First-Time Home Buyer Guide: Toronto & GTA 2026
Your step-by-step roadmap to buying your first home in Toronto. From government programs and down payment strategies to mortgage tips and closing costs—everything you need to succeed in 2026.
Can You Afford to Buy in 2026?
Before diving in, understand the 3 key affordability numbers every first-time buyer needs:
Down Payment
- • 5% minimum on first $500K
- • 10% on $500K-$1M
- • 20% on $1M+
Example: $750K home = $50K (5% of $500K) + $25K (10% of $250K) = $75K minimum
Mortgage Qualification
Your household income determines your max mortgage
Example: $100K income = ~$475K mortgage approval (at 5.5% rate, 25-year amortization)
Closing Costs
Additional costs beyond down payment
Example: $750K home = $22,500-$30,000 for land transfer tax, legal fees, inspections, etc.
📊 Quick Affordability Formula:
Household Income $100K = ~$475K mortgage + $75K down payment (15% saved) = $550K home budget
Add $25K more for closing costs. Total cash needed: ~$100K
2026 Government Programs & Incentives
First Home Savings Account (FHSA)
BEST PROGRAM FOR 2026: Tax-free savings specifically for first home purchase
- Contribution Limit 2026: $8,000/year (up from $8,000 lifetime to $40,000 lifetime cap)
- Tax Deduction: Contributions are tax-deductible (save $2,400-$3,200 in taxes at $100K income)
- Tax-Free Withdrawal: All growth and withdrawals are tax-free when used for first home
- Timeline: Must open account and make first purchase within 15 years
💡 Strategy: Open FHSA in January 2026
Contribute $8,000 on Jan 1, 2026 and claim deduction on your 2025 tax return (filed April 2026). If buying in late 2026, you can contribute another $8,000 = $16,000 total saved with ~$5,000 tax savings.
Home Buyers' Plan (HBP)
Borrow from your RRSP for down payment
- • Withdrawal Limit: Up to $35,000 from RRSP ($70,000 for couples)
- • Repayment: 15 years to repay (no interest), starting year 2 after withdrawal
- • Eligibility: RRSP funds must be in account for 90+ days before withdrawal
- • Tip: Combine with FHSA for maximum down payment power ($40K FHSA + $35K HBP = $75K)
Land Transfer Tax Rebates
Significant savings on closing costs
- • Ontario Rebate: Up to $4,000 provincial land transfer tax refund
- • Toronto Rebate: Additional $4,475 municipal tax refund (if buying in Toronto)
- • Combined Savings: Up to $8,475 total rebate for first-time buyers in Toronto
- • Example: $750K home normally costs ~$16,000 in land transfer tax. First-time buyers pay only $7,500
30-Year Amortization (New for 2026)
Lower monthly payments for first-time buyers
- • Eligibility: First-time buyers purchasing new construction (condos, townhomes)
- • Benefit: ~15% lower monthly payments vs 25-year amortization
- • Example: $600K mortgage at 5.5% = $3,620/month (30-year) vs $4,260/month (25-year)
- • Trade-off: You'll pay more interest over life of mortgage (~$110K extra), but improves qualification
Your 10-Step Home Buying Journey
Get Pre-Approved for a Mortgage (3-6 months before)
Contact 3-5 lenders/brokers to compare rates. Pre-approval shows sellers you're serious and locks in rate for 120 days. Bring: 2 years tax returns, 90 days bank statements, employment letter, ID.
⏰ Takes 1-3 days
Open FHSA and Max Out Contributions (ASAP)
Open FHSA at your bank and contribute $8,000 immediately to start earning tax-free growth. Invest in balanced ETF or high-interest savings if buying within 12 months.
⏰ Do this TODAY
Define Your Must-Haves vs Nice-to-Haves
List non-negotiables: neighborhood, bedrooms, proximity to work/school. Rank priorities. Be realistic about budget vs wishlist to avoid decision paralysis.
⏰ 1-2 weeks
Start House Hunting (Attend 10-15 Showings)
Visit open houses, book private showings, explore neighborhoods at different times of day. Use HouseIndex.ca to browse listings, check sold prices, and contact sellers directly.
⏰ 4-8 weeks
Make an Offer (Include Conditions)
Standard conditions: financing (5-10 days), home inspection (5-7 days), status certificate review (10 days for condos). Deposit typically 5% of purchase price.
⏰ 1-2 days to draft
Complete Home Inspection ($400-$600)
Hire licensed inspector (OAHI certified). Attend inspection to ask questions. Review report and negotiate repairs or price reduction for major issues (roof, foundation, electrical, HVAC).
