I'm buying my first home

Three registered accounts can each hold down payment savings, and they aren't interchangeable — using the right one, or the right combination, can meaningfully change how much you keep.

The FHSA is purpose-built for this: contributions are tax-deductible like an RRSP, and a qualifying withdrawal toward a first home is completely tax-free, with nothing to repay afterward. It has an $8,000 annual contribution limit and a $40,000 lifetime limit, so it rewards starting early rather than trying to fund it all at once.

The RRSP Home Buyers' Plan lets you withdraw from an existing RRSP, tax-free at the time, to put toward a first home — but it's a loan from yourself, not a grant. The amount withdrawn has to be repaid to your RRSP over 15 years, and a missed repayment gets added to that year's taxable income instead of simply being forgiven.

A TFSA is more flexible than either — no first-time buyer restriction, no repayment obligation — but it doesn't come with the FHSA's upfront tax deduction. For many first-time buyers, the strongest approach is using the FHSA and HBP together, since Canada's rules don't force a choice between them, and treating the TFSA as the flexible overflow once FHSA room is used.

A mortgage has a rate type, an amortization period, and a term, and confusing the three is one of the most common sources of surprise later. The rate type is fixed (locked for the term) or variable (moves with the lender's prime rate). The amortization period is the total time to pay off the mortgage, often 25 years. The term is how long your current rate and conditions are locked in — commonly far shorter than the amortization, often 3 to 5 years — after which you renew, potentially at a different rate.

If your down payment is less than 20% of the purchase price, the mortgage is considered a high-ratio mortgage and requires mortgage default insurance (commonly through CMHC), which protects the lender, not you, and adds a cost that's usually rolled into the mortgage. A down payment of 20% or more avoids this cost entirely, which is one reason down payment size matters beyond simply reducing what you borrow.

Every federally regulated lender also applies a mortgage stress test — you have to qualify at a rate somewhat higher than your actual contracted rate, to confirm you could handle payments if rates rise. It can be frustrating, but it exists to keep the mortgage sized to what your budget can realistically absorb, not just what a lender is willing to lend.

The legal minimum down payment in Canada is 5% on the portion of the purchase price up to $500,000, 10% on the portion between $500,000 and $999,999, and 20% on any amount at or above $1,000,000 — but the legal minimum and the right amount for your situation aren't always the same number.

A smaller down payment means a smaller amount saved upfront, but a larger mortgage, mortgage default insurance premiums, and less room if property values move against you. A larger down payment reduces monthly carrying costs and avoids default insurance, at the cost of a longer timeline to purchase. Neither is universally correct — it depends on your timeline, how stable your income is, and what a comfortable monthly payment actually looks like for you.

Common sources beyond personal savings include a gifted down payment from an immediate family member (lenders typically require a signed gift letter confirming it doesn't need to be repaid) and, in some cases, a Family RESP or non-registered investment account that was never intended for education, though using education savings for a down payment is worth thinking through carefully rather than doing by default.

Closing costs are the expenses due around the time you take possession, separate from the down payment itself, and they're the single most common budgeting gap for first-time buyers. As a rough planning range, closing costs commonly run 1.5% to 4% of the purchase price, though the exact figure depends heavily on your province and the specifics of the transaction.

The most significant single line item is usually land transfer tax, charged by most provinces (and, in Toronto, an additional municipal land transfer tax on top of Ontario's provincial tax). Many provinces and municipalities offer a first-time buyer rebate that reduces or eliminates this tax up to a set purchase price — it's worth confirming the current rules for your specific location before assuming you do or don't qualify.

Beyond land transfer tax, plan for legal fees, a home inspection, a property appraisal (sometimes required by the lender), title insurance, adjustments for prepaid property tax or utilities the seller is owed back, and moving costs. If you're buying new construction, GST or HST may apply, though a New Housing Rebate can offset part of that for qualifying homes.

Beyond the FHSA and Home Buyers' Plan, a few other programs specifically target first-time buyers. The Home Buyers' Amount is a federal non-refundable tax credit available on your tax return for the year you purchase a qualifying first home, worth a modest but real reduction in tax owing. Land transfer tax rebates, as mentioned above, exist in several provinces and municipalities specifically for first-time buyers.

Program details, income thresholds, and purchase price caps change more often than most parts of the tax system, so treat any specific dollar figure as a starting point to verify — not a guarantee — before you rely on it in your budget.

A mortgage is usually the point where life insurance stops being optional to think about. If something happened to you, would the mortgage still be manageable for whoever you share it with? That gap — not a generic round number — is what coverage should actually be sized against.

Lenders will often offer mortgage insurance at closing, which pays down or pays off your mortgage balance if you die (and sometimes if you become disabled). It's convenient, but it's worth comparing against a personal term life insurance policy sized to the mortgage — the payout on mortgage insurance typically goes straight to the lender, while a personal policy's beneficiary gets the flexibility to use the payout however's actually needed at the time.

You'll also be required to carry home or property insurance as a condition of the mortgage, and the lender will usually require proof before closing. It's worth understanding what it does and doesn't cover — particularly for water damage, sewer backup, and overland flooding, which are often separate add-ons rather than automatic inclusions.

Lenders assess affordability using two ratios: your Gross Debt Service (GDS) ratio, generally kept at or below about 39% of gross income going toward housing costs (mortgage, property tax, heat, and half of any condo fees), and your Total Debt Service (TDS) ratio, generally at or below about 44% once all other debt payments are included. Passing these ratios means a lender will approve the mortgage — it doesn't automatically mean the payment will feel comfortable month to month.

Build a real monthly budget that includes the mortgage payment, property tax, utilities, insurance, and a maintenance buffer (a common starting estimate is 1% of the home's value per year, though older homes or condos with upcoming special assessments can run higher) before you go shopping, not after an offer is accepted.

If you have children now, or expect to, this is also a reasonable moment to think about RESP contributions as a separate, ongoing priority alongside your new housing costs — see the full RESP breakdown on the new parent guide, since it's a large enough topic to deserve its own space rather than a few lines here.