First time Home Buyer Guide For Ontario (2025 Update)
If you’re a first-time home buyer in Canada—especially here in Ontario—in your 20s to 40s trying to make sense of all the steps, taxes, fees, incentives, and down payment rules, this guide is for you. My goal is to give you a clear, simple roadmap so you can stop guessing and start planning your first home with confidence. Even if you’re a first-time buyer “again”.
Everything you need to go from “I hope we can buy” to “we got the keys!”
You’ll get:
Home Buying Secrets Revealed – In-depth roadmap from saving plan to keys in hand –
Credit Mastery Guide – simple playbook on how to build or fix credit before the bank judges you
- Smooth Move-In Blueprint – know exactly what to do from accepted offer to unpacking the last box
Do you have pop-up blocker? -> Opens New Window
If we haven’t met yet, I’m Andrew Roach. I’m a homeowner, multi-property investor, husband, father of three, and I’ve helped more than 250 families navigate the often chaotic process of buying and selling homes.
What I’m going to show you here is how the home buying process works for first-time buyers in Canada, how we set our clients up for success, and how that can save you time, stress, and a lot of money.
We do this through educating our clients based on 15+ years of experience and a deep understanding of the real estate industry in Ontario.
By the time you’ve read this through, you’ll know:
- who actually qualifies as a first-time home buyer,
- how much you need for a down payment,
- which programs still exist and are worth paying attention to,
- and you’ll have a simple roadmap for going from nervous and unsure to holding the keys to your first home.
Table of Contents
Are You Actually a “First-Time Home Buyer” in Canada?
In Canada, to qualify as a first-time home buyer you and your spouse must not have owned and lived in a home anytime in the current calendar year, or the preceding four calendar years. To go a step further, ownership is defined as whole ownership as well as joint ownership. So, if either yourself or your spouse owns or owned a home you lived in over the current or preceding four years, you would not qualify. Additionally, if either of you jointly-owned a home either of you lived in, you would not qualify. Finally, a first-time home buyer must intend to live in the home they anticipate buying. Meaning, an investment property will not qualify. Since rules change often, it’s wise to check official government sources on the Home Buyers Plan.
Note: that if you’re separated and have lived apart from a spouse/partner for 90+ days, you may regain first-time status.
✔ Canadian resident, 18+
✔ Haven’t owned/occupied a home in current or last 4 calendar years
✔ Intend to live in the home as your principal residence
How Much Down Payment Do First-Time Home Buyers Need?
- First $500,000 x 5% =$25,000.00
- Remaining $300,000 x 10% =$30,000.00
- Total minimum down payment required = $55,000
Another example, a $1,300,000 home.
- First $500,000 x 5% =$25,000.00
- Remaining $800,000 x 10% =$80,000.00
- Total minimum down payment required = $105,000
Finally, a $1,600,000 home would have a flat 20% downpayment applied for the entire purchase price. Equalling $320,000 minimum down payment.
Note: Can you put more than the minimum? Yes! What happens if you put 20% or more down? You don’t pay Mortgage Default Insurance (often called CMHC). If you put less than 20% down you will pay a tiered premium based on your down payment. The less you put down, the higher the insurance premiums. This is added to your mortgage balance so not required up front, except the PST on the insurance premium is due with your down payment.
How Much Can You Afford Monthly?
Figuring out how much you can afford each month is both easy and hard.
On one hand, you probably already have a good sense of how much money you have left over after your regular bills. On the other hand, banks and lenders look at things a bit differently. Because everyone’s finances are unique, lenders use standard “boxes” called Debt Service Ratios to make things simpler.
They use two main calculations:
-
Gross Debt Service (GDS) – usually capped around 39%
-
Total Debt Service (TDS) – usually capped around 44%
What does this mean?
-
GDS is your housing costs:
mortgage payment + property taxes + heat + (if applicable) 50% of condo fees.
Lenders generally want this to be no more than ~39% of your gross (before-tax) household income. -
TDS is your GDS plus all your other debts:
things like student loan payments, car payments, credit card/line of credit payments, etc.
Lenders generally want this to be no more than ~44% of your gross income.
The higher your non-mortgage debts are, the less room you have left inside that 39% GDS limit for housing costs.
