Quick answer: Open an FHSA today, even years out, because its 15-year clock starts the day you open it. Get a real pre-approval before you shop. Then budget 1.5% to 4% of the purchase price for closing costs, which is the number that ambushes most first-time buyers.
This is the mechanical half of buying a home. The question of whether you should buy at all, and how much house your household can actually carry, is its own article, and it is the one to read first.
What follows assumes you have answered it. From here it is accounts, process, and costs, in that order.
The three accounts, and which one comes first
Canada has three registered accounts that help you save for a home. Two carry specific homebuying provisions, and the third is a flexible workhorse. If you are using fewer than two of them, you are leaving real tax savings on the table.
The FHSA comes first
The FHSA (First Home Savings Account) is the best account in Canadian tax history for first-time buyers, and it is not close. You get a tax deduction on the way in, like an RRSP, and a completely tax-free withdrawal on the way out, like a TFSA. No other Canadian account does both.
- $8,000 per year, $40,000 lifetime. Unused room carries forward, to a maximum of $8,000.
- Deductible going in. At a 30% marginal rate, an $8,000 contribution is roughly $2,400 back at tax time.
- Tax-free coming out for a qualifying home. Not deferred. Not reduced. Zero.
- No repayment, ever. The money is yours.
Eligibility: Canadian resident, 18 to 71, and you must not have lived in a home you owned at any point in the current year or the preceding four calendar years.
The key move: open it now, even if you are three or four years out. The account's 15-year lifespan starts the day you open it, and contribution room starts building immediately. Waiting costs you years you cannot get back. Wealthsimple offers one with no fees; your bank will too, usually with fewer investment options.
The Home Buyers' Plan, second and only sometimes
The RRSP Home Buyers' Plan lets you withdraw up to $60,000 tax-free toward a first home, but you repay it into your RRSP over 15 years, and any missed payment gets added to your taxable income for that year. That repayment schedule is a real obligation on a household that just bought a house.
Use it if you already hold a large RRSP balance and can carry the repayments. Fill the FHSA first either way. I work through the full comparison in FHSA vs RRSP Home Buyers' Plan, and the FHSA Planner will run your own timeline.
The TFSA, for everything the other two will not cover
The TFSA has no homebuying provisions and needs none. It is flexible, the withdrawals are tax-free, and the room comes back the following calendar year. It is the right home for a down payment overflow once the FHSA is full, and for the closing costs below, which the other two accounts were never designed to reach.
The Homebuying Process Step by Step
- Get pre-approved
- Find a realtor
- Make an offer, with conditions
- Home inspection
- Mortgage approval
- Closing day
- Moving day
Step 1: Get Pre-Approved
A mortgage pre-approval means a lender has reviewed your income, credit, debts, and down payment and has conditionally agreed to lend you a specific amount at a specific rate. It stops short of a guarantee, since the final approval happens after you find a property. Still, it tells you your price range and shows sellers you are serious.
Pre-approval typically locks your rate for 90 to 120 days. That is important in a rising-rate environment.
What you will need: Recent pay stubs or a letter of employment, two years of Notice of Assessment from the CRA, bank statements showing your down payment, and a list of your debts and monthly obligations.
Step 2: Find a Realtor
A good buyer's agent costs you nothing out of pocket (the seller typically pays the commission) and gives you access to MLS listings, market knowledge, and negotiation experience. Ask for referrals from people you trust. Interview two or three agents before committing. Look for someone who listens more than they talk.
Step 3: Make an Offer
When you find the right property, your agent will help you write an offer. In most cases, your offer should include conditions:
- Financing condition: The offer is conditional on you securing a mortgage. This protects you if the lender declines the property.
- Inspection condition: The offer is conditional on a satisfactory home inspection. This is not optional. More on this below.
In hot markets, buyers are often pressured to waive conditions to "win" a bidding war. I will address this in the mistakes section. For now: conditions exist to protect you. Think very carefully before giving them up.
Step 4: Home Inspection
A qualified home inspector will examine the roof, foundation, electrical, plumbing, HVAC, insulation, and structure. The inspection typically costs $400 to $600 and takes two to three hours.
Do not skip this. A $500 inspection can reveal $30,000 in hidden problems. Foundation cracks, knob-and-tube wiring, water damage behind walls, aging roof: these are the things that turn a "great deal" into a financial sinkhole. Treat the inspection as insurance, and one of the cheapest kinds you will ever buy.
