First Time Home Buyer Mortgage Guide

Congratulations on taking your first step toward homeownership!
Buying your first home can feel overwhelming, but the process becomes much easier with the right guidance.

As experienced mortgage brokers, we have access to mortgage products from banks, credit unions, and specialized lenders. This lets us find the right fit for your situation, with the best combination of rate, flexibility, and approval criteria.

Our goal is to make your first-time buying experience clear, simple, and stress-free from start to finish.

First-Time Home Buyer Considerations

If you’re a first-time home buyer in Ontario, this guide will help you understand the key parts of getting a mortgage — from down payment to closing costs and approval requirements.

The goal is to give you clarity and confidence before you start your home search. If questions come up along the way, we’re always a call or message away.

Down Payment

For first-time home buyers in Canada, the minimum down payment depends on the purchase price:

• Up to $500,000: minimum 5% down
• $500,000 – $1,499,999: 5% on the first $500,000 and 10% on the rest
• $1.5 million or more: 20% down

Example: A $750,000 home requires $25,000 (5% of $500K) + $25,000 (10% of $250K) = $50,000 total.

Homes under $1.5 million can be insured, allowing less than 20% down. Homes $1.5 million and above must be conventional, requiring 20% or more.

If you put less than 20% down, the mortgage includes default insurance (from CMHC, Sagen, or Canada Guaranty). “Default” means missed payments. The insurance protects the lender and is added to your mortgage balance.

Premiums generally range from 2.80% to 4.00% of the mortgage amount, depending on your down payment.

Insured mortgages often have slightly lower rates because they’re lower risk for lenders. Conventional mortgages don’t require insurance and can be amortized over 30 years, allowing lower payments and a higher qualifying amount.

New for 2024: First-time homebuyers can now choose a 30-year amortization even with an insured mortgage.
This is a major change from the previous 25-year limit and helps lower monthly payments and qualify for more while keeping the minimum down payment requirements the same.

Gifted Down Payment

A gifted down payment from a family member can help you get into your first home sooner.

Parents or relatives can gift funds directly or access equity from their own home to help. We can assist them with a refinance or home-equity line of credit if needed and provide the gift letter required by lenders.

Ask us about this option — we can explain exactly how it works for both you and your family member.

Closing Costs

Besides your down payment, you’ll need money set aside for closing costs.

Lenders typically require you to show at least 1.5% of the purchase price available for closing costs on insured mortgages, even if your actual costs are a bit lower.

Common closing costs include:

• Land transfer tax
• Legal fees and title insurance
• Appraisal and home inspection (if applicable)
• Property tax adjustments and prepaid utilities
• Fire/home insurance on closing

We provide all clients with a personalized closing-cost estimate so you always know exactly what to expect.

Sample Document:

Qualifying for Your First Mortgage

Your mortgage qualification is based on three main factors:

1. Income – how much you earn and how stable it is
2. Debt obligations – loans, credit cards, or other monthly payments
3. Credit history – your track record of repayment

Lenders calculate two affordability ratios:

• Gross Debt Service (GDS): percentage of income going to housing costs (mortgage, property tax, heat, and ½ of condo fees). Limit ≈ 39%.
• Total Debt Service (TDS): housing costs + all debts. Limit ≈ 44%.

The Mortgage Stress Test

When you qualify, lenders must test that you could still afford payments if rates rose.

You’re approved at the higher of:

• Your actual rate + 2%, or
• The federal benchmark rate (currently 5.25%).

This rule ensures you could handle a renewal at a higher rate in the future.

Some credit unions or alternative lenders may use lower qualifying rates for uninsured (20% down+) mortgages.

Credit Requirements for First-Time Buyers

Credit score is important, but lenders look deeper at your credit history and thickness — meaning how many accounts you’ve used responsibly.

Most lenders prefer at least two active credit lines (credit cards or lines of credit) with limits of $2,000–$2,500 or more and a minimum two-year history of on-time payments.

A thinner credit file isn’t always a deal-breaker. Strong income or a co-signer can help offset it.

If you’re new to credit, we can help you build the right credit mix before you apply.

Income Requirements

Lenders use your gross annual income to calculate affordability.

