# What Should First-Time Buyers Know Before Purchasing a Home in Canada?

> First-time buyers across Canada can use the Home Buyers' Plan (RRSP withdrawal up to $60,000) and a First Home Savings Account (FHSA), and must pass a mortgage stress test. In Ontario, a land transfer tax refund of up to $4,000 applies to eligible buyers; Alberta has no land transfer tax, only Land Titles registration fees. Common-law caveat emptor means buyers generally bear the risk of undisclosed defects once the sale closes.

Published 2026-08-24 · Last reviewed 2026-08-19 · [Canonical page](https://canadalegalcenter.ca/articles/what-should-first-time-buyers-know-before-purchasing-a-home/)

Legal information, not legal advice.

## What "first-time buyer" means and why the label matters

"First-time buyer" is not just a marketing phrase; it is a legal eligibility category that unlocks specific programs and refunds. Federally, it determines access to the Home Buyers' Plan and the First Home Savings Account (FHSA), a tax-free savings vehicle for a first home purchase (the closest US equivalent readers may search for is a first-time buyer's IRA withdrawal, though the Canadian rules differ). In Ontario, the definition is stricter still: to claim the land transfer tax refund, neither the buyer nor their spouse can have owned a home or an interest in a home anywhere in the world, at any time, while married to each other ([Ontario.ca](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers)). Knowing which definition applies to which program matters, because qualifying for one does not automatically qualify a buyer for another.

## Federal financing programs: HBP, FHSA, and the mortgage stress test

Two federal programs help fund a down payment. The Home Buyers' Plan lets a first-time buyer withdraw up to $60,000 from an RRSP to put toward a home, tax-free at the time of withdrawal ([Canada Revenue Agency](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html)). This can be combined with a qualifying withdrawal from an FHSA for the same home. The FHSA generates $8,000 of contribution room in its first year ([CRA](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html)), up to a lifetime contribution limit of $40,000 ([CRA tax tips](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/make-most-your-first-home-savings-account.html)).

Once financing is arranged, federally regulated lenders apply a mortgage "stress test": the buyer must prove they can afford payments at a qualifying rate, which is typically higher than the actual rate in the mortgage contract ([Financial Consumer Agency of Canada](https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preparing-mortgage.html)), under OSFI's Guideline B-20. This applies at initial approval across the country. As of November 21, 2024, one part of this test was narrowed: borrowers with uninsured mortgages who switch lenders at renewal no longer have to requalify under the stress test ([Department of Finance Canada](https://www.canada.ca/en/department-finance/news/2024/12/boldest-mortgage-reforms-in-decades-come-into-force-today.html)).

## Land transfer costs: Ontario's refund vs Alberta's registration fees

Ontario and Alberta handle the cost of registering a property transfer very differently, and this is one of the biggest line-item differences between the two provinces at closing.

<div class="table-scroll">

| | Ontario | Alberta |
|---|---|---|
| Charge on transfer | Provincial Land Transfer Tax, applies to all conveyances ([Ontario.ca](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers)) | No land transfer tax; Land Titles registration fee instead ([Alberta.ca](https://www.alberta.ca/register-land-title-document-plan)) |
| First-time buyer relief | Refund up to $4,000, eliminating tax on the first $368,000 of value | No separate first-time buyer relief found |
| Registration fee structure | N/A (tax, not a registry fee) | $5 per $5,000 of property value for land transfers |

</div>

The Ontario refund is not automatic for every buyer; it depends on the age-18-plus and never-owned-a-home tests described above ([Ontario.ca](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers)). Alberta buyers should not expect a comparable refund, because the province does not levy the underlying tax in the first place, only the registration fee.

## Condo purchases: status certificates and disclosure statements

Buying a condominium unit adds a document review step that a freehold purchase does not have, and the document is named and regulated differently in each province.

In Ontario, a resale condo purchase should include review of the status certificate, which contains information on the financial status of the unit and the condominium corporation, including reserve funds and any legal proceedings ([Ontario.ca](https://www.ontario.ca/page/condominium-law-changes)), under the Condominium Act, 1998.

In Alberta, a developer selling a new condo unit must provide a disclosure statement covering items such as any mortgage or financial encumbrance affecting the unit or corporation, and any home warranty insurance contract under the New Home Buyer Protection Act ([Condominium Property Act](https://kings-printer.alberta.ca/documents/Acts/c22.pdf), s 19). If the project is being built in phases, buyers should also obtain the phased development disclosure statement, which sets out the maximum and minimum number of units planned for the entire project ([Service Alberta](https://open.alberta.ca/dataset/e192adc9-2543-4f37-a3b3-efc1e2880772/resource/88fbae0f-6fbf-4bda-99da-a0e504cfbba2/download/sa-purchasing-a-condominium-2021-11.pdf)).

## Caveat emptor: the risk shifts to the buyer at closing

Outside of the specific statutory disclosures above, the general common-law rule in all three jurisdictions covered here is caveat emptor, buyer beware. The Supreme Court of Canada held that a purchaser who wants protection against a defect in title, or in the quantity or quality of the property, must secure that protection through covenants written into the conveyance itself, because once the sale is complete the buyer generally cannot go back and recover for the defect ([Redican v Nesbitt](https://www.canlii.org/en/ca/scc/doc/1923/1923canlii10/1923canlii10.html)). Fraud, or a substantial error going to the root of the bargain, is a recognized exception, but the general starting position places the burden on the buyer to investigate and to negotiate protective terms before the deal closes, not after.

