Buying your first home in Ontario is one of the biggest financial decisions of your life. Here is everything you need to know about grants, rebates, stress tests, and how much you really need to save.
Most first time buyers focus only on the down payment — but the true cost of buying a home in Ontario is much higher than most people expect. Beyond the down payment, you need to budget for land transfer tax, legal fees, home inspection, title insurance, and moving costs.
In Ontario, the minimum down payment depends on the purchase price. For homes under $500,000, the minimum is 5%. For homes between $500,000 and $999,999, it is 5% on the first $500,000 and 10% on the remainder. For homes $1 million and above, you need a full 20% down payment.
On a typical $700,000 home in the Greater Toronto Area, your total upfront costs including down payment and closing costs could easily reach $80,000 to $100,000 — a number that shocks many first time buyers who only planned for the down payment.
The good news for Ontario first time buyers is that several government programs can significantly reduce your costs. Understanding these programs before you start shopping can save you tens of thousands of dollars.
The Ontario Land Transfer Tax Rebate provides first time buyers with a rebate of up to $4,000 on provincial land transfer tax. If you are buying in Toronto, the City of Toronto also provides a municipal land transfer tax rebate of up to $4,475. Together these rebates can save you up to $8,475.
The Federal First Home Savings Account (FHSA) introduced in 2023 allows Canadians to save up to $40,000 completely tax free toward their first home. Contributions are tax deductible like an RRSP and withdrawals for a qualifying home purchase are completely tax free like a TFSA — giving you the best of both accounts.
The Home Buyers Plan (HBP) allows first time buyers to withdraw up to $35,000 from their RRSP tax free to use toward a home purchase. If you have a spouse or common law partner, you can each withdraw $35,000 for a combined total of $70,000. You have 15 years to repay the withdrawn amount back into your RRSP.
Every Canadian applying for a mortgage must pass the mortgage stress test — even if you have a 20% down payment and do not need mortgage insurance. The stress test requires you to qualify at the higher of your actual mortgage rate plus 2% or 5.25% — whichever is greater.
In practical terms, if you are offered a mortgage at 5.5%, the bank must verify you can afford payments at 7.5%. This requirement significantly reduces the maximum mortgage amount most Canadians qualify for compared to what they could technically afford at their actual rate.
Ontario's housing market varies dramatically by location. The Greater Toronto Area remains the most expensive market with average home prices above $1 million in many neighbourhoods. However markets like Hamilton, Kitchener-Waterloo, London, and Kingston offer significantly more affordable entry points for first time buyers.
Kitchener-Waterloo in particular has emerged as one of Ontario's fastest growing tech corridors, with Google, Shopify, and dozens of tech companies establishing offices there. Average home prices remain significantly below Toronto while offering strong employment opportunities and quality of life.
Q: What credit score do I need to buy a home in Ontario?
A: Most Canadian lenders require a minimum credit score of 680 for an insured mortgage (less than 20% down) and 600 to 650 for a conventional mortgage. Higher credit scores qualify you for better rates. Check your credit score through Equifax or TransUnion before applying — both offer free reports annually.
Q: Can I buy a home in Ontario with less than 20% down?
A: Yes. With as little as 5% down on homes under $500,000, you can purchase a home in Ontario. However you will need CMHC mortgage insurance which adds 2.8% to 4% of the mortgage amount to your loan balance. On a $500,000 mortgage, CMHC insurance adds up to $20,000 to your total debt.
Q: How long does it take to buy a home in Ontario?
A: From accepted offer to closing, the typical timeline is 30 to 90 days. The entire process from starting your search to moving in typically takes 3 to 6 months for most buyers. Getting pre-approved, finding a real estate agent, and researching neighbourhoods should happen before you make any offers.
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