For withdrawals made between January 1, 2022, and December 31, 2025, the repayment period starts five years after the year in which you made your first withdrawal.
How much does it really cost to buy your first home in Canada?
Buying your first home is an exciting milestone and a major achievement. But before you dive into house hunting, it’s important to understand the full financial picture. When it comes to buying a home, your mortgage is just one piece of the puzzle. There are several other expenses to plan for that can catch first-time buyers off guard, including legal fees, appraisals, inspections, title insurance and more.
And the expenses don’t stop once you’ve signed the papers and picked up the keys. From one-time fees to ongoing monthly bills, the costs of homeownership continue well beyond closing day. That’s why it’s essential to save beyond the purchase price and budget for the full scope of expenses that come along with owning a home.
To help you prepare, here’s a breakdown of some of the costs you can expect when buying your first home.
Buying a house: How much does it cost and how do you pay for it?
How much should you save for your down payment?
The “down payment” refers to how much cash you pay up front to purchase a house. Most buyers present a down payment that covers somewhere between 5% and 20% of the price of the home. The more you can put down, the better. That’s because if you have a down payment of 20% or more, you can avoid mortgage loan insurance, which is required on a lower down payment.1
For example, putting down just 5% on a $500,000 home means you’ll add approximately $19,000 to your mortgage balance to cover the cost of insurance. Another benefit to making a larger down payment? It can help reduce your overall borrowing costs and potentially save you thousands in interest over the long run.
What might your monthly mortgage payments look like?
After handing over your down payment, you’ll need to pay off the remaining balance on the house, which is done using a mortgage. A mortgage is a loan, specifically for purchasing real estate, that you repay, plus interest, over a certain period.
If you put down 20% on a $500,000 home, your mortgage would be $400,000. Using a 4% interest rate, that works out to about $2,100 a month on a mortgage amortized over 25 years.
You can use this mortgage calculator from the Government of Canada to help you determine your potential monthly payments.
Upfront costs to budget for when buying a home
You’ll want to save some extra money when buying a home to cover the fees you’ll incur to complete the transaction. Bills can add up, which is why the Canada Mortgage and Housing Corporation (CMHC) advises setting aside between 1.5% and 4% of the purchase price to cover your closing costs.2 Here are some of the fees this could include:
Real estate commissions
When you use a real estate agent to help you buy a home, they’re paid through commission on the sale of the house. The Financial Consumer Agency of Canada suggests realtor commissions typically range between 2% and 6% depending on where you live, although you may be able to negotiate a lower rate with some realtors. For example, the total commission on a $500,000 home would be $10,000 at 2% or $30,000 at 6% (plus applicable sales tax). This fee, which is paid by the seller, is split between the listing and buyer’s agents.
Property appraisal
To qualify for a mortgage, your lender may require an assessment from a licensed appraiser to ensure the value of the property is enough to back up the loan. An official appraisal can typically cost between $250 and $350, according to the CMHC, depending on the size of your home and where it’s located.
Home inspection
It’s always a good idea to have an independent home inspector walk through the home and flag any issues you’ll want to know about before you agree to buy. The CMHC pegs most standard inspections at around $500, but this can vary.
GST or HST on your new home purchase
If you’re buying a newly built home, you’ll need to budget for the GST or HST (depending on the province or territory) that applies to the purchase price of the house. In many cases, new-housing rebates are available to help offset this tax, so long as the home will be your primary residence and falls within certain price limits.
Land transfer tax
You may also need to pay a land transfer tax, a one-time fee based on the purchase price, when the property is registered in your name. Some provinces, including Ontario, British Columbia and Prince Edward Island, offer full or partial rebates for first-time buyers, which can significantly reduce or even eliminate this cost. Your provincial and municipal government websites are your most reliable sources for exact tax rates and rebate eligibility.
Real estate lawyer fees
You’ll need a real-estate lawyer to prepare the documents, register the title and mortgage and move funds on closing day. Legal fees can range from $700 to $2,000 based on factors such as complexity, value and location.3 Some firms advertise “all in” packages, so make sure you confirm what’s included.
Title insurance
This type of insurance provides coverage against defects in the title to the home, which can help protect you from potential financial losses. Title insurance is separate and paid once, with policies typically in the $250 to $400 range.4 This doesn’t replace the lawyer’s title search or your home insurance; it complements them by covering certain title and fraud issues that could surface later.
