First-Time Home Buyer Mortgage in Ottawa: A Practical Guide
Buying your first home in Ottawa involves more than finding a listing. This guide covers how much you need to save, how lenders decide what you can borrow, the government programs available, and the order to do things in so you can make offers with confidence.
How much down payment do you need?
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% of the price |
| $500,000 to $1.5 million | 5% of the first $500,000 plus 10% of the amount above $500,000 |
| $1.5 million or more | 20% of the price |
If your down payment is under 20%, your mortgage must be insured against default. The premium is a percentage of the mortgage, usually added to the mortgage amount. Try different scenarios in our mortgage calculator.
Government programs for first-time buyers
- First Home Savings Account (FHSA): You can contribute up to $8,000 a year, up to $40,000 in total. Contributions are tax-deductible and qualifying withdrawals for a first home are tax-free. See the Canada Revenue Agency page.
- Home Buyers’ Plan (HBP): You can withdraw up to $60,000 from your RRSPs to buy a first home and repay it over 15 years. See the CRA page.
- Ontario land transfer tax rebate: First-time buyers can get a rebate of up to $4,000. Use our land transfer tax calculator.
- Longer amortization: First-time buyers can choose 30-year amortizations on insured mortgages, which lowers payments but increases total interest.
The mortgage stress test
Lenders must check that you could still afford your payments if rates rose. You generally qualify at the greater of your contract rate plus 2 percentage points or 5.25%. This is why the amount you qualify for can be lower than the amount you would be comfortable paying. A broker can show how your qualifying amount changes with your debts and income.
Closing costs to budget for in Ottawa
| Cost | What to expect |
|---|---|
| Ontario land transfer tax | Tiered by price. Ottawa has no additional municipal tax. |
| Legal fees and disbursements | Lawyer or notary to register the transfer and mortgage. |
| Title insurance | One-time premium, usually arranged by your lawyer. |
| Home inspection | Paid before you finalize the purchase. |
| Appraisal | Sometimes required by the lender, and sometimes covered by them. |
| Adjustments | Reimbursing the seller for prepaid property taxes or utilities. |
| Moving and utilities setup | Set-up fees and moving costs. |
A common rule of thumb is to budget roughly 1.5% to 4% of the purchase price for closing costs on top of your down payment, though your actual amount depends on the price and your situation.
Step by step: from saving to keys
- Check your credit and correct any errors.
- Open an FHSA and set a savings plan for the down payment and closing costs.
- Get a pre-approval with a rate hold. See our pre-approval guide.
- Find a home and make an offer with your realtor, with financing conditions if needed.
- Submit your full application and documents to the lender.
- Arrange insurance, a lawyer and a home inspection.
- Close and get your keys.
Frequently asked questions
Can I buy a home in Ottawa with 5% down?
Yes, if the price is $500,000 or less you need 5% down. For prices between $500,000 and $1.5 million you need 5% on the first $500,000 and 10% on the rest. You also need mortgage default insurance and must pass the stress test.
What credit score do I need for a first mortgage?
Many lenders look for a score of 680 or higher for their best rates, though some lenders accept lower scores at higher rates. Insurers and lenders also look at your payment history and debts.
Can I use my RRSP and FHSA together?
Yes. Eligible first-time buyers may be able to combine an FHSA withdrawal with an RRSP Home Buyers’ Plan withdrawal, subject to each program’s rules.
Do first-time buyers pay land transfer tax in Ontario?
Yes, but eligible first-time buyers can receive a rebate of up to $4,000, which fully covers the tax on homes up to about $368,000. Ottawa has no municipal land transfer tax.
How long does a mortgage pre-approval last?
Many lenders hold the quoted rate for 90 to 120 days. Your approval also depends on your finances staying the same until closing.
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