Buying your first home is exciting—until the questions start piling up: How much do I really need? What’s the difference between a deposit and a down payment? What “extra costs” show up at closing? The good news: breaking the process down into clear steps makes it feel more manageable—and even empowering. In this blog, we’ll walk you through the essentials first-time homebuyers need to know, from getting financially ready to making an offer, to planning for closing day.
1) Start with your real budget (not just a number you “wish” worked)
Before you fall in love with a kitchen backsplash or an awesome backyard you saw on an online listing, zoom out and look at your full financial picture. Home ownership includes more than your mortgage payment. That means budgeting for things like taxes, insurance, utilities and upkeep, plus one‑time costs like legal fees and inspections.
A helpful way to frame affordability is to understand how lenders evaluate you. Lenders look at your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios—essentially how much of your income goes to housing costs and total debt. The common rule of thumb is this: keep your GDS under 39% and your TDS under 44% to stay within comfortable boundaries and lender expectations.
Once you’ve got your price range, start exploring what’s realistically available—browse listings to understand your local market and refine your must‑haves.
2) Know your down payment options—and what “minimum” really means
In Canada, minimum down payment requirements depend on the purchase price. Below are the federal thresholds in plain language:
- 5% on the first $500,000
- 10% on the portion between $500,000 and $999,999
- A higher minimum for higher-priced homes
If your down payment is less than 20 per cent, you’ll typically need mortgage loan insurance (often associated with CMHC or other insurers), which affects overall borrowing costs.
3) Deposit vs. down payment: the mix-up that surprises many first-timers
One of the most common first-time buyer confusions is the deposit vs. down payment.
- A deposit is submitted with your offer (or shortly after acceptance). It demonstrates good faith and is usually held in trust by the brokerage.
- Your down payment is the total amount you contribute toward the purchase at closing—and your deposit becomes part of it.
Deposits often land in the five to 10 per cent range depending on market norms, and they help show sellers you’re serious—especially in competitive environments.
4) Get pre-approved early (it’s more than a “nice to have”)
Mortgage pre‑approval as a key first step to buying a home. Pre‑approval helps you understand what you can spend and can strengthen your position with sellers. It can also hold a rate for a period (for example, 90 or 120 days), offering protection if rates rise while you shop.
Pre‑approval is one of the most important moves for first-time buyers because it reduces the risk of wasting time on homes outside your budget and helps you act quickly when the right property appears.
Pro tip: Don’t focus on the interest rate alone. Pay attention to mortgage features like prepayment privileges, penalties and portability—details that can affect you if you refinance or move later.
5) Choose the right team: agent, mortgage professional & lawyer
A first home is not a DIY project. Working with a licensed real estate agent, a mortgage professional, and a real estate lawyer helps ensure a smoother process and sound decisions. Agents can help you interpret local market value, negotiate terms and manage deadlines, among many other things, while a lawyer handles title checks, registration, closing funds, and other legal requirements
6) Make your “needs vs. wants” list (and use it like a decision tool)
First-time buyers often get swayed by staging or trendy finishes. Make a list with two columns—must-haves and nice-to-haves—and take notes during showings so you can compare homes objectively later. To keep your search organized while you tour, sign up for listings alerts so new homes in your target area hit your inbox as soon as they’re posted.
7) Your offer: price is only one piece of the puzzle
When you’re ready to make an offer, your agent will prepare an Agreement of Purchase and Sale that includes the purchase price, a closing date, and key terms/conditions. Sellers may accept, reject, or counter—and that negotiation often includes more than money (timing, conditions, inclusions, etc.).
In hot markets, “cleaner” offers with fewer conditions can be attractive, but removing conditions increases your risk, so it’s crucial to weigh your comfort level carefully.
8) Plan for closing costs (the line item that can derail your budget)
One of the biggest first-time buyer shocks is how many expenses appear at the end of the purchase process. Closing costs are paid at the end of the transaction and can vary by location and property type. Costs typically include:
- Land transfer tax, often the largest, and varies by province/municipality; some areas may offer rebates for first-time buyers.
- Legal fees and related closing services.
- Property tax adjustments, prorated amounts depending on when you take possession.
- Home inspection and appraisal fees to assess condition; appraisal sometimes required by lenders.
- Potential additional fees for pre-builds, including tax and municipal levy‑type costs depending on the purchase structure.
While the amount may vary depending on numerous factors, buyers should budget three to five per cent of the purchase price for closing costs, reinforcing the idea that the down payment is only part of what you need.
9) Use incentives that can make first-home ownership more achievable
Canada offers incentives that can help first-time buyers reduce upfront costs and save more efficiently. These include:
- First Home Savings Account (FHSA): contribute up to $8,000/year with a $40,000 lifetime maximum; contributions are tax‑deductible and qualifying withdrawals for a first home can be tax‑free.
- Home Buyers’ Plan (HBP): withdraw up to $60,000 from an RRSP (per individual) to buy/build a qualifying home, repaid over time.
- First-Time Home Buyers’ Tax Credit (HBTC): a non-refundable credit of up to $1,500.
- Provincial supports such as the Ontario land transfer tax refunds (up to $4,000) and other province/municipal programs depending on where you buy.
Because eligibility and program details can shift, it’s a good idea to review the specific requirements for your province and situation as you plan.
10) Closing day: what to expect when you finally get the keys
On closing day, your lender sends mortgage funds to your lawyer, who combines them with your down payment and closing costs, pays the seller, registers the property in your name, and finalizes the transaction. Then—keys in hand—you’re officially a homeowner!
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