First-Time Home Buyer Mortgages in Ontario

Buying your first home is one of the biggest financial decisions you’ll make — and it can feel overwhelming. Between saving for a down payment, understanding government programs, passing the mortgage stress test, and estimating closing costs, there’s a lot to navigate. The good news is that first-time buyers in Ontario have access to more incentives and programs today than ever before.

As a Level 2 Mortgage Agent with DLC National Ltd., I guide first-time buyers across Hamilton, Burlington, Brantford, St. Catharines, Caledonia, and the Kawarthas through every step of the process. With access to over 100 lenders, I match your financial situation to the right mortgage product and help you take advantage of every incentive available to you.

Minimum Down Payment Requirements

In Canada, the minimum down payment depends on the purchase price of the home:

• $500,000 or less: 5% minimum down payment
• $500,001 to $1,499,999: 5% on the first $500,000 plus 10% on the remaining amount
• $1,500,000 or more: 20% minimum down payment

As of December 15, 2024, the insured mortgage price cap was raised from $1 million to $1.5 million, meaning you can now purchase a home up to $1,499,999 with less than 20% down. This is a significant change that benefits buyers in markets like Burlington and Hamilton where prices have climbed above $1 million in some neighbourhoods.

30-Year Amortization for First-Time Buyers

Another major change: as of December 15, 2024, all first-time home buyers and all buyers of new-build homes can now access 30-year amortization on insured mortgages. Previously, the maximum was 25 years. A 30-year amortization lowers your monthly payments, making it easier to qualify and improving cash flow — especially important in today’s rate environment.

CMHC Mortgage Insurance

If your down payment is less than 20%, you’ll need mortgage default insurance (commonly called CMHC insurance, though Sagen and Canada Guaranty also provide it). The premium is based on your loan-to-value ratio:

• 5% to 9.99% down: 4.00% of the mortgage amount
• 10% to 14.99% down: 3.10% of the mortgage amount
• 15% to 19.99% down: 2.80% of the mortgage amount

The insurance premium is added to your mortgage principal — you don’t pay it upfront. While it’s an additional cost, insured mortgages typically qualify for slightly lower interest rates than uninsured mortgages.

First Home Savings Account (FHSA)

The FHSA is the newest and most powerful savings tool for first-time buyers in Canada. It combines the best features of an RRSP and a TFSA:

• Annual contribution limit: $8,000 per year
• Lifetime maximum: $40,000
• Carry-forward: Up to $8,000 of unused room carries forward (so you can contribute up to $16,000 in a single year)
• Tax-deductible contributions: Reduce your taxable income, just like an RRSP
• Tax-free withdrawals: No tax when you withdraw for a qualifying home purchase

You must be a first-time home buyer, at least 18 years old, and a Canadian resident to open an FHSA. If you haven’t opened one yet, this should be your first step — even if you’re not planning to buy for a few years.

Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows you to withdraw from your RRSP to fund your down payment:

• Withdrawal limit: $60,000 per person ($120,000 per couple)
• Repayment period: 15 years, starting in the 5th year after withdrawal
• No tax on withdrawal: As long as you repay on schedule

The withdrawal limit was increased from $35,000 to $60,000 on April 16, 2024. Combined with the FHSA, a couple could potentially access up to $200,000 in tax-advantaged savings for their first home.

Ontario Land Transfer Tax Refund

First-time buyers in Ontario are eligible for a refund of up to $4,000 on the provincial land transfer tax. This covers the full land transfer tax on homes up to $368,000 and provides partial relief on higher-priced homes.

One major advantage of buying in Southern Ontario communities like Hamilton, Burlington, Brantford, St. Catharines, Caledonia, and the Kawarthas: there is no municipal land transfer tax. Toronto charges a separate municipal land transfer tax that can add $8,000 to $15,000+ to your closing costs. Buying outside Toronto means significant savings at closing.

First-Time Home Buyers’ Tax Credit

The federal government offers a $10,000 non-refundable tax credit for first-time home buyers, providing up to $1,500 back on your income tax return. This credit can be split between you and your spouse or common-law partner.

The Mortgage Stress Test

All mortgage applicants in Canada must qualify at the higher of their contract rate plus 2% or the Bank of Canada’s qualifying rate floor of 5.25%. For example, if you’re offered a rate of 4.04%, you’d need to qualify at 6.04%. The stress test ensures you can handle higher payments if rates increase. Working with a broker helps you understand your maximum qualification amount and find the lender offering the best rate for your situation.

Closing Costs to Budget For

Beyond your down payment, plan for closing costs of approximately 1.5% to 4% of your purchase price. Common costs include:

• Land transfer tax (minus your first-time buyer refund)
• Legal fees: $1,500 to $2,500
• Home inspection: $400 to $600
• Appraisal fee: $300 to $500 (sometimes covered by the lender)
• Title insurance: $300 to $500
• Property tax and utility adjustments on closing day
• Moving costs

Getting Pre-Approved: The First Step

A mortgage pre-approval tells you exactly how much you can afford and locks in your rate for 90 to 120 days. Here’s what the process looks like:

• Step 1: We review your income, debts, credit score, and down payment
• Step 2: I shop your file across 100+ lenders to find the best rate and terms
• Step 3: You receive a pre-approval letter with your maximum purchase price
• Step 4: You shop for homes with confidence, knowing your budget
• Step 5: When you find a home, we finalize your mortgage and close

The Southern Ontario Advantage

First-time buyers in Hamilton, Burlington, Brantford, St. Catharines, Caledonia, and the Kawarthas benefit from several advantages over buyers in the GTA:

• No municipal land transfer tax — saving thousands compared to buying in Toronto
• Lower average home prices — more purchasing power with the same income
• Most homes fall under the $1.5M insured cap — 5% down payment and 30-year amortization are accessible
• Strong rental potential — house-hack opportunities with duplexes and triplexes in Hamilton, student rentals near Brock and Laurier
• Growing communities — GO Transit expansion, new infrastructure, and increasing property values

Why Work With a Mortgage Broker?

Banks offer you their own products. A mortgage broker offers you the market. I have access to over 100 lenders — major banks, credit unions, monoline lenders, and alternative lenders — and my job is to find the best rate, terms, and product for your specific situation. My services are free to you as the borrower; the lender pays my fee.

I work with first-time buyers every week across Southern Ontario and understand the local market, the available programs, and how to position your application for the strongest approval. Whether you’re just starting to save or you’re ready to make an offer, I’m here to help.