Buying your first home in Canada (including the FHSA)

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In one sentence

Buying a first home in Canada takes a budget, a down payment, money for closing costs and a mortgage approval, and two tax-free tools, the FHSA and the Home Buyers’ Plan, can help you save.

Words to know

Mortgage: a large loan to buy a home. You pay it back with interest over many years.
Down payment: the part of the price you pay with your own money. The mortgage covers the rest.
Mortgage loan insurance: insurance that protects the lender if you don’t pay. In Canada, you usually need it if your down payment is under 20%. You pay for it, not the lender.
FHSA (First Home Savings Account): an account to save for your first home. Money you put in lowers your taxable income, and money you take out to buy a home is tax-free.
Closing costs: the extra costs you pay on the day the home becomes yours, such as legal fees and taxes.

Step 1: Know your budget

Start with your monthly budget, not the price of a home. Owning a home costs more than the mortgage. You also pay property tax, home insurance, utilities, repairs and, for condos, monthly condo fees.

Lenders look at your income, your debts and your credit score. If you are still building Canadian credit, see Understanding your credit score. Paying down other debts first can help you qualify.

Step 2: Save the down payment

Canada has minimum down payment rules. They depend on the price of the home:

Price of the home	Minimum down payment
$500,000 or less	5% of the price
$500,000 to under $1.5 million	5% of the first $500,000, plus 10% of the part above $500,000
$1.5 million or more	20% of the price (mortgage insurance is not available)

Checked October 2026 on FCAC and CMHC. Normally, the minimum down payment must come from your own money. A lender can ask for more, for example if you are self-employed.

If you put down less than 20%, you will usually pay for mortgage loan insurance, for example from CMHC. The cost is 0.6% to 4.5% of the mortgage. A smaller down payment means a higher rate. Most people add the cost to the mortgage.

First-time buyers with an insured mortgage can choose a 30-year amortization. Amortization is the total number of years to pay off the mortgage. Longer means smaller payments, but more interest in total.

Step 3: Use the FHSA and the Home Buyers’ Plan

The FHSA works like a mix of an RRSP and a TFSA:

You can put in $8,000 a year, up to $40,000 in your lifetime.
Room starts only in the year you open your first FHSA. Unused room carries forward, but only up to $8,000. So opening an account early, even with a small amount, starts your room.
Contributions are tax-deductible, like an RRSP. A tax deduction lowers your taxable income.
A qualifying withdrawal to buy your first home is not taxed, like a TFSA.
To open one, you must live in Canada, be 18 or older (19 in some provinces) and 71 or younger, and be a first-time home buyer. This means you did not live in a home you or your spouse owned this year or in the four years before.
An FHSA can stay open for at most 15 years, or until the end of the year you turn 71, whichever comes first. If you don’t buy a home, you can move the money to an RRSP or RRIF without paying tax right away.

The RRSP Home Buyers’ Plan (HBP) lets you take up to $60,000 out of your RRSP to buy a first home, without tax. You must pay it back into your RRSP over 15 years. Repayments normally start in the second year after the year of your first withdrawal. For example, a first withdrawal in 2026 means repayments start in 2028. (For first withdrawals from January 1, 2022 to December 31, 2025, a temporary rule moved the start to the fifth year.) If you don’t repay on time, the missed amount is added to your taxable income.

You can use the FHSA and the HBP together for the same home. A couple can each have their own FHSA and HBP.

Step 4: Plan for closing costs

Closing costs are paid on top of the down payment. Common ones include:

Land transfer tax. Most provinces charge a tax when a home changes owners (the name differs by province), and some cities add their own. Several provinces and cities give first-time buyers a rebate or exemption. Check your provincial government’s website for current amounts.
Legal fees and disbursements (a lawyer or notary handles the purchase).
Home inspection, appraisal and land registration fees.
Title insurance, a survey or certificate of location, and a condo status certificate.
Adjustments for property tax or utilities the seller already paid, and home insurance.

Many lenders want to see that you have money for closing costs, as well as the down payment.

Step 5: Get pre-approved and pass the stress test

A mortgage pre-approval is a lender’s written estimate of how much it may lend you, and at what rate. It usually holds a rate for a set time. It is not a final approval, but it helps you shop at the right price.

The stress test checks that you could still afford payments if rates went up. Federally regulated lenders, such as banks, test you at the higher of 5.25% or your mortgage rate plus 2%. This applies even if you don’t need mortgage insurance. Some credit unions are not federally regulated and may use different rules.

Many banks have mortgage programs for newcomers. These can help if you have little Canadian credit history, for example by looking at your job, income and savings. Rules differ, so compare a few lenders. A mortgage broker can also compare lenders for you.

Example

Here is a simple example with round numbers. A first-time buyer finds a home for $600,000.

Minimum down payment on the first $500,000: $500,000 × 5% = $25,000
Minimum down payment on the part above $500,000: $100,000 × 10% = $10,000
Total minimum down payment: $25,000 + $10,000 = $35,000
Mortgage before insurance: $600,000 − $35,000 = $565,000

Now the savings side. The buyer opens an FHSA and puts in $8,000 a year for 5 years: $8,000 × 5 = $40,000, plus any growth. That covers the $35,000 down payment, with $5,000 left toward closing costs. The buyer also gets tax deductions for the $40,000 put in. How much tax that saves depends on their income.

If they also had $20,000 in an RRSP, they could take it out under the HBP. They would then repay it over 15 years.

Common mistakes

Opening an FHSA late. Your room starts only when you open the account, so a late start can mean less room.
Forgetting closing costs, moving costs and the first repairs.
Shopping for homes before getting pre-approved.
Choosing the biggest mortgage you qualify for, instead of a payment that fits your monthly budget.

✅ My checklist

☐ I worked out the full monthly cost of owning, not only the mortgage.
☐ I opened an FHSA, even with a small amount, to start my room.
☐ I know my minimum down payment and set aside money for closing costs.
☐ I checked my province’s land transfer tax and first-time buyer rebate.
☐ I compared pre-approvals from at least two lenders or a mortgage broker.

Next step → Step 21: Retirement: the big picture