First-Time Home Buyers: Costs and Benefits

Buying your first home is exciting, but the purchase price is only part of the story. In Ontario you also pay closing costs, mortgage insurance and taxes, and some of those must be paid in cash on closing day. The good news is that first-time buyers also get real benefits: rebates, tax-free savings accounts and credits that can save you thousands. This post walks through both sides, with real numbers on an $800,000 home, so you can plan with confidence.

Part 1: The costs

1. Your deposit

When your offer is accepted, you usually provide a deposit within 24 hours. In the GTA it is often around 5% of the price. The deposit is not an extra cost. It counts toward your down payment at closing. It does need to be ready in your account the moment you make an offer.

2. Your down payment

The minimum down payment in Canada is tiered, not a flat percentage:

• 5% of the first $500,000
• 10% of the portion between $500,000 and $1.5 million
• 20% for homes priced at $1.5 million or more

On an $800,000 home that means $25,000 on the first $500,000 plus $30,000 on the next $300,000, for a minimum of $55,000, not $40,000. Many buyers are surprised by this, so it is worth knowing before you start your search. Try my home affordability calculator to see what fits your budget.

3. Mortgage default insurance and the tax you pay in cash

If you put down less than 20%, mortgage default insurance is required. The premium is a percentage of your mortgage, and the lower your down payment, the higher the rate. The premium itself is usually added to your mortgage, so you do not pay it upfront.

Here is the part many first-time buyers miss: Ontario charges 8% provincial sales tax on that premium, and the tax cannot be added to your mortgage. It is paid in cash on closing day. On an $800,000 home with the minimum down payment, the insured mortgage is $745,000. At a 4.00% premium, that is $29,800 added to the mortgage, plus about $2,384 in tax due in cash at closing.

First-time buyers can also choose a 30-year amortization on an insured mortgage. It lowers your monthly payment, but the premium is slightly higher and you pay more interest over time. Your mortgage professional can compare both options for you. You can also estimate payments with my mortgage calculator.

4. Land transfer tax

Ontario land transfer tax is one of the largest closing costs. It is calculated in tiers, so the rate rises as the price rises. On an $800,000 home, it works out to $12,475.

Buyers in Oakville, Mississauga, Milton and Burlington pay the provincial tax only. Toronto charges a second municipal land transfer tax on top, which is one reason many first-time buyers look west of the city. Learn more in my post on land transfer tax as a first-time buyer.

5. Legal fees and title insurance

In Ontario, a lawyer must complete your purchase. Your lawyer reviews your agreement, searches the title, registers the transfer and claims your land transfer tax refund. Most lawyers also arrange title insurance, which protects you against problems like title fraud and certain survey or zoning issues. Ask two or three lawyers for a written quote that includes fees, title insurance and disbursements, so there are no surprises.

6. Home inspection, appraisal and other costs

• Home inspection. I strongly recommend one on every resale purchase. It usually costs a few hundred dollars and can save you from very expensive surprises.
• Appraisal. Some lenders require one before approving your mortgage. Ask your lender who pays for it.
• Adjustments. If the seller prepaid property taxes or condo fees, you repay your share at closing.
• Moving and setup. Movers, utility connections, insurance and a few basics for your new home add up quickly.

Costs at a glance: $800,000 home

Example only, based on the minimum down payment and a 25-year amortization. Your numbers will depend on your price, down payment and lender.

Part 2: The benefits

Now for the good news. First-time buyers in Ontario have access to several programs that can be combined, and the earlier you start, the more they help.

1. Ontario land transfer tax refund

Eligible first-time buyers get back up to $4,000 of the provincial land transfer tax. On the $800,000 example, that brings $12,475 down to $8,475. To qualify, you generally cannot have owned a home anywhere in the world. Tell your lawyer early that you are a first-time buyer so they claim it for you.

2. First Home Savings Account (FHSA)

You can contribute up to $8,000 a year, to a lifetime limit of $40,000. Your contributions are tax-deductible, and qualifying withdrawals for your first home are tax-free. You never have to pay it back. If you are buying with a partner, each of you can open your own FHSA.

3. RRSP Home Buyers' Plan

You can withdraw up to $60,000 from your RRSP toward your first home and repay it to your RRSP over 15 years. You can use it together with your FHSA on the same purchase, as long as you meet the rules for each.

4. First-Time Home Buyers' Tax Credit

You may be able to claim this federal credit on your tax return for the year you buy. It is based on a $10,000 amount, and your accountant can confirm exactly how much it is worth to you.

5. HST rebates on new homes

New homes in Ontario carry 13% HST. Eligible first-time buyers can now have the full 5% federal portion removed on new homes up to $1 million, a saving of up to $50,000, with partial relief up to $1.5 million. Ontario has also announced relief on its 8% portion for eligible first-time buyers. These rebates have strict rules about agreement dates, price and living in the home, so speak with your lawyer before you sign anything with a builder. If new construction interests you, visit my pre-construction homes in Oakville page.

How to plan for closing day

1. Open your FHSA now. Contribution room only builds once the account is open.
2. Get pre-approved. Know your price range and your insurance premium before you shop.
3. Ask a lawyer for a closing cost estimate before you start touring homes, then again once you have an accepted offer.
4. Set aside cash for closing, separate from your down payment. Include the tax on your insurance premium.
5. Keep your finances steady. Avoid new credit cards, car loans or job changes until after closing.

Want the full step-by-step picture? Visit my First-Time Home Buyers in Oakville page or request my Free Buyer's Guide. New to Canada? Read buying your first home in Oakville as a newcomer.

Tarlika Sehgal, REALTOR®, SRS®, ABR® | eXp Realty Of Canada, Inc., Brokerage

This article is general information, not legal, tax or financial advice. Rates, limits and program rules change. Please confirm your situation with a real estate lawyer, mortgage professional or accountant. Figures are examples current as of October 2026.