Buying a House in Canada: Step-by-Step Guide
Buying a home in Canada follows the same federal rules in every province: a minimum down payment, a mortgage stress test, and default insurance when you put less than 20% down. Here's the process from budgeting to closing.
1. Work out your budget
Lenders compare your housing costs to your income. Gross debt service (mortgage payment, property tax, heating and 50% of condo fees) should be at most 39% of gross income, and total debt service, which adds other debts, at most 44%. The qualifying rate is the higher of your contract rate plus 2 percentage points or 5.25%.
2. Save a down payment
You need at least 5% of the first $500,000, plus 10% of any part of the price above $500,000. At $1,500,000 or more, the minimum is 20%.
First-time buyers can save in a First Home Savings Account (up to $8,000 a year, $40,000 lifetime) and withdraw up to $60,000 from RRSPs under the Home Buyers' Plan.
3. Budget for insurance and closing costs
With less than 20% down, a default insurance premium is usually added to the mortgage. Closing costs come on top of the down payment: CMHC lists legal fees starting around $500, a home inspection of about $500, an appraisal of $250–$350 if required, and land transfer or registration taxes that vary by province.
4. Get pre-approved, then shop
A pre-approval tells you the maximum a lender may lend and often holds a rate for a period. Make your offer conditional on financing and inspection if you can.
5. Close
Your lawyer or notary registers the mortgage and title and handles the funds. Property insurance must be in place on closing day.
Today's borrowing costs
On new uninsured mortgages, Canadians paid an average of 4.58% (Aug 2026) for fixed terms of five years or more and 3.90% (Aug 2026) for variable rates, according to the Bank of Canada. Insured borrowers paid 4.12% and 3.74%.
The Bank of Canada's policy rate is 2.50% (Nov 11, 2026) and the banks' prime rate is 4.70% (Nov 11, 2026). Variable rates move with prime; fixed rates follow Government of Canada bond yields, with the 5-year yield at 3.46% (Nov 10, 2026).
Taxes on the purchase
Most provinces charge a land transfer tax or registration fee when title changes hands, and some cities add their own. Newly built homes also carry GST or HST, which may be partly rebated. Resale homes generally do not.
Common mistakes to avoid
- Budgeting for the down payment but not closing costs
- Shopping before you know your stress-tested maximum
- Waiving the inspection or financing condition without understanding the risk
- Taking on new debt, such as a car loan, between pre-approval and closing
Frequently asked questions
What is the minimum down payment in Canada?
You need at least 5% of the first $500,000, plus 10% of any part of the price above $500,000. At $1,500,000 or more, the minimum is 20%.
Do all buyers face the stress test?
Yes, for mortgages from federally regulated lenders. The qualifying rate is the higher of your contract rate plus 2 percentage points or 5.25%.
How long does it take to buy a house?
From an accepted offer, closing typically takes 30 to 90 days, depending on what you and the seller agree. Getting pre-approved and saving the down payment usually takes much longer.
Can I buy with a 30-year amortization?
With less than 20% down, the maximum is 25 years, or 30 years for first-time buyers and buyers of newly built homes. With 20% or more down, lenders set their own limits.
Sources
Rules are summarized in our own words from official publications. Check the source and talk to your lender or a licensed professional before making a decision.
Informational only, not financial advice. Data as of the release snapshot generated 2026-11-12.