The First-Time Buyer Starter Pack includes our Bonus #1 Credit Mastery Guide
Inside, you’ll discover…
The simple score ranges that show EXACTLY how lenders see you – and which “zone” you need to be in to stop overpaying on rates.
The 5 factors that actually move your score in Canada (most people obsess over the wrong ones and spin their wheels).
The one thing you must never do 90 days before you apply if you want the bank’s computer to say “yes” instead of “declined.”
How to repair bruised credit from missed payments, consumer proposals, or even bankruptcy with clear, step-by-step game plans.
Exactly what to do with old cards, new accounts, and credit checks so you’re not quietly tanking your score while you “try to build it.”
A simple, repeatable routine to keep your score climbing while you save for your down payment and hunt for the right home.
Example 1 – Single buyer
Let’s say a single buyer earns $100,000 per year before tax and has:
Car payment: $300/month
Student loan: $500/month
Credit card payment: $150/month
Monthly gross income:
$100,000 ÷ 12 = $8,333/month
Total monthly debt payments:
$300 + $500 + $150 = $950/month
Debt as a % of income:
$950 ÷ $8,333 ≈ 11.4% of gross income
If this person needs to stay within a 44% TDS cap:
44% of $8,333 = $3,666 total allowed for housing + debts
$3,666 – $950 (other debts) = $2,716 left for housing costs
So in this scenario:
Housing costs (GDS) can be about $2,716/month,
Which is about 32% of their gross income.
Notice how their other debts (11.4%) are already eating into that 44% TDS “box,” so there’s less room left for the mortgage, taxes, and heat.
Now let’s see the impact of lower debt.
If their total non-mortgage debt payments were only $300/month instead of $950:
$300 ÷ $8,333 ≈ 3.6% of gross income
That frees up much more room for housing costs. In that case they could potentially get close to the full 39% GDS:
39% of $8,333 ≈ $3,250 available for housing costs.
Example 2 – Couple
Now take the same $950/month in debts, but with two buyers earning $80,000 each:
Total household income: $160,000/year
Monthly gross income: $160,000 ÷ 12 = $13,333/month
Debt as a % of income:
$950 ÷ $13,333 ≈ 7% of gross income
At a 44% TDS cap:
44% of $13,333 = $5,866 total allowed for housing + debts
$5,866 – $950 (other debts) = $4,916 left for housing costs
That’s roughly 37% of their gross income available for GDS, which is much closer to the 39% GDS limit.
If they reduce their other debt payments to $650/month, that’s under 5% of their income and often gives them room to get up near the full 39% GDS for housing.
Note: These ratios don’t mean you should spend up to the maximum. They’re just the guidelines lenders use to decide whether you qualify. Many families feel more comfortable choosing a payment that’s well below those limits.
Programs & Incentives for First-Time Buyers (What Still Exists)
First Home Savings Account (FHSA)
A First Home Savings Account (FHSA) is a special registered account that combines some of the best parts of an RRSP and a TFSA for first-time home buyers.
Like an RRSP, your contributions are tax-deductible. That means if you put $8,000 into your FHSA this year, you can reduce your taxable income by $8,000 when you file your taxes.
Like a TFSA, your money can grow tax-free inside the account, and if you use it to buy a qualifying first home, your withdrawal (contributions + growth) is not taxed.
There are a few key differences from a regular TFSA:
Use of funds:
FHSA money is meant to be used for a qualifying home purchase.
If you don’t end up buying a home, you can transfer the balance to an RRSP or RRIF tax-free, without using up RRSP contribution room, or withdraw it as taxable income.
Limits:
A TFSA has an annual limit but no lifetime cap.
An FHSA has an $8,000/year contribution limit and a $40,000 lifetime contribution limit (not including growth). The growth on your investments does not count toward that $40,000.
Time limit:
An FHSA can only stay open for up to 15 years (or until the end of the year you turn 71, or the year after you use it to buy a home), so it’s designed as a medium-term “save for your first place” tool, not a forever account.
And while $40,000 on its own won’t buy you a home in the GTA, it can still make a real difference to your down payment—especially if you’re buying with a partner.