If the inspection reveals significant issues, you can renegotiate the price, ask the seller to make repairs, or walk away. That is the whole point of the condition.
Step 5: Mortgage Approval
Once your conditions are met, your lender does a final review and issues the official mortgage commitment. This includes an appraisal of the property (the lender wants to confirm the house is worth what you are paying).
If your down payment is less than 20% of the purchase price, you will need CMHC mortgage default insurance. This protects the lender (not you) and is added to your mortgage balance. The premium ranges from 2.8% to 4.0% of the mortgage amount, depending on your loan-to-value ratio. On a $400,000 mortgage with 10% down, that is roughly $11,200 added to your balance. CMHC's mortgage loan insurance page lays out the official premium table.
The 20% threshold matters. If you can put 20% down, you avoid CMHC insurance entirely. That can save you thousands. But do not drain your emergency fund to hit 20%. The insurance premium, while annoying, is not worth being financially exposed.
Step 6: Closing Day
Your lawyer handles the transfer of ownership, registers the mortgage, and manages the flow of funds. You will sign a stack of documents, hand over a certified cheque or bank draft for the remaining closing costs, and receive the keys.
What you will pay at closing (more detail in the next section):
- Legal fees
- Land transfer tax
- Title insurance
- Adjustments (prepaid property taxes, utilities)
For a broader orientation to the whole process, CMHC's home buying section is the government's own step-by-step guide and worth bookmarking.
Step 7: Moving Day
You own a home. The real work starts now. Budget for immediate needs: changing locks, basic tools, cleaning supplies, and the inevitable first repair that appears within the first month. Because it will.
Where to actually get the mortgage
The rate your bank offers you at the branch is almost never the best rate available. Shop it.
Start with a comparison site. Ratehub shows current rates from multiple lenders side by side once you enter your province, purchase price, and down payment. Wealthsimple Mortgage is worth a look too, particularly if your TFSA or FHSA already lives there.
Then talk to a broker. A mortgage broker works for you. A bank's mortgage specialist works for the bank. Brokers reach dozens of lenders, including credit unions and monoline lenders with no branches, and they are paid by the lender, so there is usually no cost to you. If you are self-employed or your income is irregular, a broker earns their keep. If you are in ministry, that irregular-income profile comes with the clergy residence deduction, which changes your reported income in ways worth understanding before you apply.
Then let your own bank compete. They may match or discount to keep you. A rate 0.15% lower on a $400,000 mortgage saves roughly $12,000 over 25 years, which is worth one phone call. The same discipline applies at every term end: your mortgage renewal is where most Canadians quietly overpay by signing whatever arrives in the mail.
Closing Costs Nobody Warns You About
- Land transfer tax, after rebate $2,475
- Legal fees $2,000
- Moving $1,500
- Immediate repairs $1,500
- Inspection $500
- Title insurance $400
Here is what you are looking at:
Land Transfer Tax
Every province charges a land transfer tax when you buy property. In Ontario, the tax on a $500,000 home is $6,475. If you are buying in Toronto, you pay the provincial tax plus an additional municipal land transfer tax, which roughly doubles the bill.
Ontario first-time buyer rebate: First-time homebuyers in Ontario can claim a rebate of up to $4,000 on the provincial land transfer tax. In Toronto, there is an additional municipal rebate of up to $4,475. These rebates are applied at closing, reducing what you owe. Make sure your lawyer applies them.
Other provinces have their own structures. Alberta and Saskatchewan do not charge land transfer tax but do have land title transfer fees (significantly lower). British Columbia charges a property transfer tax with a first-time buyer exemption on homes up to $500,000 (partial exemption up to $525,000).
Legal Fees
Your real estate lawyer handles the closing. Expect to pay $1,500 to $2,500 for legal fees plus disbursements (title searches, registration fees, courier costs, etc.). Get a quote before you choose a lawyer. Prices vary.
Title Insurance
Title insurance protects you against defects in the property's title: things like fraud, zoning violations, or undisclosed liens. It is a one-time premium of approximately $300 to $500. Most lenders require it. It is worth having regardless.
Home Inspection
As discussed above: $400 to $600. Pay it gladly. It is the best money you will spend in the entire process.
CMHC Insurance
If your down payment is less than 20%, the mortgage default insurance premium (2.8% to 4.0% of the mortgage) is added to your mortgage balance. You do not pay it out of pocket at closing. Instead it increases your total mortgage and therefore your monthly payment.
