Down payment requirements depend on the home price:

• Up to $500,000: Minimum 5% down payment
• $500,000-$999,999: 5% on the first $500,000, 10% on the remainder
• $1,000,000+: Minimum 20% down payment

Down payments below 20% require CMHC mortgage insurance. In major cities like Toronto and Vancouver, actual average down payments often exceed minimums, reaching $100,000-$150,000.

The FHSA, introduced in 2023, is a tax-free savings tool for first-time buyers:

• Annual contribution limit: $8,000
• Lifetime limit: $40,000
• Tax benefits: Contributions are tax-deductible, withdrawals for home purchases are tax-free
• Investment growth: Tax-free earnings within the account
• Usage period: Within 15 years of opening or after first home purchase

The FHSA can be combined with the RRSP Home Buyers’ Plan to maximize down payment savings.

January 2025 average rates:

• 5-year fixed: 5.24%
• 3-year fixed: 5.49%
• Variable: 6.20% (based on Prime – 0.3%)

Choosing advice:

• Fixed rate: Ideal for risk-averse buyers, tight budgets, or those expecting rising rates
• Variable rate: Suitable for those who can handle payment fluctuations, expect rate cuts, or plan early repayment

With potential Bank of Canada rate cuts in late 2025, some experts suggest short-term fixed rates (1-3 years) as a compromise.

Toronto region (2025 data):

• Detached home average $1,200,000: Requires household income of $180,000-$200,000
• Townhouse average $900,000: Requires $135,000-$150,000
• Condo average $650,000: Requires $98,000-$110,000

Vancouver region:

• Detached home average $1,800,000: Requires household income of $270,000+
• Townhouse average $1,100,000: Requires $165,000+
• Condo average $750,000: Requires $112,000+

Calculations assume a 20% down payment, 5.5% interest rate, 25-year amortization, and adhere to 32% GDS and 40% TDS ratios.

National average (2025):

• Condos: $0.50-$0.80/sq ft/month
• Townhouses: $0.30-$0.50/sq ft/month

Major city ranges:

• Toronto: One-bedroom condo $400-$600/month, two-bedroom $550-$800/month
• Vancouver: One-bedroom $450-$700/month, two-bedroom $600-$900/month
• Montreal: Relatively lower, $250-$450/month

Condo fees cover building maintenance, amenities, insurance, and reserve funds. Buyers should review condo documents to assess reserve fund health and potential special assessment risks.

Homebuying eligibility for newcomers:

• Permanent residents and citizens: No restrictions
• Work permit holders: Eligible (subject to lending criteria)
• International students: Restricted (foreign buyer taxes in BC and Ontario)

Lending requirements:

• Establish Canadian credit history (6-12 months minimum)
• Proof of stable income (employer letter, tax returns, pay stubs)
• Higher down payments (typically 20%+ recommended)
• Some lenders accept foreign credit history and income

Newcomer advantage: CMHC’s Newcomer Homeownership Program allows more flexible credit assessments.

Most affordable major cities (2025):

1. Montreal, Quebec: Detached home average $550,000, vibrant culture
2. Edmonton, Alberta: Detached home average $425,000, strong job market
3. Calgary, Alberta: Detached home average $575,000, no provincial sales tax
4. Winnipeg, Manitoba: Detached home average $380,000, low cost of living
5. Quebec City, Quebec: Detached home average $340,000, European charm

Emerging affordable regions:

• Moncton and Fredericton, New Brunswick
• Halifax, Nova Scotia (prices rising)
• London and Windsor, Ontario

Stress test requirements (2025 rules):

Borrowers must prove they can afford payments at the higher of:

• Contract rate + 2%
• 5.25% benchmark rate

Strategies to pass:

• Increase down payment: Reduce loan amount to lower payments
• Lower other debts: Pay off credit cards, car loans, etc.
• Boost income: Add part-time work, investment income, or a co-applicant
• Extend amortization: Choose 25-30 years to lower payments (20%+ down payment)
• Adjust budget: Target lower-priced homes

The stress test ensures borrowers can afford payments if rates rise, protecting financial system stability.

