Your first home in Canada

A home of your own

Buying property in Canada can be complex and stressful unless you do it right


This article was updated on June 27, 2017.

The ultimate goal for many immigrants who come to Canada is to buy their own home. “Homeownership is often a top priority for new immigrants,” says Janet Gray, an Ottawa-based financial planner and Money Coach. “Buying a place offers a sense of accomplishment and quickly establishes roots, but I caution anyone about taking this big step without first putting the pieces in place.” Even if Canadian homes appear very affordable—especially when compared to the housing costs in some foreign cities, such as Hong Kong—the cost of the home can skyrocket without proper planning. “Getting stable jobs and establishing good Canadian credit are essential for making homeownership work,” says Gray.

Most immigrants start off renting an apartment. As a general rule, the Canada Mortgage and Housing Corporation (CMHC) says that your entire monthly housing costs (rent as well as utilities such as heat, electricity and water) should be less than 42% of your household income before taxes. Before renting, ask if utilities are included in the rent, and if not, how much will these services cost, on average. Check to see that everything in the apartment works properly, such as front door locks, taps, toilets and appliances.

Before you sign the lease, make sure you understand everything on it. It’s common for a tenant to sign a lease agreeing to rent the apartment for one year, and after that the lease is renewed monthly. You usually need to give the landlord a damage deposit equivalent to one month’s rent to cover potential injury done to the unit. You should ask to get this deposit back if the landlord finds no damage when you move out. Just know that landlords cannot request an application fee from prospective tenants, which is a sum of money paid just to apply to get a rental apartment. If you’re asked to pay just to fill out a rental application, consider looking for an apartment elsewhere.

Can you afford to buy?

If you’re looking to buy a home, make sure you’re in it for the long haul. Rising real estate prices in the last decade have convinced many people that home prices can only go up, but there’s no guarantee they will always be rising. Real estate is usually a good investment because if you stick with it, you will eventually pay off your mortgage and live rent-free, but you shouldn’t necessarily assume that your home’s value will zoom upwards.

When figuring out how much you can spend on a home, remember that your monthly housing costs shouldn’t be more than 35% of your monthly income before taxes—the Canada Mortgage and Housing Corporation (CMHC) has tools on its website to help you with the calculations. You’ll also want to understand how realtor fees work. In Canada, the buyer doesn’t directly pay the realtor: the commission is paid by the seller and divided between the buying and selling realtors.

When immigrant Fernando Margueirat learned that typically realtors in Canada get 5% of the sale price—a much higher rate than his home country of Argentina—he changed his home-hunting strategy. “Originally I was going to start by buying a small apartment and then sell it three or four years later,” says Margueirat. “When I realized that 5% would be lost in commissions, I decided to start with something bigger.”

Homebuyers should also factor in another 1.5% to 4% for other closing costs, such as lawyer or notary fees and land transfer taxes. You’ll also want to spend another $400 to $800 to have the property inspected before you close the deal to make sure there are no major problems with the house.

You can buy a home with just a 5% down payment and a 25-year mortgage, but Edmonton-based financial educator Jim Yih advises against it. “Like any first-time home buyer, immigrants need to be careful they don’t get overextended. I don’t think you should buy a home unless you can put 10% down. Make sure you can afford the payments and more.” If you put less than 20% down, you’ll need to pay for mortgage loan insurance that protects the bank if you default: with 10% down on a $350,000 home, expect an extra $9,765 or so in fees.

Picking a mortgage

Make sure you shop around for the best rate on your mortgage by talking with several banks or a mortgage broker. There are two main types of mortgages to choose from: With a fixed-rate mortgage, your payment amounts won’t change during the term of the mortgage. This type of mortgage has a slightly higher interest rate, but gives you peace of mind because your payments won’t go up if interest rates suddenly surge. However, unlike in some countries, where it’s common to get decent rates on a 30-year fixed-rate term, in Canada, competitive fixed-rates are only found on terms of two to five years; extend the term beyond that time and you’re looking at paying a much higher mortgage throughout the entire length of the term

With a variable-rate mortgage, the interest you pay fluctuates with market rates. You’ll start with a cheaper rate, but you have to accept the risk that your payments could increase. “If you go for a variable rate, make sure you could still afford your mortgage if rates rose by 1%,” says Yih. If you can make extra payments or increase the amount you pay each month, you’ll save big on interest over the course of your mortgage.


1. Overview
2. Get job experience
3. Build a credit score fast
4. Property buying tips
5. Pay less tax
6. Invest wisely
7. Insurance to buy
8. Finding childcare
9. Avoid scams
10. Free resources
11. Getting started checklist