The Office of the Superintendent of Financial Institutions (OSFI) requires federally regulated lenders to qualify you at the higher of your contract rate plus 2%, or 5.25%. This stress test ensures you could still afford your payments if interest rates rise. For most Ontario buyers in 2025, it effectively reduces your maximum borrowing power by roughly 20% compared to qualifying at your actual contract rate. Both insured and uninsured mortgages are subject to this rule for new purchases and refinances. As of November 21, 2024, OSFI removed the stress test for uninsured straight switches — when you move your existing mortgage to a new lender at renewal without increasing the mortgage amount.

The minimum down payment in Ontario follows federal rules updated December 15, 2024. For homes up to $500,000 the minimum is 5%. For homes between $500,000 and $1,499,999 it is 5% on the first $500,000 and 10% on the remainder. Homes priced at $1,500,000 or more require at least 20% down and are not eligible for CMHC mortgage default insurance. Putting down less than 20% means you must purchase mortgage default insurance, which adds a premium of 2.80%–4.00% to your mortgage balance (2.80% at 15–19.99% down, 3.10% at 10–14.99%, and 4.00% at 5–9.99%).

CMHC mortgage default insurance protects the lender — not you — if you stop making payments. It is required any time your down payment is less than 20% of the purchase price on homes under $1,500,000 (the insured mortgage cap as of December 15, 2024). The premium is added to your mortgage balance and paid off over the life of your loan: 4.00% for a 5–9.99% down payment, 3.10% for 10–14.99%, and 2.80% for 15–19.99%. Although it adds to your total cost, insured borrowers typically receive lower interest rates from lenders, which can offset a portion of the premium over time.

Ontario levies a provincial Land Transfer Tax (LTT) on every property purchase. The rate is tiered: 0.5% on the first $55,000, 1.0% up to $250,000, 1.5% up to $400,000, 2.0% up to $2,000,000, and 2.5% above that for one-or-two family residences. First-time buyers receive a rebate of up to $4,000, which eliminates the LTT entirely on purchases up to roughly $368,000. Our calculator computes the exact Ontario LTT for your purchase price and applies the rebate automatically when you indicate you are a first-time buyer.

Toronto is the only municipality in Ontario with its own municipal Land Transfer Tax, which applies in addition to the provincial LTT. It uses an identical rate structure to the provincial tax, meaning Toronto buyers effectively pay double land transfer tax on closing. First-time buyers purchasing in Toronto can receive a municipal rebate of up to $4,475. If you are buying anywhere in Ontario outside the City of Toronto's boundaries — including Mississauga, Brampton, Vaughan, or Markham — you only pay the provincial LTT. Our calculator shows both taxes side by side so you know exactly what to budget.

The First Home Savings Account is a registered account introduced by the federal government in 2023 that lets first-time buyers save up to $40,000 tax-free for a home purchase. Annual contributions are limited to $8,000, and unused room carries forward one year. Contributions are tax-deductible (like an RRSP), and qualifying withdrawals for a first home are completely tax-free (like a TFSA). This makes the FHSA one of the most powerful savings tools available to Ontario first-time buyers, potentially reducing your taxable income while building your down payment at the same time.

The RRSP Home Buyers' Plan lets first-time buyers withdraw up to $60,000 per person (as of 2024) from their RRSPs tax-free to put toward the purchase of a qualifying home. Couples can combine their HBP withdrawals for up to $120,000. The funds must have been in your RRSP for at least 90 days before withdrawal. You are required to repay the amount to your RRSP over 15 years starting the second year after the withdrawal; any portion not repaid in a given year is added to your taxable income for that year. The HBP can be combined with the FHSA for maximum impact.

Your maximum mortgage in Ontario is determined by two ratios lenders calculate. The Gross Debt Service (GDS) ratio limits your housing costs — mortgage principal and interest, property taxes, and heat — to no more than 39% of your gross income. The Total Debt Service (TDS) ratio limits all debt payments, including housing costs plus car loans, credit cards, and other obligations, to no more than 44% of gross income. Both ratios are calculated using the stress-test qualifying rate, not your actual rate. As of December 15, 2024, first-time buyers purchasing any property can now access a 30-year insured mortgage amortization (extended from 25 years), which lowers the required monthly payment and can increase the maximum mortgage you qualify for. Our calculator applies both the GDS and TDS caps and shows you the binding constraint for your situation.

Ontario buyers typically pay 1.5%–4% of the purchase price in closing costs on top of their down payment. The largest items are provincial (and Toronto municipal) land transfer tax, legal fees of $1,500–$2,500, title insurance of $200–$400, and a home inspection fee of $400–$600. If your down payment is under 20%, CMHC insurance is rolled into the mortgage but the applicable PST on the premium must be paid at closing. You may also pay a property tax adjustment, utility hookup fees, and moving costs. Budgeting $15,000–$25,000 for a $700,000 purchase is a reasonable starting estimate.

A mortgage pre-approval in Ontario typically takes 24–72 hours once you have submitted a complete application with supporting documents — including recent pay stubs, two years of T4s or NOAs, a letter of employment, and three months of bank statements. Pre-approvals are generally valid for 90–130 days and lock in an interest rate for that period, protecting you if rates rise while you are shopping. Note that a pre-approval is not a guaranteed mortgage commitment; the lender still conducts a full appraisal and underwriting review once you have an accepted offer on a specific property.