1 First-time home buyer in Canada: the journey, in order

Step 1 — Save: the FHSA and the RRSP Home Buyers' Plan stack

Canada gives first-time buyers two programs that are meant to be used together. The First Home Savings Account (FHSA) lets you contribute $8,000 a year, up to a $40,000 lifetime limit. Contributions reduce your taxable income like an RRSP, growth inside the account is sheltered, and a qualifying withdrawal to buy your first home is completely tax-free — it is the only account in Canada that gives you the deduction on the way in and the tax-free withdrawal on the way out. Unused room carries forward, but the account must be opened to start the clock: room only accumulates from the year you open it, so opening an FHSA before you are seriously saving is one of the few genuinely free moves in personal finance. At the calculator's defaults — steady contributions, a modest return, and a typical Ontario marginal tax rate — an FHSA grows to roughly $58,275 of down payment money.

The RRSP Home Buyers' Plan (HBP) is the older program: withdraw up to $60,000 from your RRSP, tax-free, as long as you repay it over 15 years starting the second year after you buy. Repayments are not tax-deductible — miss one and that year's amount is added to your taxable income instead. Money must sit in your RRSP for at least 90 days before withdrawal to count.

Here is the point most first-time buyers miss: the two programs stack. $40,000 of FHSA plus $60,000 of HBP is $100,000 of tax-advantaged down payment per person — and $200,000 for a couple who both qualify as first-time buyers. If you have RRSP room and savings sitting in a regular account, routing the first $40,000 through an FHSA before topping up the RRSP usually wins, because the FHSA deduction can be carried forward to a higher-income year while the withdrawal stays tax-free either way.

Step 2 — Qualify: affordability and the stress test

Lenders judge you on two ratios. Your GDS ratio — mortgage payment, property tax, heating, and half of any condo fee — must stay at or under 39% of your gross income. Your TDS ratio adds every other debt payment (car, cards, student loans) and must stay at or under 44%. And the payment used in both ratios is not your real payment: under OSFI's B-20 stress test you must qualify at the higher of 5.25% or your contract rate + 2%. At a 4.49% contract rate, you are tested at 6.49% — which is why the maximum price a lender approves is often 15–20% lower than the payment you were picturing. Run the affordability calculator for your ceiling, then the stress test calculator to see the exact qualifying payment and your pass/fail.

Down payment rules set the other boundary. The minimum is 5% on the first $500,000 and 10% on the slice from $500,000 to $1.5 million; homes at $1.5 million or more need 20% and cannot be insured. Under 20% down, mortgage default insurance is mandatory and the premium — 0.60% to 4.00% of the loan depending on how much you put down — is added to your mortgage balance. One recent relief: first-time buyers (and buyers of new builds) can now take a 30-year amortization on an insured mortgage, which lowers the payment and raises the qualifying ceiling, at the cost of more total interest and a 0.25-point premium surcharge.

Step 3 — Buy: land transfer tax and the Ontario first-time rebates

Your down payment is not your only cash cost. Ontario charges a provincial land transfer tax on every purchase, and Toronto charges a second, municipal one at the same rates — a Toronto buyer pays the tax twice. On a $650,000 Toronto home, each tax works out to $9,475, or $18,950 combined before rebates. First-time buyers get real relief: Ontario refunds up to $4,000 of its tax and Toronto refunds up to $4,475 of its tax, which can wipe out the tax entirely on homes under roughly $369,000 in Toronto. To qualify, you must never have owned a home anywhere in the world, and the home must become your principal residence.

Beyond the tax, budget roughly 1.5% to 4% of the price for the rest of closing: legal fees and disbursements, appraisal, home inspection, title insurance, and — the one nobody warns you about — the 8% Ontario PST on your CMHC premium, which is due in cash at closing and cannot be added to the mortgage. The closing costs calculator adds all of it into one cash-to-close number so there are no surprises on the day.

A realistic order of operations, then: open the FHSA early, save into the FHSA first and the RRSP second, check your stress-test ceiling before booking a single showing, get a real pre-approval, and price homes at least one closing-costs estimate below your ceiling. Do it in that order and the process is mostly paperwork. Do it backwards — fall for a house first, then discover the stress test and the double Toronto tax — and it is mostly stress.

What can I afford on my salary? Start here

The salary guides run the full affordability math at common Ontario incomes with the standard defaults: $60,000 salary — up to about $271,154; $80,000 salary — up to about $368,282; $100,000 salary — up to about $465,410; $120,000 salary — up to about $562,539; $150,000 salary — up to about $708,231. Each page shows the GDS/TDS math behind its number, and the full calculator lets you swap in your real debts, taxes, and down payment.