• Salaried income: full amount can be used.
• Bonuses, overtime, commissions: averaged over 2 years.
• Self-employed: can use business income with supporting tax documents or through stated-income programs.
• Variable or gig income: accepted if proven consistent.

Regardless of your income type, we’ll help you get pre-qualified for the maximum amount you can reasonably afford.

Adding a Co-Signer or Guarantor

If you need to increase the amount you qualify for, adding a co-signer or guarantor can help.

A co-signer goes on the mortgage and title.
A guarantor is legally responsible for the payments but does not go on title.

We’ll help determine which is best and explain the responsibilities so everyone involved feels confident.

Once your income and credit allow, the co-signer or guarantor can usually be removed.

Mortgage Rates for First-Time Buyers

Be careful with very low online-advertised rates. They often come with hidden restrictions, larger penalties, or limited prepayment privileges.

Through Dominion Lending Centres, one of Canada’s largest broker networks, we access exclusive rate discounts and lender promotions that aren’t available directly through branches.

Rates vary depending on term, down payment, and whether your mortgage is insured or conventional. We compare every option to find the right balance of rate and flexibility for you.

Should You Use a Mortgage Broker or the Bank?

Working with a mortgage broker is free, easy, and saves you time and money.

Over half of Canadian home buyers now use brokers because they get:

• Access to more lenders (banks, credit unions, and non-bank lenders)
• Expert guidance from a licensed professional who works for you
• Personal support and clear communication throughout the process
• Unbiased advice focused on your best interest
• Exclusive rate discounts through broker networks

Banks can only offer their own products and work in their own interest. Brokers work for you.

You don’t need to switch bank accounts or change your everyday banking. Everything is handled for you.

First-Time Home Buyer Benefits in Ontario

There are several programs designed to make buying your first home more affordable:

1. Land Transfer Tax Rebate (Ontario)
Up to $4,000 provincial rebate.
If buying in Toronto, an additional $4,475 municipal rebate applies.

2. First-Time Home Buyer Tax Credit
A $1,500 federal tax credit (raised from $750 in 2022). Claim it in the year you buy.

3. Home Buyers’ Plan (HBP)
Withdraw up to $35,000 tax-free from your RRSP ($70,000 per couple) toward your down payment. Must be repaid to your RRSP within 15 years.

4. First Home Savings Account (FHSA)
Save up to $8,000 per year ( $40,000 lifetime limit ) tax-free for a first home.
Contributions are tax-deductible, growth is tax-free, and withdrawals for a home purchase are also tax-free.
You can combine the FHSA with the Home Buyers’ Plan for maximum benefit.

5. 30-Year Insured Amortization (New 2024 Rule)
First-time homebuyers and purchasers of newly built homes can now qualify for an insured 30-year amortization — an increase from the previous 25-year limit.
This longer repayment option helps reduce monthly payments and improves affordability for buyers entering the market with smaller down payments.

Getting Your First Mortgage: Step-by-Step

Step 1 – Apply for a Mortgage
Start with our secure online application or call us directly. We’ll discuss your goals and collect the details needed to get you pre-qualified.

Step 2 – Pre-Qualification
Once we have your information and documents, we’ll confirm your maximum purchase price, estimated payments, and available rate hold for up to 120 days.

Step 3 – House Hunting and Making an Offer
With your pre-qualification in place, shop with confidence.
Include a financing condition (usually 5–7 days) in your offer to finalize the mortgage arrangement once you have an accepted offer.

Step 4 – Mortgage Approval
After acceptance, we present your application to lenders, secure a commitment, order any required appraisal, and guide you through DocuSign to complete the paperwork.

Step 5 – Closing Day
Your lender sends instructions to your lawyer, who handles the funds, registers the mortgage, and transfers ownership to you.

Congratulations — you’re a homeowner! We’ll stay in touch for renewals and future planning.

Ready to Get Pre-Qualified?

Start your mortgage journey now.
Click Apply Now to complete your secure online application — it takes just a few minutes and has no impact on your credit.

Once submitted, we’ll review your information, confirm what you qualify for, and explain your next steps clearly. You’ll know your budget, estimated payments, and what documents you’ll need — all before you start shopping.

Apply today and take the first step toward your new home with confidence.