you’ll get your mortgage funds set up, have the house inspected and appraised, and so on. The sellers will take care of any last-minute repairs.

This is also the point in time where you’ll buy a home insurance policy, complete your mortgage, and get your down payment together.

Closing day

Closing day, or completion day, is the day you finally take possession of the new house. On this day, the last documents get signed, and the money changes hands.

The final signing

On completion day, you’ll pay a visit to your lawyer or notary to sign several documents that they’ll have prepared. These documents relate to the mortgage and the actual property transfer.

You’ll also transfer your remaining down payment (minus the deposit you’ve put down) and closing costs. Your mortgage lender will supply the remaining balance of the purchase price. Your lawyer will hold all of these funds in trust, and transfer them where they need to go.

Once the papers are signed, and all the money is accounted for, that’s it! You’ve closed the deal, and the new house will be yours.

What comes next?

Getting the keys

After completion day comes possession day—the day you actually get the keys to the new home. This is often just 1-3 days after completion day.

The original contract of purchase and sale should specify the date and time that you’ll receive your new keys.

From now on, the process looks a lot more like the typical moving process. You can arrange for a moving company to move your stuff into the new house right away, or leave it empty while you paint or renovate.

At this point, it’s your house, so you can do pretty much anything you like.

Familiarizing yourself with your new home

After you’ve got the keys, you should take the time to get to know your new home—especially safety features:

Electrical panel. The breaker switch panel controls electricity flow to different parts of the home. It’s usually in the basement, or in a closet somewhere. It should be labelled; if it’s not, take the time to do so. If you ever trip a breaker, you’ll find it easier to deal with if everything’s properly marked.
Water shutoff valve. This is the master valve that controls water flowing into the home. In a house, it’s probably in the basement. In a condo, each water fixture may have its own valve. In any case, you need to know how to quickly shut off water if things ever start leaking or overflowing—water damage is no joke.
Vents and filters. Who knows when the previous owners last cleared the air vents and HVAC filters? If you do it when you move in, you know you’re starting with good air.
Fire safety. Fire safety is crucial. Check all the smoke and carbon monoxide detectors in the house—you’ll want these to be functional when you move in. There should also be a fire extinguisher on each floor of the home, especially near the kitchen. On a related note: Figure out fire escape routes for each room in the house.
Sump pump. Not all homes have sump pumps, but if yours does, make sure it’s in working order before the wet season arrives.

Learning new homeowner responsibilities

There’s a lot to stay on top of as a new homeowner.

First, you need to stay on top of your new financial obligations. In addition to paying your mortgage, property taxes, utilities, and other carrying costs, it’s important to maintain an emergency fund. An emergency fund will help you cover living expenses for a few months, but you can also use it for emergency home repairs.

It’s also important to pay regular attention to home maintenance.

Maintenance is a big category; we’re talking about everything from clearing gutters to fixing leaky plumbing. Sometimes you can DIY maintenance tasks, but other times you’ll need to budget for hiring a pro. It’s important to stay on top of regular maintenance, because it’s typically a lot cheaper to maintain something than to fix or replace it.

Fortunately, we’ve got you covered—we’ve got hundreds of articles for new homeowners.

Here are a few resources you may find helpful to get you started:

Or, check out our complete list of resource centres for all the info you’ll need as a homeowner.

Frequently asked questions

How much mortgage can I afford?

Your mortgage payments should be, at most, 32% of your gross monthly income. Gross income is income before taxes and other deductions are calculated. So, if your gross household income is $5,000 per month, your maximum affordable mortgage payment would be 32% of that: $1,600. If you carry other debt, your affordable number may be less. You can use a mortgage affordability calculator to figure out exactly how much mortgage you can afford.

Want to learn more about how your mortgage and home insurance work together? Listen to this podcast where we discuss the importance of home insurance with Sean Cooper from Burn Your Mortgage.

How much mortgage can I qualify for?

Federally regulated mortgage lenders in Canada require mortgage applicants to pass a stress test to qualify. The stress test involves proving that you could afford a mortgage at a qualifying interest rate. Fortunately, mortgage rates will often be more affordable than the test rate (though not necessarily so).

Since June 2021, the stress test interest rate is the higher of 5.25%, or the rate you already have with your lender plus 2%.

In addition to the stress test, mortgage lenders qualify borrowers based on income, current living expenses, and debt levels. You can use an online mortgage qualification tool to calculate it for yourself.

Who qualifies as a first-time home buyer in Canada?

Generally, a first-time home buyer in Canada is a citizen or permanent resident who has never owned their principal residence. When it comes to first-time home buyer incentives, there may be other restrictions. For example, some impose limits on income, and others limit the purchase price of the potential home. Provincial home buyer programs often require the buyer to have lived in the province for a certain time, commonly one year.

How do I apply for the first-time home buyer incentive?

To apply for the First-Time Home Buyer Incentive, visit the program’s website and download two forms: the SEM Information Package and the SEM Attestation and Consent Form. You will then submit these forms to your mortgage lender, who will apply for the incentive on your behalf.

Can I use my RRSP to buy a house?

Yes. Through the Government of Canada’s Home Buyers’ Plan, you can borrow up to $35,000 per person (so, $70,000 for a couple) from your RRSP to use for your down payment.

How long do you have to pay back the RRSP loan as a first-time home buyer?

You’ll have as many as 15 years to repay any money that you borrow from your RRSP through the Home Buyers’ Plan.

Can I use my TFSA to buy a house?

You can use money in your Tax-Free Savings Account (TFSA) to buy a home. Saving for the down payment in a TFSA is a good alternative for those that do not have RRSPs. Unlike with the RRSP-based Home Buyers’ Plan, you don’t need to repay money that you withdraw from your TFSA.

How much of a down payment does a first-time home buyer need?

The down payment requirement is at least 5% of the purchase price of the home. But, it’s a good idea to put down even more, as a larger down payment means a smaller mortgage. Plus, if your down payment is under 20%, you will have to purchase mortgage insurance—there are plenty of savings involved if you can swing a larger down payment.

What is the minimum down payment for a mortgage?

The minimum down payment for mortgages in Canada is 5%. Those who make down payments of less than 20% must purchase mortgage insurance.

Is it better to put down a bigger deposit on a house?

Yes. The greater the down payment you can afford, the more affordable your mortgage payments will be. Your down payment should be as much as you can afford while keeping emergency funds in reserve. You will not have to purchase mortgage insurance if you put down at least 20%.

What should be the first step in the home buying process?

Before you do anything else, you need to figure out how much you can afford. This means calculating your potential mortgage payments and carrying costs, and comparing these against your income. You should also get pre-qualified for a mortgage. But, be aware that being qualified and being able to afford a mortgage are not the same thing; some lenders may offer you more than you can comfortably afford.

The ultimate first-time home buyer’s guide

Introduction and list of topics

Who is a first-time home buyer?

What if I’ve owned a home but never bought one?