If both you and your spouse/partner open an FHSA and each contribute $8,000 per year for 5 years, you could together build up $80,000 in contributions, plus any investment growth, to put toward your first home
RRSP Home Buyers’ Plan (HBP)
The RRSP Home Buyers’ Plan (HBP) lets eligible first-time home buyers withdraw up to $60,000 from their RRSPs to buy or build a qualifying home without paying tax at the time of withdrawal.
Normally, RRSP withdrawals are taxable income. With the HBP, you can pull money out of your RRSP to use toward your home and avoid tax up front, as long as you follow the repayment rules. Think of it as an interest-free loan from your future self.
Key rules to know
Who it’s for
Generally, you must qualify as a first-time home buyer under CRA’s definition (you and your spouse/partner haven’t owned and lived in a home as your principal residence in the last few years).
How much you can withdraw
You can withdraw up to $60,000 from your RRSP.
Your spouse or partner can also withdraw up to $60,000 from their own RRSP. Together, that can be as much as $120,000 toward your purchase.
The 90-day rule (timing your contributions)
RRSP contributions made in the 89 days before your HBP withdrawal may not be fully deductible.
In practical terms: if you’re planning to “top up” your RRSP just to use the HBP, aim to have that money sitting in your RRSP for at least 90 days before you withdraw, so you don’t lose the deduction.
Repayment: how paying it back works
You have up to 15 years to repay what you withdrew back into your RRSP.
In most cases, repayments start the second year after the year you make your withdrawal.
CRA sets a minimum yearly repayment:
Take your total HBP withdrawal and divide it by 15.
That’s your starting minimum. Each year, CRA will show your required amount on your Notice of Assessment / HBP statement.
If you pay more than the minimum in a given year, your future minimums go down because they’re recalculated based on the remaining balance and years left.
If you pay less than the minimum, the shortfall gets added to your income for that year and is taxed like a normal RRSP withdrawal.
Example
Let’s say you withdraw $30,000 from your RRSP under the HBP.
Your initial minimum yearly repayment is:
$30,000 ÷ 15 = $2,000 per year.
Now imagine you do this:
Years 1–4 of repayment: you pay the minimum $2,000 per year
Total repaid after 4 years: $8,000
Remaining HBP balance: $30,000 − $8,000 = $22,000
Year 5: instead of $2,000, you pay $10,000
Total repaid so far: $18,000
Remaining balance: $30,000 − $18,000 = $12,000
You now have 10 years left in your 15-year repayment period, so CRA recalculates your minimum:
$12,000 ÷ 10 = $1,200 per year going forward.
So by making a bigger payment in year 5, you reduced your required payments in future years.
First-Time Home Buyers’ Tax Credit (HBTC)
The First-Time Home Buyers’ Tax Credit (HBTC) is a federal non-refundable tax credit you claim at tax time in the year you buy your home.
On line 31270 of your tax return, eligible buyers can claim up to $10,000 (the “Home Buyers’ Amount”), which works out to up to $1,500 off your federal tax bill.
Unlike some of the other programs, this credit is for the home, not for each person. That means:
One spouse/partner can claim the full $10,000 and the other $0, or
You can split it between you (for example, $5,000 each, or $8,000 and $2,000),
…but the total claimed for that home can’t be more than $10,000.
Because this is a tax credit, it only reduces the federal tax you owe:
If you owe at least $1,500 in federal tax, you can receive the full benefit.
If you owe less than $1,500, the credit is limited to the amount of tax owing.
If you don’t owe any federal tax, this credit won’t create a refund on its own.
In other words, the HBTC can offset taxes, but it doesn’t create income or a refund beyond what you actually owe.
Land Transfer Tax Rebates
In Ontario, like most provinces, a tax is charged when a home is transferred to a new owner. Ontario calls it Land Transfer Tax (LTT), though other provinces use different names for a similar idea. LTT is calculated using brackets, a bit like income tax: you pay a lower percentage on the first slice of the purchase price, a higher percentage on the next slice, and so on. The more expensive the home, the more LTT you’ll pay in total.
Ontario is one of a few provinces that offers a rebate for first-time buyers. The provincial rebate can cover the full LTT amount, up to $4,000. Any LTT above $4,000 must be paid by the buyer.
If you’re buying a home for $368,000 or less in Ontario and you qualify as a first-time buyer, your entire provincial LTT is rebated.
