First Time Home Buyer Tips for Ontario in 2025

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Buying your first home in Ontario is one of the biggest financial decisions you'll ever make. The good news? There are several government programs and strategies that can save you thousands of dollars and make the process much smoother. Here's everything you need to know as a first time buyer in 2025.

1. Get Mortgage Pre-Approval First

Before you start browsing listings, get pre-approved for a mortgage. This tells you exactly how much you can afford and shows sellers you're a serious buyer. Pre-approval locks in your interest rate for 90 to 120 days, protecting you from rate increases while you shop.

What you'll need: proof of income (pay stubs, T4s, or Notice of Assessment), proof of down payment funds, identification, and a list of your debts and monthly expenses.

2. Take Advantage of the First Home Savings Account (FHSA)

The FHSA is a registered savings account introduced in 2023 specifically for first time home buyers. You can contribute up to $8,000 per year (lifetime max of $40,000), and contributions are tax-deductible — just like an RRSP. The best part? Withdrawals for your first home purchase are completely tax-free.

• Contributions are tax-deductible (reduces your taxable income)
• Investment growth inside the account is tax-free
• Withdrawals for a qualifying home purchase are tax-free
• Can be combined with the RRSP Home Buyers' Plan

3. Use the RRSP Home Buyers' Plan (HBP)

The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSPs tax-free to buy your first home (up from $35,000 as of 2024). If you're buying with a partner who also qualifies, that's up to $120,000 combined. You'll need to repay the amount over 15 years, starting two years after your withdrawal.

4. Ontario Land Transfer Tax Rebate

First time buyers in Ontario can receive a rebate of up to $4,000 on the provincial land transfer tax. If you're buying in Toronto, there's an additional municipal land transfer tax rebate of up to $4,475. That's potentially $8,475 back in your pocket.

To qualify, you must be a Canadian citizen or permanent resident, at least 18 years old, and you cannot have owned a home anywhere in the world previously.

5. Understand the Stress Test

All Canadian mortgage borrowers must pass a "stress test." This means you need to qualify at the higher of your actual mortgage rate plus 2%, or 5.25%. For example, if your lender offers you 4.5%, you must qualify as if the rate were 6.5%. This is designed to ensure you can still afford payments if rates rise.

6. Know Your Closing Costs

Beyond your down payment, budget an additional 1.5% to 4% of the purchase price for closing costs. These include:

• Land transfer tax (minus your first-time buyer rebate)
• Legal fees ($1,500 – $2,500)
• Title insurance ($300 – $500)
• Home inspection ($400 – $600)
• Appraisal fee ($300 – $500)
• Moving costs ($1,000 – $3,000)

7. Work with a Realtor Who Specializes in First Time Buyers

A knowledgeable realtor can help you navigate the process, negotiate the best price, and avoid costly mistakes. As a buyer in Ontario, you typically don't pay your realtor's commission — the seller does. So there's no reason not to have expert representation on your side.