New home advantages:

• Modern design and energy efficiency, reducing utility costs
• New appliances and systems, minimizing repairs
• Builder warranties (typically 2-5-10 years)
• Possible GST/HST new home rebate (up to $36,000)
• Customization options (colors, materials, etc.)

New home drawbacks:

• Higher prices (10-20% premium)
• Construction delay risks
• Incomplete community amenities
• Smaller lot sizes

Resale home advantages:

• Lower prices, more room for negotiation
• Established neighborhoods with mature amenities
• Immediate move-in availability
• Larger lots (in older areas)

Resale home drawbacks:

• May need renovations or repairs
• Lower energy efficiency, higher operating costs
• No builder warranty

Recommendation: Budget-conscious first-time buyers may prefer resale homes; those seeking low maintenance and modern features may opt for new builds.

Likelihood of a market crash:

Experts believe a major crash is unlikely due to:

• Strict lending approvals and stress tests
• Consistent immigration and population growth driving demand
• Chronic housing supply shortages
• Robust Canadian banking system

Possible market adjustments:

• Major cities may see 3-8% price declines
• Overheated markets (e.g., some suburbs) may face larger corrections
• Condo markets may experience oversupply pressure

2025 buying timing:

• Favorable factors: Potential rate cuts, more motivated sellers, greater choice
• Challenges: High prices, economic uncertainty
• Key advice: Base decisions on personal finances and long-term plans, not market timing

If planning to hold for 5-10+ years and financially stable, now may be a reasonable time to buy.

Foreign buyers’ tax overview:

An additional land transfer tax levied on non-citizens/permanent residents.

Provincial policies (2025):

• British Columbia: 20% foreign buyers’ tax (Greater Vancouver, Fraser Valley, Capital Region, etc.)
• Ontario: 25% Non-Resident Speculation Tax (Greater Golden Horseshoe)
• Federal policy: 2023-2025 ban on foreign residential property purchases (with exceptions)

Exemptions:

• Work permit holders (with conditions)
• International students (specific cases)
• Refugees
• Commercial properties or vacation homes

The policy aims to cool markets and increase opportunities for local residents.

Co-ownership forms:

• Joint Tenancy: Equal ownership, automatic transfer to co-owners upon death
• Tenancy in Common: Unequal shares allowed, shares can be sold or bequeathed independently

Operational steps:

1. Choose trustworthy co-owners (family, friends)
2. Determine ownership shares and contribution amounts
3. Sign a co-ownership agreement (Cohabitation/Co-ownership Agreement)
4. Define cost-sharing, decision-making, and exit strategies
5. Consult a real estate lawyer to draft legal documents

Key legal terms:

• Cost and mortgage payment splits
• Property use and living arrangements
• Handling sales if one party wants to exit
• Right of First Refusal
• Dispute resolution procedures

Risks: Relationship breakdowns, financial disputes, or one party’s inability to meet obligations. A robust legal agreement is critical.

Importance of home inspection:

• Identify structural issues (foundation, roof, electrical, plumbing)
• Assess system conditions (heating, cooling, water heater)
• Detect safety hazards (asbestos, mold, radon)
• Estimate repair costs
• Provide leverage for price negotiations

Inspection costs (2025):

• Standard detached home: $400-$700
• Large or older homes: $700-$1,200
• Condos: $300-$500
• Specialized inspections:
  • Mold testing: $300-$600
  • Radon testing: $150-$300
  • Asbestos testing: $400-$800

Choosing an inspector:

• Ensure CAHPI (Canadian Association of Home and Property Inspectors) certification
• Verify Errors & Omissions (E&O) insurance
• Check past client reviews
• Attend the inspection to ask questions directly

Key tip: Even new homes need inspections! Builder quality varies, and professional checks can uncover construction defects.