Moving Costs
Professional movers for a local move typically cost $800 to $2,000 depending on the size of your home and distance. DIY with a rental truck is cheaper but costs you time and your back.
Immediate Repairs and Setup
Changing locks, minor repairs, smoke detectors, tools, cleaning supplies. Budget at least $1,000 to $2,000 for the first month of ownership. Something will need attention immediately. It always does.
The Total Picture
On a $500,000 home in Ontario, a reasonable estimate of closing costs:
| Cost | Estimate |
|---|---|
| Land transfer tax (after rebate) | $2,475 |
| Legal fees and disbursements | $2,000 |
| Title insurance | $400 |
| Home inspection | $500 |
| Moving costs | $1,500 |
| Immediate repairs | $1,500 |
| Total | ~$8,375 |
That is on top of your down payment. If this number surprises you, good. Now you can plan for it.
Common Mistakes Christian Homebuyers Make
Plenty of good, faithful men make these mistakes. Every single one is avoidable.
1. Buying Too Much House
"God will provide" is a statement of faith, and it was never meant to double as a mortgage qualification strategy. If you can only afford the payments under a best-case scenario, one with no job loss, no rate increase, no major repairs, no new baby, then what looks like faith is really just risk you cannot afford, covered over with spiritual language.
Buy less house than the bank says you can. You will sleep better. You will give more freely. You will have margin for the things that actually matter.
2. Skipping the FHSA
Every year you do not contribute to an FHSA is a year of tax deductions and tax-free growth you will never get back. If you are a first-time buyer and you have not opened one, this is costing you real money. The account takes ten minutes to open. Do it today.
3. Not Getting Pre-Approved First
House-hunting without a pre-approval is like grocery shopping without knowing your budget. You will fall in love with something you cannot afford, and the emotional pain of losing it will push you to make a bad financial decision.
Get pre-approved before you look at a single listing. Know your number.
4. Waiving the Inspection to Win a Bidding War
In a competitive market, sellers prefer offers with no conditions because they close faster and with less risk. Buyers respond by waiving inspections to make their offers "cleaner."
This is one of the most dangerous financial decisions you can make. You are committing hundreds of thousands of dollars to a property you have not examined. A home with a failing foundation, mould in the walls, or an aging septic system can cost tens of thousands in repairs, and you have no recourse once you close without an inspection condition.
Proverbs 14:15: "The simple believe anything, but the prudent give thought to their steps."
If waiving the inspection is the only way to get the house, it is not the right house.
5. Forgetting to Budget for Tithing After the Mortgage
This happens more often than anyone admits. A couple stretches to buy a home, and suddenly the mortgage payment, property tax, insurance, and utilities consume so much income that giving becomes the first thing to go. The tithe drops. The offering plate gets skipped. The generosity that characterized their pre-homeownership life quietly disappears.
This is exactly the "slave to the lender" dynamic. Your mortgage should not displace your giving. If it does, you bought too much house. Before you sign anything, the Financial Health Scorecard is a free worksheet that walks you through take-home pay, giving, and a real monthly baseline: the three things you need locked in before a lender tells you what you can "afford."
Build your budget with giving as a non-negotiable line item before you ever settle on a housing number.
6. Ignoring the True Cost of Ownership
A mortgage payment is not the total cost of owning a home. Property taxes, insurance, utilities, maintenance, and repairs add significantly to the monthly number. A common rule of thumb is to budget 1% to 2% of your home's value per year for maintenance and repairs. On a $500,000 home, that is $5,000 to $10,000 annually, or $400 to $800 per month.
The furnace will die. The roof will need replacing. The dishwasher will flood the kitchen on a Sunday morning. Plan for it.
Build it with your eyes open
None of this is complicated. It is just unfamiliar, and unfamiliar is what lets a bank, an agent, or your own optimism decide things you should be deciding.
So do the boring parts properly. Open the FHSA before you need it. Get the real pre-approval instead of the calculator estimate. Budget for closing costs at the top of the range rather than the bottom. Read the status certificate. Take less than you are approved for.
If you are close to buying, run your numbers through the Rent vs Buy Calculator and check your real take-home against the Tax Calculator.
Psalm 127:1: "Unless the Lord builds the house, the builders labor in vain." Do the work carefully, and hold the result loosely.
Disclosure: This article contains affiliate links. If you sign up or purchase through them, I may earn a small commission at no extra cost to you. I only recommend products I personally use. Full disclosure.
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