How to finance your first home in Quebec
- coraliefortin076
- Jul 1
- 5 min read
Updated: Jul 14
Buying your first home, whether in Quebec or elsewhere in Canada, is often one of life's most significant financial projects. At Plan Maison Québec, we understand the challenges you face: securing a substantial down payment, navigating government programs, meeting financial institution criteria, and anticipating hidden costs.
In this article, we offer a comprehensive guide on how to finance your first home by combining disciplined savings, tax strategies, and accessing homeownership programs, all tailored to Canadian and Quebec realities.
1. Take stock of your financial situation
Before you even begin saving, it's essential to have a clear picture of your financial health. This involves assessing your debts (credit cards, lines of credit, food loans, etc.), your income, your savings potential, and your job stability. Desjardins emphasizes that good debt management, especially high-interest debt, improves your debt-to-income ratio and increases your chances of obtaining good mortgage financing.
This inventory must be precise. You must make a list of the amounts still owed and upcoming deadlines. Calculating your monthly obligations allows you to plan how much you can dedicate to savings and your future monthly payments. This step is crucial before even considering financing.
2. The down payment: who can beat that?
Target: 20% or less, insurance plan
In Canada, the recommended down payment is 20% of the purchase price. If you can't meet this requirement, mortgage insurance becomes necessary, which incurs additional costs. Desjardins indicates that if you opt for a down payment of only 5%, this means taking out this insurance with CMHC or Sagen, and that 1.5% of the property's price must be available for start-up costs.
Anticipate additional costs
Beyond the down payment, you should budget between 1.5% and 3% additionally to cover notary fees, inspection, moving, transfer taxes (landing tax), etc. Some financial institutions, such as Desjardins, also offer cash bonuses to cover part of these costs.
Plan Maison Québec recommends carefully planning this budget to avoid unpleasant surprises at closing.
3. Save smart with financial plans
3.1 The RRSP and the Home Buyers' Plan (HBP)
RRSPs are often associated with retirement, but their Home Buyers' Plan allows you to withdraw up to $60,000 (for a couple, $120,000 combined) to buy or build a first home without immediate tax, provided you repay the amount within 15 years. The tax advantage is twofold: you reduce your taxable income when you contribute to an RRSP, and then you get the money back without incurring taxes on the withdrawal.
By combining RRSP contributions, tax savings, and HBP withdrawals, you can build a solid down payment without depleting your cash flow.
3.2 CELIAPP (new regime dedicated to first-time property owners)
Established in 2023, this dedicated tax-free savings account makes homeownership easier. This plan allows you to contribute up to $8,000 per year, up to a total of $40,000, with immediate tax deductions and tax-free withdrawals for the purchase of a first home. Unlike the HBP, it does not require repayment.
Plan Maison Québec recommends opening a TFSA as soon as possible, contributing regularly (e.g., through automatic transfers), and combining both plans (RRSP+TFSA) to maximize your purchasing power.
3.3 The classic TFSA
Although not directly targeted at home purchases, the TFSA remains an excellent tax-sheltered savings solution. Any adult Canadian can contribute to it. Amounts accumulate tax-free, and withdrawals are free, making it a good complement to a TFAPP or RRSP if you have reached their limits.
Plan Maison Québec recommends combining a TFAPP, an RRSP (via the HBP), and then a TFSA to optimally secure your down payment.
4. Take advantage of government incentives to finance your first home in Quebec
4.1 Refunds and tax credits
In addition to the TFSA, the federal government offers various programs, such as a tax credit of up to $1,500 for the purchase of a home. In addition, the purchase of a new construction property may qualify for a partial GST/HST rebate, depending on the province. In Quebec, a provincial credit linked to the CMHC can be as high as $750.
Some cities offer local rebates. Montreal, for example, offers a residential support program with a rebate of the welcome tax, and provinces like Ontario and Prince Edward Island also offer rebates on transfer taxes.
Plan Maison Québec suggests that each buyer check the programs specific to their location, as these incentives can significantly reduce the total cost.
4.2 Shared purchasing incentive – Federation and provincial
Some programs offer additional financial assistance (up to 5 to 10% of the purchase price) for the down payment. This assistance varies depending on income and region. The important thing is to check your eligibility from the outset.
5. Personal savings strategies
5.1 Automate your payments
Financial experts recommend setting up automatic transfers into your RRSP, TFSA, or TFSA accounts as soon as you get paid. This makes saving a regular, voluntary activity that's easier to maintain.
5.2 Reduce expenses and increase income
Testimonials from young Quebecers in financial forums reveal that they have saved aggressively by limiting their expenses and putting in extra hours: living below their means, working more, and investing have been their winning strategies. Buying as a couple also increases borrowing power, which can simplify financing.
Plan Maison Québec encourages everyone to establish a realistic budget that includes the savings and effort needed to achieve their goal of owning a house.
6. Mortgage pre-authorization: a strategic asset
Getting pre-approved for a mortgage from a lender allows you to know exactly how much you can borrow and at what rate. This process can lock in a favorable rate for a few months, which is very useful in a context of rising interest rates. Desjardins and several other institutions strongly recommend this step before even starting your search.
Plan Maison Québec advises every buyer to start with this process: knowing your capacity will help you plan your project with greater peace of mind.
7. Evaluate mortgage options and term selection
Perpetuity of payments vs. total interest
Many lenders offer a longer amortization period (up to 30 years for first-time federal buyers). This reduces the monthly payment, but costs more interest over time. If you plan on staying long-term, it may be wise to aim for a standard 25-year term. Plan Maison Québec recommends comparing repayment options with a professional to find the best compromise.
The Importance of Doing Your Own Research
In a constantly evolving real estate market, staying informed is essential. Each project is unique, and what suits one buyer may not be appropriate for another.
That's why it's crucial to compare mortgage options, read the terms of tax plans like the HBP or the TFSA, and fully understand the implications of government programs. Offers change, rates vary, and eligibility criteria may differ depending on the institution.
Doing your research helps you avoid pitfalls, negotiate better, and, above all, make informed decisions. Plan Maison Québec strongly encourages its clients to actively seek information, ask questions, and consult several reliable sources. Proper preparation is the key to a well-planned project and a successful purchase.
Conclusion and call to action
Financing your first home in Quebec requires careful planning, careful use of tax regimes and incentives, and disciplined savings. By combining your RRSP (via the HBP), the TFSA (TFSA), reducing your expenses, maximizing your income, and obtaining a mortgage pre-approval, you can make your dream homeownership a reality.
Every situation is unique, and Plan Maison Québec is ready to assist you, from the financing phase to the final construction plan.
Your project starts here, with Plan Maison Québec.
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