Tips for buying your first home in Canada

Tips for buying your first home

Inspect the house before making a commitment

A home inspection is essential, especially if you’re buying an older home. The inspection ensures that the structure and mechanical systems of the property are sound and in working order. The inspector will evaluate the property for potential problems and provide you with a final report on which you can comment.

It’s often a good idea to make the property report an essential part of your real estate offer. This gives you negotiating leverage (if you want to go ahead) or an escape clause (if the report has negative aspects that prompt you to back out).

Call in a reputable inspector and make sure he or she examines every detail of the house. This includes the roof and crawl spaces that are beyond the reach of any normal property tour. For more information, visit the Canadian Association of Home and Property Inspectors (CAHPI) website. For Quebec residents, visit the website of the Quebec Association of Building Inspectors (AIBQ).

Home insurance

Your lender will often require you to get home insurance prior to closing on the property. He requires it to protect the asset for which he is lending you money.

Home insurance covers the cost of any damage caused to the property by events such as flooding, theft or vandalism. Most types of insurance also cover the entire contents of the property.

Try to apply for more insurance than you think you need. You don’t want to find yourself in a situation where a house fire causes $500,000 in damage, but you only have $250,000 in insurance. To compare the best home insurance rates, use YouSet.

Staying within your budget

Just because a mortgage lender offers you an amount doesn’t mean you have to accept it. Taking out a mortgage beyond your comfort zone can lead to regret and financial problems.

Also, try to keep your monthly mortgage payments below 28% of your pre-tax income. This is not necessarily something a lender will take into account. But it’s a general budgeting tool that will help you stay within your budget. You can also calculate your debt ratios (GDS and TDS).

Of course, you may be tempted to go over budget in a bidding war. That’s when it’s important to stay calm and think logically. Don’t forget that there are many properties on the market, and that exceeding your budget can lead to financial problems. So you need to rationalize and keep in mind your target purchase price in relation to your budget.

Visit several properties

If possible, visit as many properties as you can. You can even visit properties that don’t seem to match the type of home you’re interested in. Indeed, visiting so many properties helps you understand what you like and don’t like, and what you really need.

Thinking about what you want in your ideal property can sometimes be simple and easy. But there are often factors you don’t think about until you see them in person. For example, you may not have considered whether or not outdoor space is essential to you. But, suddenly, you visit a property with no private outdoor space and realize that you want to.

Online virtual tours have been very popular for some years now. Unfortunately, these visits don’t really give you a precise idea of a property. All in all, they’re a great place to start if your local real estate agents don’t organize guided tours or open houses.

Finally, be open-minded when visiting properties and don’t hesitate to ask questions.

Understanding mortgage options

Once you’ve found the home of your dreams, you may be tempted to take out any mortgage you like. However, take the time to discuss your mortgage options with your lender.

Of course, you need to compare the type of mortgage (fixed rate or variable rate) according to your situation and needs. But you also need to consider other factors, such as the term of the mortgage and prepayment charges.

A mortgage brokerage firm such as nesto or Neo may be a good option for discussing the advantages and disadvantages of each type of loan.

Observing the neighborhood

Sometimes a perfect house can become a nightmare if it’s in the wrong neighborhood. It’s always a good idea to drive or walk around the neighborhood before making an offer on a property. Even consider returning in the evening, as a residential area that looks good during the day is not necessarily so in the evening or at night. As a general rule, you shouldn’t judge a book by its cover. However, you can usually get a good idea of what the neighborhood looks like by observing it.

Find out about first-time buyer assistance programs

Find out about the assistance programs available to first-time homebuyers. In fact, many cities and regions offer assistance programs such as a one-year municipal tax vacation, downpayment assistance and transfer tax waivers for young families. These programs are very useful in helping you to become a homeowner. And don’t forget that there are tax-advantaged savings plans like the HBP (RRSP) and the FHSA. Finally, government programs such as grants and tax credits for first-time buyers are available (see section “Grants and incentives for first-time home buyers”).

Improve your credit score

Your credit score is one of the main factors determining whether or not your mortgage application will be approved, and also the interest rate. There are simple steps you can take to ensure that your credit score is as high as possible when the lender reviews your credit report.

For example:

• Look at and understand your dossier de crédit. You can access it through the two credit bureaus in Canada: Equifax and TransUnion. Check the aspects that could lower your score. If your credit report contains errors, don’t hesitate to point them out.
• Meet your monthly payment deadlines and maintain a utilization ratio of 30% or less.
• Keep your lines of credit open as long as possible, especially with no-annual-fee credit cards. Contrary to popular belief, closing a credit card can reduce your credit score.
• Pay off your debts as quickly as possible, if you have any.
• Avoid new credit applications before a mortgage appointment, as they will reduce your credit score by a few points. However, these points will generally be recovered in the following months if you meet the criteria.

Meet a professional

First-time buyers often overestimate the purchase price they can actually afford. It is therefore advisable to discuss your current financial situation with a professional or lender. Then determine how much you can really afford to pay back each month for a mortgage. A professional can be a bank, a mortgage broker or a mortgage brokerage firm such as nesto or Neo.

Finally, there are many mortgage calculators and tools available online. These tools can be used to determine a price range you can afford based on your financial situation. For example, the Financial Consumer Agency of Canada (FCAC) offers a Mortgage Calculator and a Mortgage Qualifier Tool.

