Canadian First Time Home Buyers Guide

About this video

In this August 2021 video, Tom Storey answers the most common questions from first time buyers in Canada: minimum down payment, incentive programs, the difference between a deposit and a down payment, what to do if you cannot save as fast as prices rise, how to get started, and which closing costs to budget for. Some rules and programs have changed since 2021, so confirm current details with your lender and lawyer.

Key points

• Minimum down payment (at the time): 5% on the first $500,000 and 10% on the portion up to $1 million, so $35,000 on a $600,000 home. Homes at $1 million or more required 20% down. Under 20% down means an insured mortgage.
• Incentive programs: Tom was not a fan of the federal shared equity incentive, where the government shared in future gains. That program has since ended. In Toronto, first time buyers could get just over $8,000 off the double land transfer tax, applied automatically at closing.
• Deposit versus down payment: the deposit, typically about 5% in Toronto, is paid when your offer is accepted, held in trust and counts toward your total down payment.
• Cannot save fast enough? Consider buying with someone you trust, ideally family. Tom bought the townhouse he filmed in 50/50 with a friend, and it had risen over $200,000 since.
• How to start: build your team. Talk with family about goals, find a local realtor who educates rather than sells, get pre approved before viewing homes, and line up a real estate lawyer.
• Other costs: legal fees (Tom suggested setting aside about $1,500 to $2,000) and land transfer tax, both cash on closing, plus possible inspection, appraisal and home insurance costs.

Questions answered in this video

What is the difference between a deposit and a down payment?

The down payment is the total amount you put toward the purchase. The deposit, usually about 5% in Toronto, is paid when your offer is accepted, held in trust until closing, and counts toward the down payment.

What closing costs do first time buyers in Toronto pay?

The two big ones are legal fees and land transfer tax, both paid in cash on closing. Toronto buyers pay provincial and municipal land transfer tax, with rebates for first time buyers.

How do I get started buying my first home?

Tom recommends building a team: talk to family about your goals, find a local realtor, get pre approved by a bank or mortgage broker before viewing homes, and connect with a real estate lawyer.

Can I buy my first home with a friend?

Yes. Tom bought a townhouse 50/50 with a friend because neither could afford it alone. He suggests partnering with someone you trust and agreeing on goals up front.

Related: first time home buyer insider, buying a home in Toronto and Toronto real estate FAQ.