If you’ve already downloaded our Buyer’s Guide, the next step is to get familiar with the finances, first-time buyer programs, and other professionals involved in a home purchase.
Home Buyers’ Plan (HBP)
The federal Home Buyers’ Plan lets a first-time buyer withdraw money for a down payment from their RRSP, tax-free at the time of withdrawal. In April 2024, that limit was increased to $60,000 per person, so a couple who both qualify can withdraw a combined $120,000. The amount must be repaid into your RRSP over 15 years, starting the second year after your withdrawal. Any year you miss the minimum repayment, the shortfall is added to your taxable income for that year.
First Home Savings Account (FHSA)
The FHSA is a newer program that pairs well with the HBP. You can contribute up to $8,000 per year, to a $40,000 lifetime maximum, and contributions are tax-deductible the same way an RRSP contribution is. Unlike the HBP, withdrawals for a qualifying first home purchase are tax-free and never need to be repaid. Many first-time buyers max out the FHSA first, then use the HBP for any additional down payment they need.
Current Mortgage Rules
Two federal changes are worth knowing if you’re financing with less than 20% down:
- 30-year amortizations are now available to all first-time buyers, and to all buyers of newly built homes, not just first-time buyers of new builds, as was the case before December 2024. A longer amortization lowers your monthly payment, though you’ll pay more interest over the life of the mortgage. A longer amortization will also give buyers a larger potential mortgage amount, helping them squeeze into the housing market if they were previously on the cusp of affordability.
- The insured mortgage price cap was raised from $1 million to $1.5 million, meaning buyers can now put less than 20% down on higher-priced homes than before, as long as they carry mortgage default insurance.
First-Time Buyer Tax Incentives
First-time buyers can receive up to $4000 in provincial land transfer tax credits on their first, primary residence. If you’re in Toronto, where there is a double land transfer tax, you may be eligible for twice the land transfer tax credit as well. (The total of both come to $8,475).
Closing Costs
Closing costs are always approximate. Below is a rough example for a detached home:
- Purchase price owing, minus deposits
- Property appraisal ($400)
- Home inspection ($800-1200)
- Legal fees ($1,200–$1,800)
- Title insurance ($300–$1,200)
- Land transfer tax (less any first-time buyer rebate you qualify for)
- Property tax adjustment (reimbursing the seller for prepaid taxes)
- Utility adjustments (reimbursing the seller for prepaid utilities)
- Utility connection charges (some providers charge new-account setup fees)
Pre-construction and newly built properties may carry additional closing costs and taxes beyond what’s listed here.
Other Professionals Involved in the Transaction
The first step to homeownership is securing financing through a mortgage broker or bank. The second is contacting a real estate agent and starting your search, if you’d like a hand with that, our Get Help With Your Search page is a good place to start. Once you’ve found a property, you’ll need a real estate lawyer to handle closing. A few weeks before moving in, arrange your home insurance, lenders won’t release mortgage funds without proof of it, a few days before closing it’s important to contact your utility companies to transfer accounts into your name.
For more on what the process looks like start to finish, see What to Expect When Buying and our Tips for Buyers.
Frequently Asked Questions
How much can I withdraw from my RRSP under the Home Buyers’ Plan?
Up to $60,000 per person as of April 2024, so a couple who both qualify as first-time buyers can withdraw a combined $120,000. Repayment starts the second year after withdrawal and runs over 15 years.
Can I use the FHSA and the HBP together?
Yes. There’s nothing preventing you from maxing out the FHSA ($40,000 lifetime) and also using the HBP ($60,000) toward the same first home purchase, giving a single buyer up to $100,000 in tax-advantaged funds.
Do the new mortgage rules affect me if I’m not a first-time buyer?
The 30-year amortization is now available to any buyer of a newly built home, not just first-time buyers. If you’re buying resale and aren’t a first-time buyer, the standard 25-year amortization for insured mortgages still applies.
Have a question about buying a home? Contact us and we’ll get right back to you.
