First Time Home Buyer Mortgage

Searching for your first home? You're not alone! With budget considerations and homeownership goals in mind, partnering with our experienced Ottawa mortgage brokers can alleviate financial burdens and simplify the transition to a new chapter.

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At The Mortgage Advisors, we specialize in helping first-time home buyers in Ottawa take confident steps toward homeownership. We’ll guide you through the entire mortgage process, explain the government programs available to you, and help you access incentives and rebates designed specifically for first-time buyers.

Whether you’re just starting your search or ready to get pre-approved, we’re here to help you make smart, informed decisions—and ultimately, secure your dream home.

Down Payment Requirements for First-Time Home Buyers

As a first-time home buyer, you’ll have the option of choosing between a high-ratio (CMHC-insured) mortgage and a conventional (low-ratio) mortgage, depending on your down payment amount and the purchase price of your home.

  • For homes priced up to $500,000, the minimum down payment required is 5% of the purchase price.
  • For homes priced between $500,000 and $1,500,000, you must provide 5% down on the first $500,000 and 10% on the portion of the price above $500,000.
  • For homes priced at $1,500,000 or more, a minimum 20% down payment is required. Mortgage default insurance is not available for properties valued at $1,500,000 and higher.

If you make a down payment of less than 20%, your mortgage is classified as high-ratio and requires you to purchase mortgage default insurance through a provider like CMHC, Sagen, or Canada Guaranty.

Mortgages with 20% or more down are considered conventional (low-ratio) and do not require mortgage insurance.

New for first-time home buyers: If you are purchasing a property with less than 20% down, you may now qualify for an extended 30-year amortization, making homeownership more affordable by lowering your monthly payments.

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Fixed vs. Variable Rate Mortgage

As a first-time home buyer, one of the key decisions you’ll make is whether to choose a fixed or variable interest rate.

Fixed-rate Mortgage

Fixed-rate mortgages offer stability with consistent monthly payments throughout the entire mortgage term. This makes budgeting easier and provides peace of mind, especially in a rising rate environment.

However, fixed-rate mortgages typically come with higher prepayment penalties—often the greater of a three-month interest charge or an interest rate differential (IRD)—if you need to break your mortgage early.

Variable-rate Mortgages

Variable-rate mortgages, on the other hand, are tied to the Bank of Canada’s prime lending rate. Your rate (and potentially your payment) may fluctuate based on changes in the economy.

  • While variable rates can offer lower initial interest costs, they come with less payment predictability.
  • The upside is they offer more flexibility: if you need to break your mortgage mid-term, the penalty is typically just three months’ interest, and you also have the option to convert to a fixed rate at any time without penalty.
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Open vs. Closed Mortgage

When choosing a mortgage, you’ll also need to consider whether to go with an open or closed mortgage.

Open Mortgage

Open mortgages offer the most flexibility. You can pay off the entire mortgage or make unlimited extra payments at any time without penalty. This can be a good option if you plan to sell your home soon or expect a large lump sum of money—such as an inheritance or bonus. However, open mortgages usually come with higher interest rates, making them less common for long-term financing.

Closer Mortgage

Closed mortgages are the most common choice. They typically offer lower interest rates than open mortgages, but come with restrictions on how much extra you can pay toward the mortgage each year. Most lenders allow you to make limited lump-sum payments (e.g., 10–20% of the original mortgage amount annually) or increase your regular payments by a certain percentage. If you break a closed mortgage early, penalties will apply—usually three months’ interest or an interest rate differential (IRD), depending on the lender and term.

Programs and Benefits for First-Time Home Buyersheader decoration

First-time buyers in Ottawa may qualify for a range of financial incentives designed to make homeownership more accessible. These include tax credits, rebates, and government programs that can help reduce your upfront costs and monthly payments.

Note: While most of these incentives are exclusive to first-time buyers, some programs may also be available to individuals re-entering the market after a few years without owning a home.

Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $60,000 (as of 2024) from their Registered Retirement Savings Plan (RRSP) to use toward a down payment on a qualifying home—tax-free at the time of withdrawal.

You have 15 years to repay the amount back into your RRSP, starting the second year after your withdrawal. Annual minimum repayments are required, and any missed repayment amounts will be added to your taxable income for that year.

While this can be a helpful tool for boosting your down payment and reducing your mortgage insurance costs, it’s important to consider the trade-off: withdrawing funds from your RRSP means potentially missing out on compound growth, which could impact your long-term retirement savings.

