Table of Contents
Introduction
Buying your first home in Canada can feel overwhelming — especially when you're still learning how the system works. The good news? Canada has a number of programs specifically designed to make homeownership more accessible, and a government agency called CMHC sits at the centre of it all.
Whether you're a permanent resident who just got your status, or a newcomer who has been building roots here for a few years, understanding these programs could save you thousands of dollars and help you get into your first home sooner than you think.
This guide breaks it all down simply, so you can make confident, informed decisions.
What Is CMHC?
CMHC stands for the Canada Mortgage and Housing Corporation. It is a federal Crown corporation — meaning it's owned and backed by the Canadian government — and its job is to make housing more affordable and accessible for people across Canada.
Think of CMHC as a bridge between you and your lender (the bank or credit union giving you a mortgage). It doesn't lend you money directly, but it plays a crucial role behind the scenes that can make it possible for you to buy a home even when you don't have a large down payment saved up.
CMHC also researches Canada's housing market, provides information to renters and buyers, and runs several programs aimed at helping Canadians — including newcomers — find stable, affordable housing.
How CMHC Mortgage Insurance Works
In Canada, if your down payment is less than 20% of the home's purchase price, your lender is legally required to have mortgage insurance in place. This is where CMHC comes in.
Mortgage insurance protects the lender — not you — if you were ever unable to make your payments. But here's why it's a good thing for you: because the lender's risk is covered, they are willing to approve your mortgage even with a smaller down payment. Without mortgage insurance, most banks would require you to have 20% or more saved before they'd give you a loan.
How much does it cost?
The insurance premium is added to your mortgage, so you don't pay it all at once. The amount depends on how much you put down:
Down Payment | Insurance Premium |
|---|---|
5% – 9.99% | 4.00% of the mortgage |
10% – 14.99% | 3.10% of the mortgage |
15% – 19.99% | 2.80% of the mortgage |
Example: If you're buying a $500,000 home with a 5% down payment ($25,000), your mortgage would be $475,000, and the CMHC premium would be $19,000 — added to your mortgage, not paid out of pocket upfront.
Important to know: CMHC mortgage insurance only applies to homes priced under $1.5 million. You also need a minimum credit score of 600, and the home must be in Canada and will be your primary residence.
The First Home Savings Account (FHSA)
The First Home Savings Account is one of the best tools available for first-time buyers in Canada, and it was introduced in 2023.
Here's what makes it special: it combines the benefits of two other savings accounts — the RRSP and the TFSA — into one account designed specifically for buying your first home.
How it works:
You can contribute up to $8,000 per year, with a lifetime maximum of $40,000
Your contributions are tax-deductible, meaning they reduce the income you pay tax on each year (just like an RRSP)
Your money grows tax-free inside the account
When you use the money to buy your first home, withdrawals are completely tax-free (just like a TFSA)
In other words, you save on taxes going in, and you pay no taxes coming out. That's a genuine financial benefit you won't find in a regular savings account.
Who qualifies?
You need to be a Canadian resident, at least 18 years old, and a first-time home buyer (meaning you haven't owned a home you lived in during the current or previous four calendar years). Permanent residents and those with qualifying immigration status are eligible.
The Home Buyers' Plan (HBP)
The Home Buyers' Plan has been around since 1992 and is a well-known tool for first-time buyers. It lets you withdraw money from your RRSP (Registered Retirement Savings Plan) to use toward buying or building your first home.
As of 2024, you can withdraw up to $60,000 per person (or $120,000 for a couple) from your RRSP without paying any tax on it at the time of withdrawal.
The catch: You need to pay the money back into your RRSP over the following 15 years, starting two years after the withdrawal. If you miss a yearly repayment, that amount gets added to your income and taxed.
This program works best if you already have money in your RRSP. If you're a newer arrival and haven't had time to build up RRSP savings yet, the FHSA (above) may be a better starting point for you.
The First-Time Home Buyer Incentive
The First-Time Home Buyer Incentive was a federal shared equity program — meaning the government would contribute 5% or 10% toward your home purchase in exchange for a share of your home's value when you sell or after 25 years.