National average premiums (2025):

• Detached homes: $1,500-$2,500/year
• Townhouses: $1,200-$2,000/year
• Condos: $300-$600/year (building insurance often included in condo fees)

Factors affecting premiums:

• Home value and rebuilding cost
• Location (flood zones, wildfire risk areas)
• Home age and construction materials
• Security systems (alarms, cameras)
• Claims history
• Deductible amount

Strategies to lower premiums:

• Increase deductible to $1,000-$2,500 to save 15-25%
• Install security systems for 5-20% discounts
• Bundle home and auto insurance for 10-25% savings
• Accumulate no-claims discounts
• Update electrical, plumbing, or roofing systems
• Compare quotes from multiple insurers

Essential coverage: Building insurance, personal property insurance, liability insurance, additional living expenses coverage.

Land transfer tax overview:

A one-time tax paid to provincial/municipal governments based on the property purchase price.

Provincial rates (2025 examples):

Ontario:

• First $55,000: 0.5%
• $55,000-$250,000: 1.0%
• $250,000-$400,000: 1.5%
• $400,000+: 2.0%

Toronto municipal surcharge (added to provincial tax):

• First $55,000: 0.5%
• $55,000-$400,000: 1.0%
• $400,000+: 2.0%

British Columbia:

• First $200,000: 1.0%
• $200,000-$2,000,000: 2.0%
• $2,000,000-$3,000,000: 3.0%
• $3,000,000+: 5.0% (includes additional tax)

First-time buyer rebates:

• Ontario: Up to $4,000 rebate
• BC: Exempt on first $500,000
• Toronto: Up to $4,475 rebate for first-time buyers

Calculation example: $800,000 home in Toronto, first-time buyer pays ~$16,950 (provincial + municipal tax – rebates).

Situations favoring renting:

• Career mobility: Planning to relocate or change jobs within 2-3 years
• Financial instability: Fluctuating income, high debt, or poor credit
• Insufficient down payment: Unable to afford 5-10% down plus closing costs
• Market peak: Overvalued home prices, imbalanced rent-to-price ratio
• Life stage: Young singles, students, or retirees seeking fewer responsibilities
• Investment opportunity cost: Rent far below mortgage payments, allowing higher investment returns

Rent-to-price ratio analysis:

If home price ÷ annual rent > 25-30, renting is typically more economical. Example:

• Toronto condo $600,000, monthly rent $2,200 (annual $26,400)
• Rent-to-price ratio = $600,000 ÷ $26,400 = 22.7 (renting preferable)

Hidden costs of ownership:

Beyond mortgage payments: property taxes ($3,000-$8,000/year), insurance ($1,500-$2,500/year), maintenance (1-2% of home value/year), condo fees ($400-$800/month).

Conclusion: Buying isn’t always the best financial decision; evaluate personal circumstances and market conditions thoroughly.

Credit score importance:

• 680+: Qualifies for loans but rates may be higher
• 700-749: Good, access to better rates
• 750+: Excellent, best rates and terms

Strategies to build credit:

1. Pay bills on time: Accounts for 35% of score, set up autopay
2. Keep credit utilization low: Credit card balances <30% of limit (30% of score)
3. Maintain long credit history: Keep oldest credit card active (15% of score)
4. Diversify credit types: Credit cards + installment loans + lines of credit (10% of score)
5. Limit new credit applications: Frequent applications hurt score (10% of score)

Building credit quickly (newcomers/young people):

• Apply for a secured credit card
• Become an authorized user on a trusted person’s card
• Use rent reporting services to include rent in credit history
• Take small installment loans (e.g., phone contracts)

6 months before buying:

• Avoid new credit applications
• Don’t close old credit cards
• Keep balances low
• Check credit reports for errors (free via Equifax/TransUnion)

Recommended timeline: Start building/optimizing credit 12-18 months before buying.

