How to buy a house in Canada

The plan

1. Set a budget you can live with. Lenders cap housing costs at roughly 39% of gross income and total debt at 44%. That is the maximum, not the target. Leave room for maintenance, property tax and savings.
2. Build the down payment. The minimum is 5% of the first $500,000 and 10% of the part above, up to $1.5 million; at $1.5 million or more it's 20%. Under 20% down means mortgage default insurance.
3. Use the tax-sheltered accounts. An FHSA gives a deduction going in and a tax-free withdrawal for a first home ($8,000 a year, $40,000 lifetime). The Home Buyers' Plan lets you borrow up to $60,000 from your RRSP. You can use both for the same home.
4. Check your credit and get pre-approved. A pre-approval shows what a lender will offer and usually holds a rate for a period. Get quotes from a few lenders close together.
5. Understand the stress test. You must qualify at the higher of your contract rate plus 2% or 5.25%, even if you pay less. Use that payment when you test your budget.
6. Budget for closing costs. FCAC suggests planning for 1.5% to 4% of the price: land transfer tax, legal fees, inspection, title insurance and adjustments. First-time buyers in Ontario can get up to $4,000 back, plus up to $4,475 in Toronto.
7. Make an offer with conditions. Common conditions are financing and inspection. Your lawyer or notary reviews the agreement.
8. Close. Your lawyer transfers funds and registers the title. Have the down payment and closing costs ready a few days before, and arrange home insurance for closing day.

This week

• Run the affordability calculator with your real income and debts.
• Open an FHSA if you haven't; room only starts accumulating once it's open.
• Pull your credit reports and fix anything wrong before you apply.

Calculators for this plan

• How much house can you afford?
• CMHC insurance and minimum down payment
• FHSA calculator
• Home Buyers' Plan
• Mortgage payment
• Land transfer tax
• Rent vs buy

General information, not financial advice. This plan is a general guide. It does not know your full situation. Check with a qualified professional and the official sources before making decisions.

Sources

• FCAC (Canada.ca): How much you need for a down payment
• Finance Canada: Mortgage reforms ($1.5M insured cap, 30-year amortization for first-time buyers and new builds)
• Canada.ca: Participating in your FHSAs
• Canada.ca: The Home Buyers' Plan (incl. temporary repayment relief)
• OSFI: Minimum qualifying rate (stress test)
• FCAC: Buying your first home (closing costs 1.5% to 4%)
• Ontario: Land transfer tax refunds for first-time homebuyers ($4,000)
• City of Toronto: MLTT first-time buyer rebate ($4,475)

Checked October 16, 2026. Rules and limits change; confirm with the source before acting.