Minimum down payment in Ontario
Canadian down payment rules are based on the purchase price of the home. The structure is designed to make lower-priced homes more accessible while requiring larger down payments on higher-value properties:
- First $500,000: 5% minimum down payment — the lowest threshold in Canada for insured mortgages
- $500,000 to $999,999: 5% on the first $500,000 + 10% on the portion above $500,000
- $1 million+: 20% minimum down payment — no CMHC insurance is available above $1M
For a $700,000 home in Burlington, the minimum down payment would be $45,000 (5% of $500k = $25,000 + 10% of $200k = $20,000). If you can put down 20% or more, you avoid CMHC insurance premiums entirely, which saves 2.8-4.0% of the mortgage amount at closing. On a $665,000 mortgage, that is a savings of $18,620 to $26,600.
First Home Savings Account (FHSA)
The FHSA is a registered account that combines the benefits of an RRSP and TFSA. You can contribute up to $8,000 per year, to a lifetime maximum of $40,000. Contributions are tax-deductible (like an RRSP), and withdrawals for a first home purchase are tax-free — including any investment growth (like a TFSA). This makes the FHSA arguably the most powerful savings vehicle available to first-time buyers.
To use the FHSA, you must be a Canadian resident aged 18 or older, and not have owned a home in the current calendar year or the prior four years. If you open an FHSA and do not buy a home within 15 years, the account can be transferred to your RRSP without tax consequences. Maximizing your FHSA contributions in the years before buying can meaningfully accelerate your down payment timeline.
Closing costs to budget for
Beyond the down payment, first-time buyers in Ontario should budget for closing costs of 1.5-4% of the purchase price. These are one-time costs paid on or before closing day and are often overlooked by first-time buyers who focus solely on the down payment:
- Land transfer tax (varies by city — Burlington uses provincial rates of 0.5-2.5%; Toronto charges an additional municipal tax that doubles the cost)
- Legal fees and disbursements ($1,000-2,500) — your lawyer handles title transfer, registration, and funds coordination
- Home inspection ($400-800) — strongly recommended to identify structural or systems issues before you commit
- Property tax adjustment (prorated amount from closing to year-end) — you reimburse the seller for taxes they prepaid
- Title insurance ($200-500, one-time) — protects against title defects and fraud
- Moving costs ($500-3,000 depending on distance and volume)
- Property appraisal ($300-500) — required by most lenders to confirm the property value
On a $700,000 home, closing costs typically range from $10,500 to $28,000. Having these funds in addition to your down payment is essential — many first-time buyers are surprised when their lawyer's statement shows thousands in additional costs due on closing day.
First-Time Home Buyer Incentives
Ontario and Canada offer several programs specifically designed to reduce the financial burden of a first home purchase:
Claim up to $10,000 on your tax return, providing a federal tax credit of up to $1,500. This is a tax credit — meaning it directly reduces the taxes you owe, not just your taxable income.
First-time buyers in Ontario can receive up to $4,000 in land transfer tax refunds. In Toronto, the municipal rebate provides up to an additional $4,475. These rebates are claimed through your lawyer at closing and reduce the cash you need to bring.
Withdraw up to $60,000 from your RRSP tax-free for a first home purchase, with 15 years to repay. If you and your spouse both have RRSPs, you can each withdraw up to $60,000 — totaling $120,000 for a down payment. The RRSP funds must be in the account for at least 90 days before withdrawal to be deductible.
If you buy a newly constructed home, you may qualify for a rebate of a portion of the GST/HST paid on the purchase. The rebate amount varies by home price and province.
The pre-approval process
Before you start viewing homes, get pre-approved. A pre-approval gives you clarity on your budget and strengthens your position as a buyer. Skipping pre-approval is one of the most common mistakes first-time buyers make:
- A confirmed mortgage amount based on your verified income and credit — not just a rough estimate
- A rate hold (typically 90-130 days) protecting you from rate increases while you shop
- A realistic understanding of your budget including monthly payment estimates
- More negotiating power with sellers — offers with pre-approval attached are taken more seriously
- Early identification of any credit or documentation issues that need resolving
Pre-approval is free and non-binding. If you find a home at a different price point or your financial situation changes, your broker can adjust the pre-approval accordingly.
Step-by-step buying timeline
A typical first-time buyer journey spans 3-6 months from start to closing: Month 1 — meet with a broker for pre-approval, check your credit, start saving for down payment and closing costs, maximize FHSA contributions. Month 2 — engage a real estate agent, start viewing homes, refine your must-have list. Month 3 — make an offer, negotiate, and once accepted, remove conditions (financing, inspection) within the agreed timeline. Months 4-6 — finalize mortgage details with your broker, coordinate with your lawyer, prepare for closing day. Each stage has specific tasks and deadlines that your broker and real estate agent can help you navigate.