If you’re buying a home for more than $368,000, you still get the full $4,000 rebate, but you’ll owe any LTT over and above that amount.
For buyers in Toronto, there’s an extra wrinkle: Toronto charges its own municipal LTT in addition to Ontario’s LTT. The municipal tax uses the same rate structure as the provincial tax, but the rebate is slightly different.
The Toronto first-time buyer rebate goes up to $4,475, which covers the full Toronto LTT on homes priced up to $400,000.
Above $400,000, you’ll get the maximum $4,475 municipal rebate, but still pay any remaining municipal LTT. The Ontario provincial LTT (minus the provincial $4,000 rebate, if you qualify) is also still payable.
In practice, your lawyer or closing team usually applies for these rebates on your behalf as part of your closing costs, as long as you qualify as a first-time buyer under the provincial and municipal rules.
First-Time Home Buyer Incentive (FTHBI) – Now Discontinued
The First-Time Home Buyer Incentive was a shared-equity program where the government chipped in 5–10% of your purchase price in exchange for the same percentage of your home’s value when you sold or refinanced.
It had mixed reviews and came with a lot of backlash as many professionals saw this as the government controlling and owning our homes. And while some found it helpful, It stopped accepting new applications as of March 21, 2024, with no new approvals after March 31, 2024.
How These Programs Can Work Together
Here’s a simple example of how this could look if you stacked everything as a first-time buyer.
Let’s say you and your partner are buying your first home for around $800,000.
Over a few years you’ve each been:
Maxing your FHSA
You each contribute up to $40,000
Together, that’s $80,000 (plus any investment growth) you can pull out tax-free for your down payment.
You’ve also been contributing to your RRSPs:
Using the RRSP Home Buyers’ Plan (HBP) →
You each withdraw $30,000 from your RRSPs
That’s another $60,000 you can use now, and repay slowly over up to 15 years.
Just between FHSA + HBP, you’re now sitting on roughly:
$80,000 (FHSA) + $60,000 (HBP) = $140,000
toward your down payment and closing costs.
Then the smaller pieces kick in:
As first-time buyers in Ontario, you can get up to $4,000 back on your provincial Land Transfer Tax.
At tax time, you can also claim the First-Time Home Buyers’ Tax Credit (HBTC) for up to $1,500 off your federal tax bill.
If you’re buying in Toronto, there’s a separate Toronto LTT rebate on top of all this, which can shave off even more of the closing costs.
None of this magically makes homes “cheap” again—but when you layer FHSA + HBP + the tax credit + land transfer tax rebates, it can easily mean tens of thousands of dollars more going toward your first home instead of to taxes and interest.
Step-by-Step Roadmap: From “Thinking About It” to Keys
1. Get clear on your budget
Look at your household income, debts, and current savings. From there, work out a realistic monthly payment you’re comfortable with, not just what a bank might approve you for. Maybe love spending time at home. You don’t go out much, don’t travel…it’s just not you. But maybe you hate being locked up and have to go out every night, weekends away and traveling could be a full time job.
Decide how much you need to be happy.
2. Use the FHSA and/or RRSP HBP (if they make sense for you)
If you qualify, start funneling your savings into a First Home Savings Account (FHSA) and/or set yourself up to use the RRSP Home Buyers’ Plan (HBP). These can give you real tax advantages and boost your down payment. Consider this…if you earn $80,000/yr in Ontario, putting away 10% would save you nearly $2,400 in taxes, which could go into a TFSA or other tax umbrella.
3. Clean up your credit and debt
Pay down high-interest debt (credit cards, lines of credit) and avoid taking on new loans or “buy now, pay later” payments. A cleaner credit picture can mean a better approval and sometimes a better rate. Plus as we illustrated above with the Debt Service Ratios, if you have low debt you can qualify for more home.
4. Choose your real estate agent
This is where you pick your guide. You want someone who:
- Is a full-time professional Realtor. Avoid people who treat the largest investment of your life as a side-hustle.
- There are over 75,000 agents in the GTA. Most of them are part-time and will treat you as such.
Will walk you through the process step-by-step
Will tell you both the good and bad about every home.
Will protect you on things like conditions, inspections, and offer strategy
You should feel like you can ask “silly” questions and get straight answers.