Important note: As of March 2024, this program has been discontinued and is no longer accepting new applications. If you applied before the deadline, your application is still being processed. For new buyers, the FHSA and Home Buyers' Plan are now the primary federal tools available.
The Land Transfer Tax Rebate
When you buy a property in Canada, you typically pay a land transfer tax to the provincial government. It's calculated as a percentage of the purchase price and can be a significant amount.
The good news for first-time buyers is that several provinces and municipalities offer a rebate (refund) of this tax — either partially or in full.
Key rebates to know:
Ontario: First-time buyers can receive a rebate of up to $4,000 on provincial land transfer tax. If you're buying in Toronto, there is also a Municipal Land Transfer Tax with a separate rebate of up to $4,475.
British Columbia: A full exemption on the first $500,000 of a home's value for first-time buyers purchasing a home priced under $835,000.
Prince Edward Island: Full rebate of land transfer tax for first-time buyers.
Other provinces have their own rules, and some (like Alberta and Saskatchewan) don't have land transfer tax at all. Ask your real estate lawyer or notary about what applies in your province.
Do These Programs Apply to Newcomers?
This is one of the most common questions — and the answer is mostly yes, with a few conditions.
CMHC mortgage insurance: Available to permanent residents and non-permanent residents with a valid work permit. Non-permanent residents may need a larger down payment (at least 10%) and will face slightly different qualification rules.
First Home Savings Account (FHSA): Available to Canadian residents who are at least 18, including permanent residents. You must have a Social Insurance Number (SIN) and file a Canadian tax return.
Home Buyers' Plan (HBP): Available to Canadian residents, including permanent residents, as long as you have RRSP savings and meet the first-time buyer definition.
Land transfer tax rebates: Generally available to Canadian citizens and permanent residents. Some provinces have additional residency requirements — check with your province.
One important thing to know: Many newcomers worry that not having a long credit history in Canada will hold them back. This is a real challenge, but not an impossible one. Building your Canadian credit score over 12–24 months before applying for a mortgage can make a significant difference. Some lenders also accept international credit history or alternative credit evidence for newcomers.
Practical Tips & Next Steps
You now understand the landscape. Here's how to turn that knowledge into action.
Start saving now — even a little:
The FHSA allows you to open an account and carry forward unused contribution room. Opening your FHSA as early as possible — even if you can only contribute a small amount — starts the clock on your tax benefits. Talk to your bank or a financial institution about opening one.
Get pre-approved before you start shopping:
A mortgage pre-approval tells you exactly how much you can borrow and at what rate. It also shows sellers you're a serious buyer. You can get pre-approved through most Canadian banks, credit unions, or a mortgage broker. Bring your T4s (tax slips), pay stubs, SIN, and two years of tax returns.
Work with a mortgage broker who knows newcomer situations:
Not all lenders treat newcomers the same way. A good mortgage broker can compare options across many lenders and find one that fits your specific situation — including those that specialize in newcomer mortgages. This service is typically free to you, as brokers are paid by the lender.
Build your credit proactively:
If you haven't already, get a Canadian credit card and use it regularly for small purchases — then pay it off in full each month. After 12 months of consistent, on-time payments, your credit score will be in a much stronger position for mortgage applications.
Work with a real estate lawyer or notary:
In Canada, every home purchase involves a lawyer (or notary in Quebec). They handle the paperwork, confirm the title is clean, and make sure your land transfer tax rebate is applied correctly. Budget roughly $1,500–$2,500 for legal fees depending on your province.
Ask about provincial and municipal programs:
Beyond the federal programs covered here, many provinces and cities have their own first-time buyer grants, rebates, and down payment assistance programs. Check your province's housing or finance ministry website, or ask your mortgage broker to walk you through what's available where you live.
The most important step: Don't wait until you feel "ready" to start learning. Every month you understand these programs better is a month closer to having the keys to your own home. Canada's system is designed to help you — take advantage of it.
Buying a home is one of the biggest steps you'll take in your new life in Canada. Take your time, ask questions, and don't hesitate to seek professional advice. For more guides on building a confident life in Canada, keep reading True North Collective.