Essential professional team:

1. Realtor

• Cost: Typically free for buyers (seller pays ~5-6% commission)
• Services: Find listings, negotiate, coordinate transaction

2. Mortgage Broker

• Cost: Usually free (lender pays commission), or $500-$1,500
• Services: Compare lenders, secure best rates, manage application

3. Real Estate Lawyer

• Cost: $1,000-$2,500
• Services: Review contracts, title searches, handle title transfer, manage escrow

4. Home Inspector

• Cost: $400-$700 (standard detached home)
• Services: Thorough home condition check, detailed report

Optional professionals:

• Appraiser: $300-$500 (often required by lenders)
• Property Valuator: Determines fair market value
• Financial Advisor: Aligns homebuying with long-term goals
• Insurance Broker: Compares insurance options for best rates

Total professional costs: Budget $2,000-$5,000 (excluding mortgage insurance and land transfer tax).

Selection advice: Choose professionals with local market experience, good reviews, and clear communication. Don’t select based solely on lowest cost.

Annual fixed costs:

• Property taxes: 0.5-1.5% of home value (Toronto ~1.0%, Vancouver 0.25% + surcharges)
• Home insurance: $1,500-$2,500/year (detached homes)
• Condo fees: $400-$800/month = $4,800-$9,600/year

Utility costs (monthly):

• Electricity: $80-$150
• Gas/heating: $50-$150 (higher in winter)
• Water: $40-$80 (sometimes included in taxes/fees)
• Internet/cable: $80-$150
• Total: $250-$530/month = $3,000-$6,360/year

Maintenance and repairs:

• Annual budget: 1-2% of home value ($500,000 home = $5,000-$10,000/year)
• Recurring projects:
  • Roof replacement: $5,000-$15,000 (every 15-25 years)
  • Heating system: $3,000-$6,000 (every 15-20 years)
  • Water heater: $1,000-$2,000 (every 10-15 years)
  • Windows: $300-$800/window (every 20-30 years)
  • Exterior painting/repairs: $3,000-$10,000 (every 5-10 years)

Other costs:

• Lawn/yard maintenance: $500-$2,000/year
• Snow removal (winter): $300-$600/year
• Pest control: $200-$500/year

Total annual cost example ($600,000 detached home, Toronto):

• Property taxes: $6,000
• Insurance: $2,000
• Utilities: $4,500
• Maintenance: $8,000
• Total: ~$20,500/year ($1,710/month)

Budgeting advice: Beyond mortgage payments, reserve 15-20% of monthly income for these costs. Maintain an emergency fund for 3-6 months of expenses.

Remote work trends (2025 data):

• 34% of Canadian workforce in full-time or hybrid remote roles
• Tech, finance, and consulting sectors exceed 50% remote work
• Government sectors increasingly offer remote flexibility

Impact on housing market:

1. Geographic dispersion:

• 40% increase in migration from major cities to smaller cities/towns
• Ontario’s London, Guelph, and Kingston see 20-30% price increases
• BC interior (Kelowna, Kamloops) sees surging demand
• Atlantic provinces attract out-of-province remote workers

2. Changing housing needs:

• Demand for larger spaces (dedicated offices/work areas)
• Increased value of outdoor spaces (yards, balconies, patios)
• High-speed internet now a must-have
• Declining appeal of downtown condos

3. Price arbitrage opportunities:

• Toronto income + Montreal prices = significant quality-of-life gains
• Vancouver income + Calgary prices = substantial savings
• Cost-of-living differences enable earlier retirement

4. Emerging hotspot regions:

• Ontario: Barrie, Peterborough, Sarnia
• Quebec: Sherbrooke, Trois-Rivières, Gatineau
• Atlantic Provinces: Halifax, Charlottetown, Saint John
• BC: Victoria, Nanaimo, Vernon

Risk considerations:

• Remote work policies may change, requiring career flexibility
• Some employers may adjust salaries based on location
• Consider healthcare, education, and amenities before moving to remote areas
• Resale market liquidity may be lower outside major cities

Strategy advice: If remote work is stable long-term, relocating to lower-cost, high-quality-of-life areas can significantly improve affordability and financial health.