- Know your numbers first: income, debts, credit and savings.
- You can buy with as little as 5% down, but less than 20% means mortgage insurance.
- Get pre-approved before you shop, and don't take on new debt before closing.
1. Know your numbers
Lenders look at the full picture before they say yes. Start by pulling together:
- Income. Your job history and how you're paid.
- Debts. Car loans, credit cards, lines of credit, student loans.
- Credit. Your score and history. Check yours before you apply.
- Savings. Your down payment, plus a cushion for closing costs and moving.
Try the affordability calculator for a first estimate of what you could buy.
2. How much down payment do you need?
In Canada, the minimum down payment depends on the purchase price:
- Up to $500,000: 5%
- $500,000 to $1.5 million: 5% of the first $500,000, plus 10% of the amount above that
- $1.5 million and over: 20%
For example, on a $600,000 home the minimum is $35,000: $25,000 (5% of the first $500,000) plus $10,000 (10% of the remaining $100,000).
If you put down less than 20%, your mortgage needs default insurance (from CMHC or another insurer). The premium is a percentage of your mortgage, from 0.60% up to 4.00% depending on how much you put down, and it is usually added to your mortgage balance. Use the payment calculator to see its effect.
3. Government programs that can help
These are federal programs many first-time buyers can use. Limits change, so confirm the details at canada.ca.
- First Home Savings Account (FHSA). A registered account for your first home. Contributions are tax-deductible, and withdrawals for a qualifying home purchase are tax-free. The annual limit is $8,000 and the lifetime limit is $40,000.
- Home Buyers' Plan (HBP). Lets you withdraw up to $60,000 from your RRSP for a first home, which you repay over 15 years. Each person can use it, so a couple may combine amounts.
- First-Time Home Buyers' Tax Credit. A federal tax credit that can reduce your taxes in the year you buy.
4. Get pre-approved
A pre-approval is a lender's review of your finances that estimates how much you may borrow and holds a rate for a set period, often 90 to 120 days. It is not a guarantee: final approval depends on the property and your documents. Once you're pre-approved, avoid new loans, big purchases or job changes until you've closed.
5. Plan for closing costs
On top of your down payment, budget for:
- Legal fees and title insurance
- Home inspection (and an appraisal if your lender requires one)
- Adjustments for property tax and condo fees
- Moving costs and a cushion for first-month expenses
Alberta doesn't charge a land transfer tax, but there are land titles registration fees. Your lawyer will give you exact figures.
6. The steps from start to finish
- Talk with us. We review your goals, numbers and timeline.
- Get pre-approved. Know your budget before you shop.
- Find a home and make an offer. Your offer will usually include a condition for financing.
- Final approval. We work with the lender to complete your documents and meet conditions.
- Lawyer, closing and possession. You sign, funds are released and you get the keys.
Common first-time buyer mistakes
- Shopping for a home before getting pre-approved
- Using every dollar of savings with no buffer
- Taking on new debt, like a car loan, before closing
- Forgetting ongoing costs: property tax, heating, condo fees and maintenance