## A worked example

A couple in Ontario, neither of whom has ever owned a home, agrees to buy a $450,000 condo. Because they meet the never-owned test, they can claim the maximum $4,000 Ontario land transfer tax refund, which eliminates the tax on the first $368,000 of value ([Ontario.ca](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers)); tax is still owed on the remaining $82,000. To fund the down payment, one partner withdraws $30,000 from an RRSP under the Home Buyers' Plan, and the other draws from an FHSA that has accumulated $16,000 in contribution room over two years. Before their lender approves the mortgage, both must qualify at the stress-test rate, not the contract rate ([FCAC](https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preparing-mortgage.html)). Before closing, they also request and review the unit's status certificate.

## Common mistakes

- **Assuming the Ontario refund covers the whole tax bill.** It is capped at $4,000; buyers of higher-value homes still owe tax above the $368,000 threshold ([Ontario.ca](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers)).
- **Assuming Alberta has an equivalent refund program.** Alberta has no land transfer tax to refund; the only charge is the Land Titles registration fee, which does not scale down for first-time buyers ([Alberta.ca](https://www.alberta.ca/register-land-title-document-plan)).
- **Budgeting only for the mortgage rate offered, not the stress-test rate.** Lenders qualify buyers at a rate typically higher than the contracted rate, which can lower the amount a buyer actually qualifies to borrow ([FCAC](https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preparing-mortgage.html)).
- **Skipping the condo disclosure document.** Ontario's status certificate and Alberta's developer disclosure statement exist precisely because the financial health of the corporation, or the project's phasing plans, is not visible from a walkthrough of the unit alone.
- **Assuming a defect found after closing can be undone.** Under caveat emptor, the buyer generally bears that risk unless fraud or a substantial error is shown; protection has to be negotiated into the contract before the sale closes, not after ([Redican v Nesbitt](https://www.canlii.org/en/ca/scc/doc/1923/1923canlii10/1923canlii10.html)).

## Frequently asked questions

**Can I use both the Home Buyers' Plan and an FHSA for the same purchase?**

Yes, federally, a qualifying withdrawal from a First Home Savings Account (FHSA) can be combined with a Home Buyers' Plan withdrawal of up to $60,000 from an RRSP for the same home purchase, under the Income Tax Act.

**Does Ontario's land transfer tax refund cover the whole tax bill?**

Only up to a point. In Ontario, the maximum first-time buyer refund is $4,000, which effectively eliminates the tax on the first $368,000 of an eligible home's value; anything above that still attracts tax.

**Why doesn't Alberta charge land transfer tax like Ontario does?**

Alberta has no equivalent land transfer tax at all. Instead, buyers pay Land Titles registration fees under a sliding scale, currently $5 per $5,000 of property value for a land transfer.

**What happens if I find a defect in the house after closing?**

In all three jurisdictions covered here, the common-law doctrine of caveat emptor generally means the buyer cannot recover for defects discovered after closing unless there was fraud or the buyer protected themselves through specific covenants in the purchase contract.


## Sources

1. [Canada Revenue Agency - The Home Buyers' Plan](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html), Income Tax Act, RSC 1985, c 1 (5th Supp), s 146.01 (retrieved 2026-07-17)
2. [Canada Revenue Agency - First Home Savings Account (FHSA)](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html), Income Tax Act, RSC 1985, c 1 (5th Supp), s 146.6 (retrieved 2026-07-17)
3. [Canada Revenue Agency - Make the most of your First Home Savings Account](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/make-most-your-first-home-savings-account.html), Income Tax Act, RSC 1985, c 1 (5th Supp), s 146.6 (retrieved 2026-07-17)
4. [Financial Consumer Agency of Canada - Preparing to get a mortgage](https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preparing-mortgage.html), OSFI Guideline B-20, Residential Mortgage Underwriting Practices and Procedures (retrieved 2026-07-17)
5. [Department of Finance Canada - Boldest mortgage reforms in decades come into force](https://www.canada.ca/en/department-finance/news/2024/12/boldest-mortgage-reforms-in-decades-come-into-force-today.html), OSFI Guideline B-20 (2024 amendment) (retrieved 2026-07-17)
6. [Ontario.ca - Land Transfer Tax Refunds for First-Time Homebuyers](https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers), Land Transfer Tax Act, RSO 1990, c L.6, s 9 (retrieved 2026-07-17)
7. [Alberta.ca - Register a land title document or plan](https://www.alberta.ca/register-land-title-document-plan), Land Titles Act, RSA 2000, c L-4; Tariff of Fees Regulation, Alta Reg 120/2001 (retrieved 2026-07-17)
8. [Ontario.ca - Condominium law changes](https://www.ontario.ca/page/condominium-law-changes), Condominium Act, 1998, SO 1998, c 19, s 76(1) (retrieved 2026-07-17)
9. [Condominium Property Act (Alberta King's Printer)](https://kings-printer.alberta.ca/documents/Acts/c22.pdf), RSA 2000, c C-22, s 19 (retrieved 2026-07-17)
10. [Service Alberta - Purchasing a Condominium](https://open.alberta.ca/dataset/e192adc9-2543-4f37-a3b3-efc1e2880772/resource/88fbae0f-6fbf-4bda-99da-a0e504cfbba2/download/sa-purchasing-a-condominium-2021-11.pdf), Condominium Property Act, RSA 2000, c C-22, s 8 (retrieved 2026-07-17)
11. [Redican v Nesbitt, 1923 CanLII 10 (SCC)](https://www.canlii.org/en/ca/scc/doc/1923/1923canlii10/1923canlii10.html), Redican v Nesbitt, 1923 CanLII 10 (SCC), [1924] SCR 135 (retrieved 2026-07-17)