What qualifies you as a first-time buyer?
In Canada, you qualify as a first-time home buyer if you (or your spouse/common-law partner) have not owned and lived in a home that you owned in the current calendar year or any of the previous four calendar years. You must also be at least 18, a Canadian resident, and intend to occupy the new home as your principal residence. After a separation from a spouse or common-law partner, you may regain first-time status after living apart for at least 90 days.
Note that program-specific rules vary: the Ontario and Toronto land transfer tax rebates require that you have never owned a home anywhere in the world, which is stricter than the four-year federal definition.
What credit score is needed for first-time buyers?
For a CMHC-insured mortgage in Canada, at least one borrower must have a credit score of 680 or higher. Most major banks look for 660+ on a standard application, while alternative (“B”) lenders may approve scores as low as 550–600 at higher interest rates. To access the lowest advertised rates from prime lenders, aim for a score of 720 or above.
Build credit at least 12 months before applying: pay every bill on time, keep credit utilization under 30%, and avoid opening new accounts in the months leading up to your mortgage application.
What is the minimum deposit for a first home buyer?
The minimum down payment in Canada is 5% of the purchase price for homes priced up to $500,000. For homes priced between $500,001 and $1,499,999, you need 5% on the first $500,000 plus 10% on the remainder. Homes priced $1.5 million or more require a full 20% down payment.
This sliding scale was last updated in December 2024, when the federal government raised the insured-mortgage cap from $1 million to $1.5 million — a meaningful change for Toronto buyers.
How much deposit do you need for a first-time buyer?
The legal minimum is 5%, but most Toronto first-time buyers put down between 5% and 10% on entry-level properties. On a typical $900,000 Toronto home, the minimum down payment is $65,000 ($25,000 on the first $500K plus $40,000 on the remaining $400K).
The bigger your down payment, the lower your CMHC insurance premium: 4.00% of the loan at 5–9.99% down, 3.10% at 10–14.99%, and 2.80% at 15–19.99%. At 20% down, no insurance is required at all. Plan for an additional 1.5%–4% of the purchase price in closing costs on top of your down payment.
What type of mortgage is best for first-time buyers?
For most Canadian first-time buyers, a 5-year fixed-rate insured mortgage with a 30-year amortization is the strongest default choice. Insured (high-ratio) mortgages typically come with the lowest available rates because the lender carries no default risk, and the 30-year amortization — available to first-time buyers and new-build purchasers since December 2024 — meaningfully lowers monthly payments.
A 5-year variable-rate mortgage may save more money over the term if you have a financial cushion and can absorb potential payment increases. The right choice depends on your risk tolerance, not on what’s “objectively best.”
What mortgage term is best for a first-time buyer?
There is no single best term, but the 5-year fixed remains the default for buyers prioritizing payment certainty. Choose a shorter 2- or 3-year fixed term if you expect rates to fall and want to renew sooner; choose a 5-year fixed if you want to lock in stability through your early years of homeownership.
Variable-rate terms can save money in a falling-rate environment and have smaller break penalties (typically three months’ interest), but they require the ability to absorb increases if the Bank of Canada raises its policy rate.
What is the most common loan term for first-time homebuyers?
The 5-year fixed-rate mortgage is by far the most common term in Canada. In 2025, 77% of mortgage rate inquiries on Ratehub.ca were for fixed-rate products, with 5-year terms dominating, compared to just 8% for variable rates.
Buyers favor it because it locks in payments for a meaningful portion of the typical 25- to 30-year amortization, removing rate volatility from household budgeting.
What is the best interest rate for first-time buyers?
As of April 2026, the best available high-ratio insured mortgage rates in Canada are roughly 3.30%–3.35% for a 5-year variable and 3.84%–4.04% for a 5-year fixed. Big-bank posted rates run noticeably higher — CIBC, for example, was advertising 4.19% on a 5-year fixed in mid-March 2026.
These best-available rates are typically accessed through independent mortgage brokers and online lenders, not directly through bank branches. Rates change weekly, so always lock in a pre-approval (typically valid for 90 to 120 days) once you start house hunting.
Who is the best lender for a first-time home buyer?
There is no single best lender — it depends on your file, credit profile, and priorities. Monoline lenders like MCAP, First National, and Strive often offer the lowest rates but no in-branch service. Big 5 banks (RBC, TD, Scotiabank, BMO, CIBC) offer convenience, bundled banking, and brand familiarity at typically higher rates. Credit unions can be flexible on harder-to-qualify files.
The most efficient approach for a first-time buyer is to work with an independent mortgage broker, who can compare 30 to 50+ lenders in a single application — usually at no cost to you, since the lender pays the broker’s commission.
What are the biggest first-time home buyer mistakes?
The most common — and most costly — mistakes are:
- Budgeting at the contract rate instead of the stress-test rate. You qualify at the higher of contract rate + 2% or 5.25%, which is roughly 6% today. Many buyers overestimate what they can actually afford.
- Going to only one lender. A single bank’s rate is rarely the best on the market; brokers routinely beat posted bank rates by 0.50% or more.
- Skipping pre-approval. Without one, you don’t know your real budget and have no rate hold protecting you against rate hikes.
- Ignoring closing costs. Land transfer tax, legal fees, title insurance, PST on CMHC premium, and adjustments can add 1.5–4% of the purchase price on closing day.
- Choosing the lowest rate without reading the fine print. Restricted “no-frills” mortgages often have harsh break penalties, no portability, and limited prepayment privileges.
- Not maximizing FHSA and HBP contributions. Together they can provide up to $200,000 per couple toward a down payment, with major tax benefits.
- Failing to claim available rebates. The Ontario and Toronto land transfer tax rebates (worth up to $8,475 combined) and the federal Home Buyers’ Tax Credit ($1,500) all require active claims at closing or on your tax return.
