First Time Homebuyer

Congratulations! You are about to embark on what will likely be one of the biggest purchases of your life—buying your first home! This journey is an exciting one and we’re eager to help make owning your first home as easy as possible.

For more details on things you’ll need to consider, keep reading

How much can I afford to spend?

Your Downpayment

By making a downpayment of 20% of the purchase price, you will be applying for a conventional mortgage. This will typically eliminate the need for you to get mortgage default insurance, provided by the Canadian Mortgage and Housing Corporation(CMHC) or Sagen Financial. In some instances mortgage default insurance will be required even though you have more than 20% down payment. For more information, speak to an Alterna representative.

If you make a downpayment that is less than 20% of the purchase price, it's called a high ratio mortgage. This kind of mortgage must be insured through a mortgage default insurance provider such as CMHC or Sagen Financial. Depending on the size of the downpayment, you'll be charged an insurance premium, which is a percentage of the mortgage amount. For your convenience, you can add this premium to your mortgage and pay for it as part of your regular mortgage payments.

For more details on CMHC or Sagen Financial high ratio mortgage requirements, please refer to their websites.

Your Monthly Payments

For your financial protection, you should spend no more than about 32% of your gross annual income on housing. This means that if your family's gross annual income is $40,000, you should pay approximately $12,000 a year or $1,000 a month for:

  • Mortgage and Interest
  • Property Taxes
  • Utilities
  • Half of any condominium fees that apply

You should also consider other financial liabilities you may have, such as payments on personal loans and credit cards, plus child care expenses or support payments. You'll be much more secure if these payments, along with your housing expenses, add up to less than 40% of your gross annual income.

Pre-approval takes the guesswork out of house hunting

The knowledgeable mortgage professionals at Alterna can tell you exactly how much you can borrow, before you start looking at homes. They will look at your downpayment and the monthly payments you can afford, in order to provide you with this important number.

Once you have your mortgage pre-approval, you'll be ready to house hunt with confidence and make an offer quickly if the perfect place comes along.

What government help is available for first-time homebuyers?

Saving for a downpayment can be made easier through the federal Home Buyers' Plan (HBP). The HBP lets you withdraw, without immediate penalty, up to $35,000 of your Registered Retirement Savings Plan (RRSP) for use as part of the downpayment on a qualifying residence. Then you pay back into your RRSPs over a 15 year period. To qualify, neither you nor your spouse can have owned a home in the last five years.

It is important to note that some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds. Make sure to ask your RRSP issuer for more information about the types of RRSPs you have—and whether or not withdrawals can be made to participate in the HBP.

In 2019, the Federal government launched the new First-Time Home Buyer Incentive. The incentive is worth up to 5% for purchasing an existing home and up to 10% for buying a new build.

Conditions of the First-Time Home Buyers Incentive include:

  1. Your household income must be less than $120,000 to qualify for the program in most places across Canada.
  • For borrowers in Toronto, Victoria, and Vancouver, the maximum eligible household income is $150,000*
  1. You or your partner cannot have owned a house in the year of the purchase or any of the four proceeding years.
  2. The amount of an insured mortgage and the CMHC incentive is capped at $480,000. This means, with a 15% down payment,
  • $565,000 is the maximum home price most places in Canada.
  • $722,000 is the maximum home price in Toronto, Victoria, and Vancouver.

*Note: The maximum eligible household income increased effective May 3, 2021.

Homeowners do not have to pay interest on the incentive, but money must be paid back after 25 years or when the property is sold, whichever comes first. The government will share in the upside or downside of any change in property value.

Savings add up over time

This is for illustrative purposes only, and calculations assume a mortgage rate of 3.09%.





House Price



Down Payment



Cost of mortgage insurance



Size of mortgage



Monthly Payment



Monthly Savings



Annual Savings



Savings over 25 years



How do I choose the right mortgage?

You can choose from a number of mortgage options, fixed or variable, open or closed, to meet your needs and lifestyle. Our homebuying specialists can assist you along the way.

Building your homebuying team

Once you are ready to look, it's time to assemble a team of professionals who will work with you. The mortgage professionals at Alterna are ready to help you choose the right mortgage and provide you with a mortgage pre-approval—to get you started on your house hunt.

Realtor: Although you can purchase without a realtor, it is a good idea to enlist the services of an agent who will provide objective advice. With a good understanding of your needs, an agent can help you compare a number of properties.

Home inspector: A clean bill of health from a qualified home inspector can provide a great deal of comfort when buying a home. Be sure to use a reputable inspector and ask for references.

Lawyer: When you make an offer on a home, you'll want a lawyer to review it in detail and ensure it contains all the necessary information.

Anticipating your closing costs

Know what to expect well in advance of the day of closing. You'll need to budget for:

CMHC or Sagen Financial insurance premiums: These will apply if you take a high ratio mortgage.

Land transfer taxes: The provincial government levies this one-time tax when you buy a home, which could amount to about $2,000 on a $250,000 home (be sure to ask your lawyer for details as they apply to your situation). If you are a first-time homebuyer of a newly constructed home you may be entitled to a rebate.

Legal fees: You are responsible for paying the lawyer's fees and disbursements.

Fire insurance: You are required to take fire insurance effective the time you legally take possession of your new home. Other insurance requirements may also apply.

Contact an Alterna Savings mortgage specialist at 1.877.560.0100. They’ll help you find the mortgage solution that’s right for you.

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