How to Buy
a House
in Canada

The minimum depends on purchase price. For homes under $500,000 the minimum is 5%. For the portion between $500,000 and $999,999 it rises to 10%. Homes $1 million and over require at least 20% down. Putting less than 20% down means your mortgage is 'high-ratio' and requires CMHC mortgage insurance, which costs 2.8–4% of the insured amount added to your mortgage.

Introduced by OSFI, the stress test requires all insured and uninsured mortgage applicants to qualify at the greater of their contract rate + 2% or 5.25% (whichever is higher). This applies even when refinancing. The stress test reduces maximum borrowing by roughly 20% compared to qualifying at the actual contract rate. It is designed to ensure buyers can still carry their mortgage if rates rise.

For an insured mortgage (less than 20% down), most lenders require a minimum score of 600–620. To qualify for the best rates and products, you want 680 or above. Credit unions and alternative lenders may accept lower scores but typically charge higher rates. Check both your Equifax and TransUnion reports before applying — lenders use the lower of your two bureau scores.

Canada Mortgage and Housing Corporation (CMHC) insurance is mandatory when your down payment is less than 20% of the purchase price. The premium ranges from 2.80% to 4.00% of your mortgage amount depending on your down payment ratio. It is typically added to your mortgage and amortized over the loan term. This insurance protects the lender — not you — in case of default.

Buyers should budget 1.5–4% of the purchase price for closing costs. These include: land transfer tax (provincial, and municipal in Toronto), legal fees and disbursements ($1,500–$2,500), title insurance ($250–$400), home inspection ($400–$600), property tax and utility adjustments, and moving expenses. First-time buyers in Ontario can claim up to $4,000 in provincial LTT rebates and up to $4,475 from the City of Toronto.

From start (beginning your search) to finish (receiving keys), the typical Canadian home-buying timeline is 3–6 months. Getting pre-approved takes 1–3 days. Searching and touring may take weeks to months. Offer-to-close is typically 30–90 days. In fast markets like Toronto, you may submit several unsuccessful offers before winning. Planning for a 4-month process is realistic for most buyers.

Condos offer lower entry prices, maintenance-free ownership, and downtown access, but come with monthly condo fees ($400–$1,200+) and rules set by the condo corporation. Freehold ownership (detached, semi, townhouse) gives you full control of the land and structure with no maintenance fees, but you are solely responsible for all repairs. Condos suit investors and urban professionals; freehold suits growing families. The right answer depends entirely on your lifestyle, budget, and long-term plans.

Ontario charges a provincial land transfer tax (LTT) on every real estate purchase. Toronto buyers pay an additional municipal LTT on top. On a $1,000,000 purchase, provincial LTT is roughly $16,475. Toronto's municipal LTT adds another ~$16,475. First-time buyers can claim up to $4,000 (province) and $4,475 (Toronto) in rebates. These rebates can only be claimed once in a lifetime and both buyers on title must be first-time buyers to qualify.