Buying a House? Keep These Tips in Mind
It seems like almost every week there’s a new headline about how homes in Canada are now more affordable, thanks to a mix of falling prices and lower interest rates.
One of those two levels are likely to be in favour of buyers. The 2026 Remax Market Outlook expects prices to drop 3.7% this year, and says, “Canadian housing market could be on the upswing looking ahead to 2026, with more buyers preparing to enter the market and home sales expected to increase by 3.4% next year. This follows signs of renewed buyer intent earlier this fall, compared to the first half of the year.”
Meanwhile, the Canadian Mortgage and Housing Corporation’s (CMHC) Outlook notes that Canada’s economy is expected to grow slowly in 2026, as geopolitical and trade uncertainty, significantly lower population growth, soft labour markets and modest income growth weigh on demand. The CMHC outlook states that housing demand is projected to gain momentum while sales stay below historical averages and prices show only modest gains after falling in 2025. It also expects price declines in Ontario.
It is important to note that these outlooks came at the start of the year, before the Iran war. Since then, there have been rumblings in the market that the Bank of Canada (BoC) may raise interest rates in 2026. On the positive side of the aisle, on Tuesday, March 17, 2026, the Canada Revenue Agency (CRA) started accepting applications for the new first-time home buyers’ GST/HST rebate, which provides eligible first-time home buyers with a full or partial rebate of the GST (or the federal part of the HST) on newly constructed or substantially renovated homes. Eligible individuals could get a rebate of up to $50,000.
I don’t have a crystal ball, and so I cannot predict the future, but it seems to me that if you’ve been waiting on the sidelines, hoping that both prices and interest rates continue to fall, the chances of both continuing their downward trajectories unhindered seem slimmer than they were before. If you think that now’s the time to buy, though, there are a few tips and tricks that you should keep in mind.
Tip 1: Make the Most of Government Support
Apart from the $50,000 rebate, the Government of Canada offers many options to Canadian home-buyers, and this is especially true if you’re buying your first house. Here are a few that you should consider, if you are eligible:
First Home Savings Account (FHSA)
The First Home Savings Account is a tool only for first-time home buyers. It is a registered plan which allows you to save to buy or build a qualifying first home tax-free (up to certain limits). It feels almost like a mix of a registered retirement savings plan (RRSP) and a tax-free savings account (TFSA.) Contributions will be tax-deductible, like an RRSP, while qualifying withdrawals will be non-taxable, like a TFSA. Your FHSA participation room in the first year is $8,000, and has a lifetime limit of $40,000. If you are a couple, you can save up to $80,000 combined.
Home Buyers’ Plan (HBP)
If you have not been building up an FHSA and have been diligently contributing to your RRSP, you can consider the Home Buyers’ Plan. According to the Government of Canada website, the HBP is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a specified disabled person. Currently, the HBP withdrawal limit is $60,000 ($120,000 for a couple.)
Double and Stack
According to the Government of Canada website, you can withdraw amounts from your RRSP under the HBP and make a qualifying withdrawal from your FHSA for the same qualifying home, as long as you meet all of the conditions at the time of each withdrawal. This means that as a single person, you can use $40,000 from your FHSA and $60,000 from your HBP to buy a single home. If you’re a couple, that would work out to $200,000.
Home Buyers’ Tax Credit (HBTC)
If you are a first-time home-owner, you also can access the Home Buyers’ Tax Credit (HBTC). This credit is also known as the home buyers amount, or Line 31270. It is a non-refundable tax credit that helps first-time home buyers with some of the costs of purchasing a qualifying home. If you qualify, you could claim an amount of $10,000 on your tax return during the year you purchase your home for a maximum tax credit of $1,500. This credit reduces the federal income tax you may owe, but you will not get a refund for this credit if you do not have any tax payable.
Tax Refund and Rebates
When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax. For conveyances or dispositions that occur before January 1, 2017, the maximum amount of the refund is $2,000. Beginning January 1, 2017, the maximum amount of the refund is $4,000.
Tip 2: Make the Most of Your Mortgage
Few things in life are as stressful as finding, buying, and paying for your dream house. To make things run as smoothly as possible, it makes sense to get some of the financing in place so you’re not in a fix later.
Make Sure You Pass the Stress Test
As if buying a home was not stressful enough, if you need a mortgage, you will need to pass a stress test. The stress tress looks to prove that you can afford payments at a qualifying interest rate which is typically higher than the actual rate in your mortgage contract. You need to pass the stress test even if you don’t need mortgage loan insurance. However, credit unions and other lenders that are not federally regulated do not need to use this mortgage stress test. If you already have a mortgage, you’ll need to pass the stress test if you refinance your home or take out a home equity line of credit. This ensures that you can handle rate increases.
Get Pre-Approved
Before you take on a mortgage, which is typically some of the highest amounts of debt many people take, it is important to understand your debt ratios. The CMHC guidelines state that your monthly housing costs should not exceed 39% of your gross monthly income. Your total debt payments should not exceed 44% of your gross income. To avoid shocks in the middle of your house hunt, it is best to get a pre-approval. This will help you fix a budget for your home, and also allows you to waive financing conditions at the time of purchase.
Decide on Fixed Vs Variable Mortgage Rates
As your shopping around for a mortgage, you’ll hear “fixed rate” or “variable rate” a lot. This is easy to understand. A “Fixed Rate” means your interest rate is locked in for the entire mortgage term, which typically runs from 1-5 years. For the whole term, you’ll pay the same monthly amount, making it predictable. Breaking a fixed mortgage early comes with steep penalties — often 3 months’ interest or an Interest Rate Differential (IRD) calculation, whichever is greater. On the other hand, a “Variable Rate” means your rate fluctuates with the BoC’ overnight rate. When the BoC cuts rates, you pay less; when it raises them, you pay more. Choose fixed if stability and predictability matter most to you. Choose variable if you can stomach some uncertainty and want to bet on rates falling.
Tip 3: Don’t Miss the ‘Other’ Stuff
Buying a house is exciting, scary, overwhelming, and intense. It can be easy to get confused, or caught up in the excitement, and miss out on something important. Most people focus on finding the right house, and getting a mortgage. But that can cost you in the long run. So difficult as it is, you should not forget some other stuff:
Get a Home Inspection
Nothing is less fun than moving into your new home, and having the roof collapse. It is not mandatory, but in this market, where sales are slower, and buyers have more power, it is recommended that you include a home inspection as a condition of your offer.
Plan to Spend Beyond Your Mortgage
Stuff creeps up on you when you buy a house. Expect to pay for less obvious things, like closing costs, taxes, maintenance fees, renovations, moving costs. It is best to have a small fund set aside for these expenses, so you have it when you need it.
You’ll Need Your Deposit Immediately
Maybe this was just a me thing, but I didn’t know that I would need to provide a deposit the day my offer was accepted, or within the next 48 hours. As a result, I ended up scrambling. Don’t be like me – make sure you have your deposit ready to go when you make your offer, up to 5% of the purchase price.
Get a Good Realtor
There are thousands of realtors in Canada. Make sure that whoever you work with is right for you. Buying a house is a huge investment, if you don’t have the right partner on your journey, it could be a difficult road ahead.
Now that you have all you need, happy house hunting!
Disclaimer
This communication is intended solely for general informational and educational purposes. It should not be interpreted as advice or as a recommendation to purchase or sell real estate, make investments, or engage in any specific investment strategy. Decisions related to real estate, taxation, investments, or other financial matters should be made in consultation with a qualified professional.