Be sure to weigh the pros and cons carefully, and don’t hesitate to reach out if you’d like personalized advice on whether the HBP is right for your situation.

First-Time Home Buyer Tax Credit and Land Transfer Tax Rebate

When you purchase your first home, there are a few tax relief options that can help offset the upfront costs:

First-Time Home Buyers’ Tax Credit

You may be eligible to claim the First-Time Home Buyers’ Tax Credit (HBTC) on your income tax return for the year you buy your home. This federal credit provides a $750 rebate, helping to reduce your tax payable.

Land Transfer Tax Rebates

First-time home buyers can also receive a rebate on land transfer taxes, depending on the province or municipality where the home is located. This rebate reduces the tax payable at closing and can make a significant difference.
Here are the maximum rebates currently available in some regions:

  • Ontario: Up to $4,000
  • City of Toronto: Additional municipal rebate of up to $4,475
  • British Columbia: Up to $8,000
  • Prince Edward Island (PEI): Up to $2,000

Each program has its own eligibility criteria, such as being a Canadian resident, not having owned a home before, and living in the home as your primary residence.

First Home Savings Account (FHSA)

The First Home Savings Account (FHSA) is a powerful new way for first-time buyers in Ottawa—and across Canada—to save for a down payment.

If you’re a Canadian resident aged 18 or older and haven’t owned a home before, you can open an FHSA and contribute up to $8,000 per year, with a lifetime contribution limit of $40,000.

Here’s the best part: Contributions are tax-deductible, like an RRSP and withdrawals used to buy your first home are completely tax-free, like a TFSA.

It’s a win-win for growing your savings faster while reducing your tax bill—making it one of the smartest tools available to help you reach homeownership.

First Time Home Buyer Incentive (Now Ended)

This federal program previously offered 5%–10% shared equity contributions to help first-time buyers lower their mortgage payments. While the program officially ended in March 2024, it provided valuable support to many Canadians entering the housing market for the first time.

GST/HST New Housing Rebate

When you buy a newly built home in Canada, or build one yourself, GST or HST is typically added to the purchase price. The GST/HST New Housing Rebate allows eligible buyers to recover a portion of that tax, depending on the price of the home and whether it will be used as a primary residence.

This rebate may apply if you:

  • Purchase a newly constructed home or condo
  • Build a home on land you already own
  • Substantially renovate your existing home

While many first-time home buyers benefit from this rebate, it’s not limited to first-time buyers—any eligible homeowner may qualify.

In most cases, when buying from a builder, the rebate is already included in the advertised purchase price—but it’s still important to confirm how it’s being applied and who receives the benefit.

If you’re considering a newly built home, we can help you determine whether you’re eligible and guide you through the application process.

How to Apply for the First-Time Home Buyer Mortgageheader decoration

Navigating the mortgage process as a first-time home buyer in Canada can feel overwhelming—but with expert guidance from The Mortgage Advisors, it doesn’t have to be. We’ll walk you through every step, from pre-approval to closing, helping you understand your options and make confident decisions.

Who Qualifies as a First-Time Home Buyer in Canada?

Many federal and provincial programs are designed specifically for first-time home buyers—but to access them, you need to meet certain eligibility criteria. While the requirements can vary by program, most share similar conditions, especially for incentives like the First-Time Home Buyers’ Tax Credit and the RRSP Home Buyers’ Plan.

Here’s a general overview of what qualifies you as a first-time home buyer in Canada:

  • You are 18 years of age or older
  • You are a Canadian citizen or permanent resident
  • The property is located within Canada
  • You have not owned a home in the last four years
  • You have not lived in a home owned by your spouse or common-law partner in the last four years
  • You plan to use the home as your primary residence within one year of purchase
  • You can provide documentation proving the purchase of the property

Every buyer’s situation is unique. If you’re unsure whether you qualify or want to explore your options, our team is here to help you get clarity and move forward with confidence.

First-Time Home Buyer Mortgage Application Process

Buying your first home is exciting—but knowing the steps ahead of time can make the process smoother and less stressful. Here’s what to expect:

1. Check Your Credit Score: Start by reviewing your credit reports with Equifax and TransUnion. A credit score of 680 or higher improves your chances of qualifying for the best mortgage rates. Flag and fix any errors early—your broker can help if needed.

