How much money do you really need to buy your first home in Canada?
Beyond the minimum down payment (5%, 10%, 20%), discover hidden closing costs, CMHC insurance guarantees, and government programs (FHSA, HBP, GST rebates) to plan your purchase strategically.
Buying your first property brings up many questions, the most crucial being: 'How much can I afford to borrow?'. To answer this, buyers must calculate not only the down payment, but also mortgage default insurance, legal fees, land transfer tax, and moving costs.
1 What Are the Minimum Down Payment Rules in Canada?
The required minimum down payment depends on the total purchase price of the home. Here is the Canadian legal structure:
| Purchase Price | Minimum Rule | Sample Calculation | Min. Down Payment | CMHC Insurance Required? |
|---|---|---|---|---|
| $500,000 or less | 5% of the purchase price | $400,000 x 5% | $20,000 | Yes (since < 20%) |
| Between $500k and $1.5M | 5% of first $500k + 10% of remaining balance | ( $500k x 5% ) + ( $250k x 10% ) | $50,000 | Yes (since < 20%) |
| $1.5 million or more | 20% of the purchase price | $1,500,000 x 20% | $300,000 | No (insurance unavailable above $1.5M) |
2 Government Programs to Help You Save Faster
First Home Savings Account
Contribute up to $8,000/year ($40,000 lifetime limit). Contributions are tax-deductible AND qualifying withdrawals are 100% tax-free for your home purchase.
Home Buyers' Plan (RRSP)
Withdraw up to $60,000 from your RRSP ($120,000 for a couple) tax-free, repayable over 15 years.
3 Closing Costs and Hidden Expenses (Plan an extra 3%)
In addition to your down payment, budget about 3% of the purchase price to cover:
- Appraisal and inspection fees: Between $250 and $500+ to inspect and appraise the property.
- Legal fees and real estate lawyer/notary: Starting from $500 to $1,500+ for title searches and legal closing documents.
- Land Transfer Tax (Welcome Tax): Varies by province (e.g., partial land transfer tax rebate in Ontario up to $4,000 for first-time buyers).
- Mortgage default insurance (CMHC / Sagen): Ranges from 2.8% to 4.0% of the loan amount for down payments under 20%.
Want to get a mortgage pre-approval?
Lock in a rate guarantee for 120 days so you can shop for your home with peace of mind.