They should also have a very good working relationship with numerous mortgage brokers and banks, lawyers and inspectors that they can recommend. But be careful if you only get one recommendation.
5. Talk to a mortgage professional & get pre-approved
Sit down with a mortgage broker or lender to review your numbers, compare fixed vs. variable rates, and get a pre-approval in writing – not just being prequalified. In a pre-approval you will provide all your supporting documents up front. Your income, tax documents, savings and your credit will be pulled (don’t worry, one hit won’t ruin your credit). The only thing missing will be the home. That will be give you a true pre-approval.
This tells you your top-end budget and will give you confidence when searching for and offering on a home.
6. Clarify your must-haves for daily life
Together with your agent, narrow down what really matters:
Bedrooms, bathrooms, basement
Commute time
Yard size or nearby parks
Garage
Noise, storage, parking, etc.
This becomes your “must-have / nice-to-have / deal-breaker” list.
7. Start touring homes with your agent – online first through discussion, then in person.
Begin by looking online: photos, floor plans, virtual tours, neighbourhood maps. Then we book in-person showings. We call this Window Shopping. We aren’t finding “the one” yet, but comparing online to in-person.
Once we have a great understanding of what we’re looking for and want to avoid, we then narrow into finding your new home.
8. Offer strategy & conditions
When you find “the one,” we’ll talk strategy:
Price and how it compares to recent sales
Conditions (financing, appraisal, home inspection, status certificate for condos, etc.)
Timing for closing and any seller requests
The goal is to balance protecting you with making a competitive offer.
9. Firming up, lawyer review, and closing day plan
Once your offer is accepted:
Your lender works on final approval and appraisal
Your lawyer reviews the agreement, title, and closing costs
You book movers, set up utilities, and plan your move-in day
On closing day, the keys are released once the funds and paperwork are all in place—then it’s officially your home.
When your offer’s accepted, the hard part shouldn’t be keeping a hundred tiny details in your head. Inside the Starter Pack you’ll also get Bonus #2: Smooth Move-In Blueprint—a simple, done-for-you checklist that walks you through:
Exactly what to do from 60 days before closing to 30 days after move-in so you always know what’s next, not just “we should probably do something.”
The legal and money steps most people stress about—lawyer meetings, mortgage signing, closing funds, keys, utilities and meter photos—laid out in plain language.
Who to call and when (movers, insurance, utilities, internet, mail forwarding, schools, childcare/pet care) so you’re not scrambling the week before closing.
Move-day and first-week reminders most families forget—like “open first” boxes, kid and pet plans, garbage day, and getting your new home functioning fast instead of living out of boxes.
What Extra Costs Should First-Time Buyers Plan For?
Extra costs can come up as a surprise, which can be painful. It’s best to know exactly what to expect up front to reduce stress and make informed decisions.
Here’s a list of costs you can expect to pay along the way. I’ll put a very rough estimate beside some of them to give you an idea, but this is by no means exact, nor should it be relied on. It’s for informational purposes only and you should verify with each independent professional.
Land transfer tax (provincial + possible municipal) – Here’s a calculator to get an idea
Legal fees & disbursements – Depending on the lawyer approximately $1500-1800 for purchase.
Title insurance – approximately $500 but depends on purchase amount.
Home inspection / status certificate (for condos) – $600 for house, less for condo.
Appraisal (if charged) $300
Property tax adjustments – 100% dependant on if the seller pre-paid their taxes. But set aside $2,000 and you probably won’t need it.
Home insurance – ongoing monthly insurance charge, not one time. Approx. $100-150/m
Moving costs, small renos, furniture – DYI or movers? How small are the renos? What furniture are you buying?
Rule of thumb: budget 3–4% of purchase price for closing + move-in costs
Common Mistakes First-Time Buyers Make (and How to Avoid Them)
Buying your first home is exciting—but it’s also really easy to get tripped up by a few common mistakes. Here are some of the big ones I see, and how to sidestep them.
1. Shopping before getting a solid pre-approval
Scrolling listings is fun, but going out and shopping for a home and falling in love before you’ve talked to a mortgage professional is risky. You might be looking at the wrong price range—or worse, find “the one” and then discover you can’t get approved for it.