2. Start Saving for Your Down Payment: Figure out how much home you can afford based on your income and monthly expenses. While you can buy with as little as 5% down, putting down 20% or more can help you avoid mortgage insurance costs and lower your monthly payments.

3. Get Pre-Approved: Connect with a mortgage broker, like The Mortgage Advisors, to get pre-approved before you start house hunting. A pre-approval shows sellers you’re serious—and gives you a clear budget to shop with.

4. Explore First-Time Buyer Incentives: Ask your broker about federal and provincial programs like the RRSP Home Buyers’ Plan, the First Home Savings Account (FHSA), GST/HST New Housing Rebate, and Land Transfer Tax Rebates in Ontario. These programs can significantly reduce your upfront costs.

5. Compare Mortgage Options: Your mortgage broker will review all available options from a wide range of lenders. They’ll help you weigh the pros and cons of different terms, interest rates, and payment structures—so you find a mortgage that fits your goals.

6. Submit Your Application: Once you’ve made an offer on a home, your broker will submit your mortgage application. You’ll need to provide documents such as:

  • Proof of income (e.g., pay stubs, employment letters)
  • Recent bank statements
  • Valid ID
  • Details of any debts or assets

7. Get Approved and Sign the Paperwork: If your mortgage is approved, your broker will go over your mortgage commitment with you. You’ll also work with your real estate lawyer to finalize the closing details and sign all the necessary documents.

Pro Tips for First-Time Home Buyers in Ottawa

Buying your first home is a major financial decision—these tips can help you navigate it with confidence:

  • Aim for a balanced down payment. While 5% may get you in the door, saving closer to 20% can reduce long-term costs. Just be sure you don’t stretch yourself too thin.
  • Get a gift letter if needed. Receiving part of your down payment as a gift? You’ll need to provide a signed letter confirming the funds don’t need to be repaid. We can provide the template.
  • Maintain strong financial health. Lenders look at your credit history, debt levels, income, and assets. Avoid new debt or major purchases during the mortgage process.
  • Budget for closing costs. In addition to your down payment, be prepared for legal fees, land transfer taxes, inspections, and property tax adjustments—typically 1.5% to 1.75% of the purchase price.
  • Explore alternative lenders if needed. If you’re self-employed, have credit challenges, or fall outside traditional lending guidelines, private lenders or Alternative lenders may be a solution. We’ll walk you through your options and risks.

Why Work with The Mortgage Advisors for Your First Home in Ottawa?

Buying your first home is a big milestone—and having the right mortgage partner can make all the difference.

At The Mortgage Advisors, our team of certified and fully licensed mortgage professionals is here to simplify the process and guide you every step of the way. We’ll help you understand your options, explain the fine print, and ensure you feel confident in your decisions.

Here’s how we support first-time buyers:

  • Review your credit and qualifications
  • Determine your affordability and ideal price range
  • Build a strategy for your down payment and closing costs
  • Compare mortgage options from multiple lenders
  • Provide clear, expert recommendations tailored to your goals
  • We’ll also coordinate with lawyers, home inspectors, lenders, and other key professionals to keep everything moving smoothly from pre-approval to closing. And don’t forget—you can use our handy [Mortgage Calculator] to start exploring payments and possibilities right now.

If you’re a first-time home buyer in Ottawa, let’s connect. We’re here to help you navigate the journey with confidence—and get the keys to your first home with the best mortgage for your future.

When you work with a certified and fully licensed mortgage broker, it’s easier to narrow down choices and find the right solutions for your budget and needs. Feel free to ask questions, clear up any terminology, and learn about the mortgage products available from lenders today. Our team is happy to provide ample insights and recommendations. Not only that, but working with a mortgage broker means having an experienced, certified professional who knows the market by your side, helping you apply for pre-approval, utilizing lender connections, and securing the best possible rates.

We can assist with the following and more:

  • Review of credit qualifications
  • Discuss your affordability and budget
  • Roadmap for optimal down payment and closing costs
  • Analyze available mortgage options and provide informed recommendations

Our team will also work closely with inspectors, lawyers, lenders, and other professionals commonly associated with home purchases, keeping you up-to-date as we move through the process. Also, feel free to use our very own Mortgage Calculator tool.

Ready to speak to a Mortgage Advisor about your first time home buyer mortgage options?

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