Notary fees in Quebec
If you live in Quebec, you may also need a notary to complete the transfer. A notary ensures that all important documents in the transaction are valid and correct. Expect to pay between $1,500 and $3,000 for a Quebec notary,5 with scope and location potentially pushing the number up or down.
Don’t forget your moving costs
Once you’ve secured your home, you need to consider how you’re going to get all your belongings there. A two‑ or three‑person crew with a moving truck often runs between $100 and $250 per hour and varies by the size of your home and distance travelled.6 It’s important to find a reputable service, one that has the proper insurance and protection for its workers and offers a signed contract, among other factors.
Ongoing homeownership costs
After the purchase of your first home, it’s important to be aware of the ongoing costs of home ownership. Understanding these expenses in advance can help you adjust your budget and ease the financial transition. Here are some of the common costs that come with owning a home.
Condo fees
These fees are separate from your mortgage and pay for day‑to‑day building management and maintenance costs. Some may also cover utilities, but this varies by property. A portion of the condo fees collected also goes toward a reserve fund to cover major repairs and replacements of common elements. These fees are typically calculated based on the square footage or the unit factors (UF) of the particular unit. However, condo fees vary considerably across the country, and even between properties in the same city, based on a range of factors, including building age and amenities offered.
Property taxes
In Canada, these taxes range from 0.3% to 1.8% of your home’s assessed value, or about $1,500 to $9,000 a year on a $500,000 property,7 depending on your property’s location. This tax helps fund essential local services, such as public schools, waste collection, road maintenance, community infrastructure and more.
Home insurance premiums
Home maintenance and repairs
Setting aside between 1% and 3% of your home’s value per year for maintenance is a good starting point for many homeowners. (If you own a condo, some of these costs may be covered by your condo fees.) On a $500,000 property, that works out to roughly between $5,000 and $15,000 a year to cover things like landscaping and snow removal, or aging essentials, such as your roof, furnace and windows.
Home renovations
If you’re planning to buy a fixer-upper, keep in mind the cost of a bathroom reno starts at around $19,000 and a standard kitchen somewhere around $27,000.9 But prices can quickly increase, depending on size of your space and the fixtures you choose. For instance, you’ll be looking at a higher bill if you envision a spa-like bathroom or a chef’s kitchen.
Monthly utilities
Canadians pay, on average, approximately $240 a month for water, fuel and electricity, and another $290 or so for their communication needs, such as internet, home phone and cellphone.10 Keep in mind that these costs can vary based on where you’re located and what you feel is essential to live comfortably in your new home.
How to save for your homeownership expenses
Saving for a home may seem overwhelming for first-time home buyers, which is why the government in Canada offers home buying programs and incentives to help. Below, we’ve outlined some of the programs and saving vehicles you can take advantage of to help you realize your goal of owning a home.
Use the First Home Savings Account (FHSA) as your main down-payment savings vehicle
Consider using a FHSA, which is designed to help first-time home buyers reach their goal of homeownership sooner, with tax-deductible contributions and tax-free withdrawals. You can contribute up to $8,000 a year to the account, with a lifetime limit of $40,000. Keep in mind that once you open the account, you have 15 years to use the funds toward the purchase of a qualifying first home.
Reduce your down-payment burden with the Home Buyers’ Plan (HBP)
The HBP lets you withdraw up to $60,000 from your Registered Retirement Savings Plan (RRSP) to buy or build your first home, although you’ll have to repay that amount to your RRSP over 15 years, starting the second year after you make your first withdrawal.
Buy yourself some time with a Tax-Free Savings Account (TFSA)
A TFSA gives you tax-free growth with quick access to your money. And your contribution room, including last year’s withdrawals, resets every January. If your timing is uncertain, saving in a TFSA lets you grow funds now, without starting the 15-year clock on an FHSA. You can always move TFSA dollars into an FHSA at a later date, claim the tax deduction and then get that TFSA room back next January.
The bottom line
Buying your first home is a big step, and it comes with many financial responsibilities beyond just the down payment. From closing costs to ongoing expenses, such as property taxes, insurance and maintenance, being prepared for all the costs associated with homeownership can help you avoid costly surprises and feel confident about your purchase.
The good news is that there are lots of tools and strategies to help you get to your goal. Whether you’re just starting to save or refining your budget, a financial advisor can help you build a personalized plan that aligns with your timeline and homeownership goals.
Note: All costs included in this article are estimates and may vary depending on the property, location and other circumstantial factors.