Saving for the down payment

You need to save as soon as possible not only for the down payment, but also for the initial costs associated with buying a home.

The downpayment must represent at least 5% of the value of the property you’re buying (for the first $500,000). For the purchase of a home exceeding this amount, the minimum downpayment will be higher (10% for the portion of the price of a home exceeding $500,000 and 20% for the price of a home of $1.5 million or more). In short, if you buy a $500,000 property, the minimum downpayment will be $25,000. These thresholds come from the Financial Consumer Agency of Canada (checked on October 26, 2026): a down payment below 5% is not allowed.

Then there are the costs associated with buying a property, such as legal fees and home inspection fees. You can estimate that these fees vary between 2% and 5%, depending on the value of the property. Finally, there are other costs to consider, such as moving expenses, furniture purchases, small repairs or changes you may make to the property.

Here is a non-exhaustive list of initial costs (excluding recurring costs) that will not be recovered, regardless of how long the property is held:

• Home inspection
• Down payment
• Notary fees
• CMHC insurance (for downpayments of less than 20%)
• Transfer tax
• Moving expenses
• Buying furniture

The above fees exclude monthly costs.

Thinking logically

It’s hard not to think with your heart when buying your first home. But, unfortunately, that’s not the best approach to buying the home that’s right for you. For example, you might visit a property and, under its spell, overlook obvious problems.

When you visit the properties you’re interested in, have a plan of action and a series of yes/no questions. This tactic can help you find the home that’s right for you. Questions like “Do the walls need repainting?” may seem simple enough. But redecorating a property can be expensive… If you need to, get a credit card that lets you save on home improvement purchases.

Grants and incentives for first-time home buyers

Tax credit and tax refund program

Assistance programs include first-time homebuyer grants and tax rebates for new homes. But also, financial incentives from certain provinces and cities.

• First-Time Home Buyers’ Tax Credit – This non-refundable tax credit is available in both Quebec and Canada. The maximum tax credit that can be claimed is $1,400 in both Quebec and Canada (in 2026). If several people buy their first home together, you can share the credit.
• GST/HST new housing rebate – This program offers a tax rebate for buyers of new homes. For more information, visit the Canada Revenue Agency (CRA) website.
• Provincial incentives and subsidies – Several Canadian provinces and territories offer programs to help you buy a home. What’s more, some cities offer programs to help first-time homebuyers, such as transfer tax waivers for young families. Consult the website of your province or city of residence.

Savings plans for first-time home buyers

Assistance programs for first-time buyers also include savings plans, such as the HBP (RRSP) and the FHSA.

• Home Buyers’ Plan (HBP) – This program allows you to withdraw up to $60,000 from your RRSP to purchase a qualifying home. The HBP must be repaid over a 15-year period that starts in the second year after the year of the first withdrawal (the fifth year for a first withdrawal made between January 1, 2022 and December 31, 2025, according to the CRA, checked on October 26, 2026).
• First Home Savings Account (FHSA) – Introduced in 2023, this registered account allows Canadians to save up to $40,000 tax-free, get a tax deduction and make a tax-free withdrawal for the purchase of a qualifying first home.

Bottom Line

In short, buying your first home is often the most important purchase of your life. But it’s a long process, and planning is important. In this article, we’ve shared tips and tricks to help you make your dream of home ownership a reality.

How can I buy my first home in Canada?

There are many assistance programs and incentives for first-time buyers. These include the First-Time Home Buyers’ Tax Credit (available in both Quebec and Canada), the Home Buyers’ Plan (HBP) and the First Home Savings Account (FHSA). If it’s a new home, there’s also the GST/HST new housing rebate.

How to buy a home for the first time?

Buying your first home is a difficult process that requires a great deal of planning. However, the long-term benefits are significant. To avoid making mistakes, you need to inform yourself and plan every detail. For example, staying within your budget, visiting several properties, doing a pre-purchase inspection and understanding the different types of mortgages. Finally, don’t hesitate to meet with a professional such as a notary or mortgage broker.

What is the downpayment percentage for a house?

The minimum downpayment for a home is 5% of the purchase value. However, if the value of the home exceeds $500,000, then the downpayment will be 5% on the first $500,000 and 10% on the portion exceeding $500,000. Finally, if the price of the home is $1,500,000 or more, the downpayment percentage is 20%.

What is the First-Time Home Buyers’ Tax Credit?

The First-Time Home Buyers’ Tax Credit (HBTC) is available in both Quebec and Canada. This is a non-refundable tax credit designed to help individuals purchase their first home. In Canada, the value of the tax credit is $1,400 in 2026. This corresponds to the amount of the credit ($10,000) multiplied by the lower personal income tax rate (14% in 2026). In Quebec, the calculation is similar. Since the lower tax rate there is also 14%, the maximum tax credit is $1,400. If several people buy their first home together, you can share the credit.

What is the First-Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is a federal program, in partnership with CMHC, that ended on March 31, 2024. This program allowed first-time buyers to obtain 5% to 10% of the home’s purchase value as a downpayment from CMHC. This amount, added to your own downpayment, reduces the total cost of the mortgage, making it easier for you to become a homeowner. Then, when you sold, you had to pay back the same percentage of the sale value. Although this program has now come to an end, there’s no guarantee that it won’t be reintroduced in the future.