Buying a home in Ontario this fall: what first-time buyers should know

Buying a home in Ontario in 2026 means dealing with two forces pulling in opposite directions: prices have softened, while fixed mortgage rates have moved up since September. For first-time buyers, that makes a pre-approval with a rate hold, a realistic budget and every available rebate more important than usual. Nobody knows where prices go next, so the goal is a purchase you can carry comfortably either way.

Key takeaways

• CREA's September data showed national sales down 7.7% year over year and the average price down 1.6% to $666,538.
• All Big Six banks have raised fixed rates since early September, some by 40 to 50 basis points on certain terms.
• A pre-approval with a rate hold (often up to 120 days) can protect you if rates keep rising while you shop.
• First-time buyers can use a 30-year insured amortization, the Ontario land transfer tax refund (up to $4,000) and an FHSA.
• You still have to pass the stress test at the greater of your contract rate plus 2% or 5.25%.

What are Ontario home prices doing this fall?

Prices have softened modestly across the country. According to CBC's coverage of CREA's September numbers, national sales fell 2.3% from August and 7.7% from a year ago. The average price was $666,538, down 1.6% year over year, and the home price index was down 3.4%. CREA also cut its 2026 forecast to 444,530 sales, a 5.2% drop, while forecasting a 4.4% rise in sales for 2027.

Toronto has been one of the softer spots. Royal LePage's Q3 survey put the national price at $810,000 (down 0.8% year over year) and Toronto down 3.7%, as summarized in the bips weekly mortgage report. New listings are down too, which can limit choice in some neighbourhoods.

I won't predict where prices land next. What I'd take from these numbers is that buyers in many Ontario markets may have more room to negotiate than they did a few years ago, and less reason to rush.

Why are mortgage rates rising if prices are falling?

Fixed rates follow bond yields, and bond yields have climbed. money.ca reports that all Big Six banks raised fixed rates since early September, with TD and RBC up 40 to 50 basis points on some terms, and the 5-year Government of Canada bond yield sat around 3.62% on October 7.

Variable rates move with prime, which is tied to the Bank of Canada's policy rate. As of October 22, 2026, the policy rate is 2.25% and prime is 4.45%. The Bank of Canada's next decision is Wednesday, October 28, and the outcome isn't known yet. CBC reported on October 21 that a hike is increasingly expected, while CMHC's chief economist has said he doesn't see rates going up anytime soon. Smart people disagree, which is exactly why I'd plan for a range of outcomes.

How does a rate hold protect first-time buyers?

A rate hold locks in a rate for a set period while you shop, so a rise before you buy doesn't hit your approval. The Canadian Wire notes that holds commonly run up to 120 days. If rates drop instead, many lenders will give you the lower rate at funding.

A pre-approval also tells you what you can actually qualify for before you fall in love with a house. It isn't a final approval (the lender still has to approve the property and confirm your documents), but it's the best starting point I know. You can get a rough sense of your range with my affordability calculator before we talk.

How does the stress test work?

You qualify at the greater of your contract rate plus 2% or 5.25%, even though your actual payments are based on your contract rate. Here's a simple example using an example rate of 4.5% (not a quote): you'd need to qualify at 6.5%. If your example rate were 3.0%, you'd qualify at 5.25%, because that floor is higher than 3.0% plus 2%.

That means rising fixed rates can shrink your maximum purchase price, even if your income hasn't changed. Another reason to lock a rate hold early.

What's the minimum down payment in Ontario?

The minimum is 5% on the first $500,000, 10% on the portion from $500,000 to $1.5 million, and 20% on homes priced at $1.5 million or more. Using CREA's September average price of $666,538:

With less than 20% down, your mortgage needs default insurance. My CMHC insurance calculator shows what that premium might add.

Does a 30-year amortization make sense?

It can. Since December 15, 2024, first-time buyers and buyers of new builds can get a 30-year amortization on an insured mortgage. A longer amortization lowers your regular payment and can help you qualify, but you'll pay more interest over the life of the loan. I often suggest taking the 30 years for breathing room and using prepayment privileges when you can.

What rebates and accounts can first-time buyers use?

There are two I bring up with every first-time buyer in Ontario.

Ontario land transfer tax refund

Eligible first-time buyers can get a refund of up to $4,000 on Ontario's land transfer tax, according to Ontario's Ministry of Finance. If you're buying in the City of Toronto, there's a separate municipal land transfer tax with its own first-time buyer rebate of up to $4,475. Run your numbers with the land transfer tax calculator.

First Home Savings Account (FHSA)

An FHSA lets you save for a first home with tax-deductible contributions and tax-free qualifying withdrawals. The limits are $8,000 a year and $40,000 lifetime. The Canada Revenue Agency's FHSA page covers eligibility and carry-forward room. If you haven't opened one, it's worth doing even if your purchase is a year or two away, since your room starts building once the account is open.

First-time buyer checklist for fall 2026

1. Check your credit report and pay down high-interest balances first.
2. Gather two recent pay stubs, an employment letter and your last two years of Notices of Assessment.
3. Get a pre-approval with a rate hold before you start viewing homes.
4. Budget for closing costs: land transfer tax (minus your refund), legal fees, a home inspection and moving.
5. Open an FHSA if you're eligible and haven't yet.
6. Decide your comfortable monthly payment, not just your maximum approval. My payment calculator helps.
7. Keep your finances steady until closing: no new car loans, no job changes if you can avoid them.

My first-time buyer page and purchase mortgage page walk through how I work with buyers. For broader updates, I keep a running list on my news page.

What I'd do next

I'd get a pre-approval with a rate hold this week, before October 28, so you're protected whatever the Bank of Canada decides. Then I'd shop for a payment you can live with if rates stay higher for a while, and let softer prices work in your favour at the negotiating table.

If you want me to run your numbers, answer a few quick questions and pick a time to talk.

Frequently asked questions

This article is general information as of October 22, 2026 and isn't financial, legal or tax advice, a quote or an offer. Rates, rules and programs change. All mortgages are subject to lender approval (OAC).