⏰ 7 days
Finalize Mortgage and Remove Conditions
Submit all documents to lender, get final approval, sign mortgage commitment. Remove conditions in writing by deadline. Your offer becomes firm.
⏰ 5-10 days
Hire Real Estate Lawyer ($1,500-$2,500)
Lawyer handles title search, title insurance ($300), land transfer tax payment, mortgage registration, closing documents. Get referrals from friends/family.
⏰ Hire 4-6 weeks before closing
Arrange Home Insurance ($1,200-$2,000/year)
Shop 3-5 insurers for best rate. Coverage must be in place by closing day. Get quotes 2-3 weeks before closing to allow time for comparison.
⏰ 2-3 weeks before closing
Close and Get Your Keys! 🎉
Final walkthrough 1-2 days before closing. Lawyer calls you to confirm closing. Wire remaining funds to lawyer's trust account. Pick up keys from lawyer or realtor. Move in!
⏰ Closing day
7 Mistakes First-Time Buyers Make (And How to Avoid Them)
❌ Mistake #1: Not Saving Enough for Closing Costs
Problem: Budgeting only for down payment, forgetting $20K-$30K in closing costs.
✅ Solution: Save 3-4% of purchase price EXTRA for: land transfer tax, legal fees, home inspection, appraisal, title insurance, moving costs, immediate repairs/furniture.
❌ Mistake #2: Maxing Out Your Budget
Problem: Buying at the very top of your pre-approval amount, leaving no cushion for emergencies.
✅ Solution: Buy 10-15% below your max approval. If approved for $750K, target $650K-$675K. Leaves room for interest rate increases, job loss, or unexpected repairs.
❌ Mistake #3: Skipping the Home Inspection
Problem: Trying to save $500, then discovering $15,000 in foundation repairs after closing.
✅ Solution: ALWAYS get a home inspection. It's your only protection against hidden issues. Even new builds should be inspected before final closing (PDI - Pre-Delivery Inspection).
❌ Mistake #4: Buying Before You're Ready
Problem: FOMO-driven purchases in hot markets, only to realize you can't afford the lifestyle or need to move in 2 years.
✅ Solution: Plan to stay in first home for 5+ years minimum. Factor in job stability, family planning, and lifestyle needs. It's okay to rent longer if circumstances aren't right.
❌ Mistake #5: Ignoring Condo Fees and Maintenance
Problem: Focusing only on mortgage payment, not realizing $600/month condo fee + special assessments crush your budget.
✅ Solution: Calculate total monthly cost: mortgage + property tax + condo fee + utilities. Read condo status certificate to check reserve fund health and planned special assessments.
❌ Mistake #6: Not Researching the Neighborhood
Problem: Falling in love with a home, then discovering noise, crime, or poor schools after moving in.
✅ Solution: Visit neighborhood at different times (weekday evening, Saturday morning, Sunday night). Check crime maps, school rankings, future development plans, noise levels.
❌ Mistake #7: Emotional Bidding Wars
Problem: Getting attached to a home and overpaying by $50K-$100K in a multiple-offer situation.
✅ Solution: Set a firm max price before viewing. If bidding war starts, remember: there will ALWAYS be another home. Walk away if price exceeds your number. Review recent sold comparables to avoid overpaying.
Your Complete Budget Worksheet
Upfront Costs (Cash Required)
| Item | $600K Home | $750K Home | $900K Home |
|---|---|---|---|
| Down Payment (10%) | $60,000 | $75,000 | $90,000 |
| Land Transfer Tax | $8,475 | $11,725 | $15,725 |
| Legal Fees | $2,000 | $2,000 | $2,500 |
| Home Inspection | $500 | $550 | $600 |
| Title Insurance | $300 | $350 | $400 |
| Moving Costs | $1,500 | $1,500 | $2,000 |
| TOTAL CASH NEEDED | $72,775 | $91,125 | $111,225 |
Monthly Carrying Costs
| Item | $600K Home | $750K Home | $900K Home |
|---|---|---|---|
| Mortgage (5.5%, 25yr) | $3,266 | $4,083 | $4,899 |
| Property Tax | $420 | $525 | $630 |
| Home Insurance | $120 | $150 | $180 |
| Utilities (Heat, Hydro, Water) | $250 | $300 | $350 |
| Maintenance Reserve (1% annually) | $500 | $625 | $750 |
| TOTAL MONTHLY COST | $4,556 | $5,683 | $6,809 |