First-Time Home Buyer Guide for Ontario

Buying your first home in Ontario can feel overwhelming — between down payment rules, the mortgage stress test, land transfer tax and a maze of government programs, it's hard to know where to start. This guide walks you through the whole journey in plain English, with the exact numbers you need and links to deeper guides for every step.

Key takeaways

• The minimum down payment is 5% on the first $500,000 and 10% on the portion above, up to a $1.5M insured cap.
• First-time buyer programs can stack: FHSA ($40,000 lifetime), the RRSP Home Buyers' Plan ($60,000) and land transfer tax rebates.
• You must pass the mortgage stress test — qualifying at your rate + 2% or 5.25%, whichever is higher.
• Budget 1.5%–4% of the price for closing costs, with land transfer tax usually the largest line item.
• HOMEH gives eligible first-time buyers the industry's highest Cashback Rebate to put back toward their purchase.

Step 1: Figure out what you can afford

Before you fall in love with a listing, get clear on your budget. Lenders look at two debt service ratios: your Gross Debt Service (GDS) ratio — housing costs as a share of gross income, ideally at or below 39% — and your Total Debt Service (TDS) ratio, which adds all your other debts and should stay at or below 44%.

You'll also need to pass the mortgage stress test: federally regulated lenders qualify you at the greater of your contract rate plus 2% or the 5.25% benchmark floor. The point is to make sure you can still afford payments if rates rise. Run your own numbers with the affordability calculator before you start shopping.

Get pre-approved first

A mortgage pre-approval tells you your real budget and locks a rate while you shop. It also signals to sellers that you're serious — a real advantage in a competitive market.

Step 2: Save your down payment

Your down payment is the cash you put toward the purchase up front. In Canada the minimum scales with price, and homes at $1.5M or more must have at least 20% down because they can't be insured. As of December 15, 2024, the insured cap rose to $1.5M and 30-year amortizations became available to first-time buyers and buyers of new builds.

Putting less than 20% down means you'll pay CMHC mortgage default insurance, which is added to your mortgage. Learn the full rules in our guide to how much down payment you need in Ontario.

Step 3: Use first-time buyer programs

This is where first-time buyers have a real edge. Three government programs can dramatically speed up your savings and cut your tax bill — and they can be used together.

• FHSA (First Home Savings Account) — contribute up to $8,000/year and $40,000 lifetime; contributions are tax-deductible and qualifying withdrawals are tax-free. See our FHSA guide.
• RRSP Home Buyers' Plan — withdraw up to $60,000 per person ($120,000 per couple) tax-free, repaid over 15 years. Read the Home Buyers' Plan explainer.
• Land transfer tax rebate — up to $4,000 provincially, plus up to $4,475 in Toronto. See the LTT rebate guide.

For the complete list, including the GST rebate on new homes, see our roundup of first-time home buyer programs in Canada.

Step 4: Budget for closing costs

Closing costs are one-time fees due on closing day, separate from your down payment. Budget roughly 1.5% to 4% of the purchase price. Land transfer tax is usually the largest cost — and in Toronto you pay it twice (provincial plus municipal).

Get a precise estimate for your situation with the closing cost calculator, and read the full breakdown in closing costs in Ontario explained.

Step 5: Make an offer and close

Once you find the right home, you'll submit an offer — often with conditions such as financing and a home inspection. In Ontario, a real estate lawyer is required to close the transaction and register the property in your name. After conditions are waived and closing day arrives, you get the keys.

How HOMEH helps first-time buyers

Government programs cut your taxes and your down payment — but the commission side is where HOMEH stands out. As a licensed Ontario brokerage, HOMEH gives eligible first-time buyers cashback that can be put straight toward your purchase.

Get cashback on your first home

Eligible HOMEH buyers receive the industry's highest Cashback Rebate — money that can cover your closing costs, boost your down payment, or simply stay in your pocket. Estimate yours with the cashback calculator or plan your down payment with the down payment calculator.