First-Time Home Buyer Guide: Everything You Need to Know in 2026

If you're thinking about buying your first home in Canada, you're probably feeling a mix of excitement and anxiety. How much do you need to save? What programs can help? How does the mortgage process actually work?

I've helped hundreds of first-time buyers navigate this journey. Here's everything you need to know.

How Much Down Payment Do You Need?

In Canada, minimum down payment requirements depend on the home price:

For example, if you're buying a $700,000 home, you need 5% of $500K ($25,000) plus 10% of $200K ($20,000) = $45,000 minimum.

With less than 20% down, you'll pay CMHC mortgage insurance, which protects the lender and gets added to your mortgage balance. It's not ideal, but it lets you buy sooner.

First Home Savings Account (FHSA)

The FHSA is the best thing to happen to first-time buyers in years. Here's why:

• Tax-deductible contributions: Like an RRSP, your contributions reduce your taxable income
• Tax-free growth: Like a TFSA, your investments grow tax-free
• Tax-free withdrawals: When you buy a home, you pay zero tax on withdrawals
• Contribution room: $8,000/year, up to $40,000 lifetime

RRSP Home Buyers' Plan

You can withdraw up to $60,000 from your RRSP for a home purchase (up from $35,000 as of 2024). The catch: you have to repay it over 15 years, starting two years after withdrawal.

Many first-time buyers use both the FHSA and HBP together for maximum down payment power.

Getting Pre-Approved

Before you start house hunting, get pre-approved. This tells you:

• How much you can borrow
• What your payments will look like
• What rate you can lock in (usually for 90-120 days)

Pre-approval also shows sellers you're serious. In competitive markets, it can make the difference between getting your offer accepted or losing out.

The Mortgage Stress Test

All Canadian mortgage applicants must qualify at the higher of:

• Your actual mortgage rate + 2%, OR
• 5.25% (the benchmark rate)

This means if you're getting a 4.5% mortgage, you need to prove you could afford payments at 6.5%. It limits how much you can borrow but protects you from rate increases.

The Home Buying Process

1. Get pre-approved — Know your budget before you shop
2. Find a realtor — They'll help you navigate the market
3. House hunt — Tour homes in your price range
4. Make an offer — Your realtor will guide you on strategy
5. Conditions period — Home inspection, financing confirmation
6. Firm up the deal — Remove conditions, it's real now
7. Hire a lawyer — They'll handle closing paperwork
8. Final walkthrough — Make sure everything's as expected
9. Closing day — Get your keys!

Costs Beyond the Down Payment

Budget 3-5% of the purchase price for closing costs:

• Land transfer tax: 1-2% of purchase price (Ontario has a rebate for first-time buyers)
• Legal fees: $1,500-2,500
• Home inspection: $400-600
• Title insurance: $300-500
• Moving costs: $500-2,000+

Common First-Time Buyer Mistakes

• Maxing out your budget: Just because you qualify for $800K doesn't mean you should spend $800K
• Skipping the home inspection: Never buy without one, even in a hot market
• Forgetting about ongoing costs: Property tax, insurance, utilities, maintenance
• Not shopping mortgage rates: A 0.25% rate difference saves thousands over the mortgage term
• Making big purchases before closing: Don't buy a car or furniture until after you close — it affects your debt ratios

Your Next Steps

1. Open an FHSA if you haven't already
2. Check your credit score and address any issues
3. Calculate your budget realistically
4. Get pre-approved with a mortgage professional
5. Start your house hunt with confidence

Buying your first home is a big step, but it doesn't have to be overwhelming. With the right preparation and guidance, you'll be holding those keys before you know it.