Buying a home is a major milestone and something that a lot of people dream about.
The process of saving, knowing which accounts to fund, and understanding Ontario government incentives can be daunting. At MNK Financial, we help families, business owners, and individuals prepare for this step.
Step 1: Define your “why”
Owning a home seems like the first logical step when you start earning money. It’s important to ask yourself why you want to buy your first home.
Are you interested in building equity instead of paying rent?
Are you looking for a place to grow your family?
Having a clear reason keeps you focused when the process feels overwhelming, it also keeps you disciplined to stick to a realistic budget. For example, if you are looking for a place to grow your family, you can look for a place where you can renovate the basement later to save on buying a fully renovated home with a basement up front.
Step 2: Costs associated with buying a home
There are two types of costs that you should consider when planning for a home.
1. One-time purchases
One-time purchases are expenses you will pay around the time you purchase your home.
These include:
a) Down payment
The federal government has set minimums based on the price of the house
- If the purchase price is less than $500,000, a minimum downpayment of 5% is required.
- If the purchase price is between $500,000 and $1,499,999, the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.
- If the purchase price is $1,500,000 or more, the minimum down payment is 20%.
If you put plan to put down less than 20% of the purchase price, you will also need CMHC mortgage insurance because you are at a higher risk of defaulting.
b) Land transfer tax
Ontario charges a provincial land transfer tax on any property purchase.
c) Closing costs
These costs include:
- Legal fees and disbursements
- Title insurance
- Home inspection
- Appraisal
d) Moving and set up costs
Decorating and moving furniture can add up. These are some costs you will incur before moving into your home
- Movers
- New furniture and appliances
- Fees to set up your utilities, home insurance, etc.
When you work with a wealth advisor, they know to include these costs to give you a realistic budget of what you need to save and what you are likely to spend within the first couple of months of purchasing your place.
2. Monthly costs
These are recurring payments that you will have to pay monthly.
a) Mortgage payments
These payments are driven by the house purchase price, down payment, interest rate, and amortization.
b) Property taxes
Taxes are determined by the home’s assessed value and multiplied by the municipal tax rate.
c) Home insurance
Keep in mind that your work or university/college may have discounts with different insurance providers, which can lower your cost.
d) Utilities
Utilities include electricity, gas, water, and internet.
e) Maintenance fee
Maintenance fees are determined by the size of your unit, building amenities, and the overall budget set by the condo board.
f) Maintenance and repairs
Assume 1% of your total house value for all maintenance and repairs.
Step 3: Understand if you qualify for “first-time home buyer” status
Qualifying as a “first-time home buyer” allows you to be eligible for Ontario programs and incentives.
To qualify, you must agree with both statements:
- You or your partner (spouse or common-law partner) have not owned a home or lived in one owned by your partner in the current year or the past four years.
- You intend to use your home your principal residence within one year of purchasing it.
When you qualify as a first-time home buyer, you get to take advantage of
a) Home Buyers’ Plan (HBP)
The Home Buyer’s Plan is a RRSP program that allows you to withdraw $60,000 per person from your RRSP, tax-free. You can use this money for your down payment, and it needs to be repaid over 15 years. If repayments are not made, the shortfall is added to your taxable income.
b) First Home Savings Account (FHSA)
An FHSA is a new powerful tool to save tax-efficiently for your first home. Like your RRSP, contributions are tax-deductible, and withdrawing is tax-free for a home purchase. You can contribute a maximum of $8000 per year to the account, with a lifetime contribution limit of $40,000. If you under contribute in some years, that room stays open for you to overfund in later years if you choose. The earlier you open a FHSA account, the more time you have to contribute and grow your investment. An FHSA account must be closed after the 15th year of opening the account or when you turn 71.
c) Land Transfer Tax Refund
First-time buyers in Ontario qualify for a rebate on land transfer tax and if you are buying in Toronto, the transfer tax is even higher. If you are buying a house with a partner, both of you can qualify for a tax refund.
d) First-Time Home Buyers’ Tax Credit
Ontario allows a non-refundable tax credit of $1500, which allows eligible individuals to claim a $10,000 amount on their tax return to help with closing costs of the house.
Step 4: Plan Your Financing Strategy
Owning a home isn’t about qualifying for a mortgage, it’s about having a clear financial strategy that aligns with your long-term goals.
An advisor can help you build a personalized savings plan, budget for the true cost of ownership, and balance your dreams of owning a home with security for your future.
MNK Financial won’t just help you buy a house; we will help you buy it confidently while knowing your finances are structured to sup0port your lifestyle today and your wealth goals tomorrow.
What can you do today?
If you are working, open a RRSP account and a FHSA account now. You have until December 31st to open these accounts and begin contributing. The earlier you open these accounts, the more time you are giving yourself to save money and invest your savings tax-free. Call us at 905-542-1477 if you want to book an appointment and learn more about how to create a savings plan to buy your first home.
Please keep in mind that this article was written in September 2025 and Ontario grants, federal laws, and Ontario laws can change year to year. Please be sure to refer to the newest changes for the year you are making your purchase to ensure that you are following all new regulations that may take place.
About the author:
Manish Kanani B.Sc., CLU, CH.F.C., CFP, CIM
Portfolio Manager, Managing Partner
Q WEALTH PARTNERS
37+ years of wealth experience
