The Complete Guide for First-Time Home Buyers in Canada

What is a First-Time Home Buyer in Canada?

A first-time home buyer is someone who hasn’t lived in a home that they (or their spouse/common-law partner) owned as a principal residence during the past four years. Here are a few other conditions set by the Government of Canada (opens new window) to keep in mind:

Best Tips for First-Time Home Buyers in Canada

Government programs give you a strong head start, but a few practical steps can make the home buying journey smoother.

1. Estimate How Much Home You Can Afford

RBC’s Spring Home Ownership Poll found that 65% of first-time home buyers (opens new window) say they are ready to buy, but admit their finances aren’t. It’s therefore best to sort out your financial situation and know exactly what you can afford, even before you begin to look for a home.

Think about the practical questions: How much can you realistically put toward a mortgage each month? Are you comfortable making lifestyle adjustments to reach your homeownership goals? Are there savings you’re willing to redirect toward your down payment?

Also consider your future: If marriage or kids are on the plan, those life changes will affect your budget, though sharing expenses with a partner can ease the load considerably.

No matter what your situation looks like, there are ongoing costs to plan for beyond the mortgage, including:

• Closing costs – legal fees, land transfer tax, home inspection and title insurance
• Utilities – heat, hydro, internet
• Outdoor maintenance – new fencing, deck, landscaping, gutter cleaning
• Interior updates – new furniture, window covers, upgrading doors
• Moving costs – moving truck, professional movers, packing supplies

RBC’s Mortgage Affordability Calculator can help you estimate the cost of your expenses as you take that big step into home ownership.

2. Decide Your Down Payment Amount

A down payment is the initial amount of money a home buyer pays towards the purchase of a home. Your lender deducts the down payment from the purchase price and gives you a mortgage loan to cover the rest.

While a mortgage allows you to spread the cost of a home over many years, a substantial up-front lump sum is still required. Because this capital must come from your own savings rather than borrowed funds, planning ahead to build your reserves is a smart strategy.

Fortunately, Canadian down-payment requirements are flexible. Understanding the rules can help you set a realistic savings target.

How much do first-time home buyers have to put down in Canada?

In Canada, how much you need for a down payment depends on the price of the home (opens new window) you’re buying. Here’s how it breaks down:

Minimum down payment requirements in Canada

Purchase price	Minimum rule	Calculation example	Minimum down payment	Mortgage insurance required?
$500,000 or less	5% of the purchase price	$400,000 home ($400,000 x 5%)	$20,000	Yes, because the down payment is less than 20% of the purchase price.
Between $500,000 and $1.5 million	5% of the first $500,000 plus 10% of the portion above $500,000	$750,000 home ($500,000 x 5%) + ($250,000 x 10%)	$50,000	Yes, because the down payment is less than 20% of the purchase price.
$1.5 million or more	20% of the purchase price	$1,500,000 home ($1,500,000 x 20%)	$300,000	No, because the down payment is 20% of the purchase price.

3. Save Smarter for Your Down Payment

Saving for a down payment can feel daunting, but a clear savings plan can make it achievable. In Canada, minimum down payments range from 5% to 20% of a home’s purchase price.

Four tips to help you get there:

• Create a realistic saving timeline: Set a target purchase date, then build monthly milestones to track your progress and stay on course.
• Build a budget that prioritizes homeownership: Review your spending habits, identify where you can cut back, and commit a set percentage of your income directly to your down payment savings.
• Automate your savings: Set up automatic transfers so a portion of every pay cheque goes straight into your down payment fund – before you have a chance to spend it.
• Combine the right savings programs: Maximize your impact by combining different saving programs and accounts:
  • First Home Saving Account (FHSA) – Contribute up to $8,000/year, tax-deductible and tax-free when used toward a qualifying first home.
  • RRSP Home Buyers’ Plan – Withdraw up to $60,000 tax-free toward your first home.
  • Savings and Investing Accounts – Explore savings and investing accounts (opens new window) that keep your funds accessible while earning competitive interest.

Talk to an RBC mortgage advisor in person or by phone (1-800-769-2511) to build a plan that works for you.

4. Get Started with a Mortgage Pre-Approval

A mortgage pre-approval (opens new window) is one of the smartest moves you can make before you start seriously shopping for a home. It’s a lender’s conditional commitment to offer you a mortgage up to a certain amount, based on a review of your finances. Knowing your budget upfront means you can focus your search on homes you can actually afford. With RBC, your rate is locked in for up to 120 days², so you can shop with confidence and show sellers you’re serious.

To get pre-approved, you’ll need to provide some basic information: a valid government-issued ID, your gross annual income or salary details, how much you plan to put down, and your current address and contact information. You’ll also need to give permission for a credit check. If you use RBC’s online pre-approval tool (opens new window), it performs only a soft credit check, which does not impact your credit score.

Why Get Pre-Approved for a Mortgage With RBC?

5. Understand Your Mortgage Options

Choosing the right mortgage types (opens new window) comes down to your financial stability and long-term goals. The main decisions you’ll make are around rate type, term length, and amortization.

Since these decisions have a real impact on what you pay over time, it’s worth taking the time to understand how a mortgage works (opens new window) and research your options carefully, or speaking with a mortgage advisor who can help you find the right fit.

Things to Consider When Searching for a Home

While you’ve considered essential factors like down payments and tax incentives, some other elements can completely redefine your home-buying experience. Keep these in mind as you take your steps into home ownership.

1. Research your location. The right neighbourhood matters just as much as the right property. Consider proximity to transit, schools, green spaces and your workplace. Keep in mind that what the area looks like today might not be the same in five years’ time.
2. Understand your property options. A condo typically means less maintenance and built-in amenities, ideal if you want ownership without the upkeep. A detached home gives you full privacy and control, along with full repair responsibility. A townhome can offer a smart middle ground between the two. There’s no wrong answer, only what’s right for you. Browse available properties and explore more on Houseful.ca (opens new window).
3. Define your priorities. Before touring any properties, jot down your must-haves (non-negotiables like bedroom count or commute distance) and your nice-to-haves, the things you’d love but can be flexible about.
4. Budget for the full picture. Your down payment isn’t your only upfront cost. Budget an additional amount of your purchase price for closing costs, including legal fees, land transfer taxes (with potential first-time buyer rebates), title insurance and a home inspection. Knowing the breakdown of costs means you won’t get stuck with surprise fees.
5. Understand the local market conditions. The RBC’s Spring Home Ownership Poll shows that 66% of first-time home buyers (opens new window) worry about whether it is the right time to buy. Understanding which market conditions you’re entering helps you decide your approach. In a seller’s market, homes move fast and competition is stronger, so you’ll need to act quickly. On the other hand, a buyer’s market means more room to negotiate.
6. Find the right realtor. A great real estate professional does more than show you around. Look for deep neighbourhood knowledge, listening skills, strong negotiating ability and a trusted network of mortgage specialists, lawyers and inspectors. You can start your search on Realtor.ca (opens new window). Don’t be afraid to be picky, the right fit is worth the time it takes to find.