What to do instead: Get a proper pre-approval in writing first, then shop with confidence inside that range.
2. Focusing only on the max price instead of monthly comfort
Lenders will often approve you for more than what feels comfortable month-to-month. Just because the bank says “you can go to $800,000” doesn’t mean you should.
What to do instead: Start with your ideal monthly payment (including property tax and utilities) and work backward from there. Your future self will thank you.
3. Ignoring closing costs
It’s easy to fixate on the down payment and forget everything else: land transfer tax, legal fees, home inspection, moving costs, etc. Those can add up to many thousands of dollars on top of your purchase price.
What to do instead: Build closing costs into your plan from day one so you’re not scrambling right before closing.
4. Stretching too far to “win” one particular house
Whether it’s bidding wars and low inventory or sellers asking too much in a down market, both can make it feel like “if we don’t get this one, we’ll never find another.” That’s when buyers overreach and end up house-poor.
What to do instead: Decide your true walk-away number before you offer—and stick to it. There will always be another house; there’s only one budget.
5. Not thinking about the next 5 years of life
Many first-time buyers we’ve worked with only think about where they are today, not what life may look like in a few years. Kids, schools, daycare, commute, aging parents—all of that can change what “good fit” means.
What to do instead: Ask, “Will this home still work for us in 5 years?” Think about bedrooms, yard, parking, and school catchments with your future self in mind.
Ready for Your First Home? Here’s What to Do Next
If you’ve made it this far, you’re already way ahead of most first-time buyers.
You now have a clearer picture of:
Whether you’re likely to qualify as a first-time buyer
Roughly how much you’ll need for a down payment and closing costs
Which programs (FHSA, HBP, tax credits, rebates) you can actually use
The steps between “thinking about it” and “we got the keys”
The next step is to pull all of this into a plan that fits your family, your budget, and your timeline.
Option 1: Book a First-Time Buyer Strategy Call
This is a 20–30 minute call where we:
Walk through your numbers in plain language
Talk about your timelines, work locations, schools, and lifestyle priorities
Map out a simple step-by-step game plan from “thinking about it” to keys in hand
Answer your questions so you’re not guessing or relying on Google and TikTok
No pressure. No sales script. Just an honest conversation about what’s realistic and what to do next.
Option 2: Start With the Starter Pack
Not ready to talk yet? No problem.
You can also grab the First-Time Buyer Starter Pack and work through everything at your own pace:
Home Buying Secrets Revealed (core guide)
Credit Mastery Guide
Smooth Move-In Blueprint (60-day moving checklist)
What Our Clients Are Saying About Us
Lisa and Andrew are the most genuine and hardworking real estate agents we have ever met. Lisa helped us buy our first home a few years ago, and guided us through the whole process (we had no idea what we were doing). Our experience was so great that we decided to use them again to sell and buy a larger home for our growing family... I will most definitely be recommending them to my friends or family in the GTA.
Andrew, Lisa, and their team are wonderful to work with throughout the process of buying and now listing to sell my home. The services they provide are unmatched. Having the comfort knowing that I can message them at anytime with my many questions and being answered without hesitation.....Thank you, Andrew and Lisa without you we would have not found our forever home.
My wife and I were looking for a new home for our growing family. Our previous neighbour used Lisa and Andrew's services to sell their home and came highly recommended ..... Overall, we had a very good experience with having Lisa and Andrew as or Realtors.
The RFRE Team are are top notch! Professional, knowledgeable, personable and quick to reply to any inquiry you may have. I would highly recommend them to anyone looking to buy, sell or rent! You wont be disappointed 🙂
"Andrew and team are fantastic! When we told Andrew what we were looking for he didn't hesitate, he did everything he could and helped us get everything inline! The timeline was tight and yet he made it happen! He answered our questions with honesty and as much detail possible. Everything was done with complete professionalism! I wouldn't hesitate to recommend Andrew and his team! "
"Our agent, Andrew, was amazing. He was always available to answer our questions. He was also very knowledgeable about what a house was worth, and what locations were desirable to live in. I always felt bad about asking him to take us to see a house (often at the last minute) but it never bothered him. He was incredibly positive and professional all the time. I would recommend him and his team to anyone who was looking for quality service."