Montreal First-Time Home Buyers

Getting into the housing market in Montreal can be complex at the best of times, but buying your first home tends to make things even more complicated. You've no doubt got hundreds of questions about how to save a down payment, whom to trust with your mortgage, and what rebates you might be eligible for as a first-time homebuyer.

At Ratehub.ca our aim is to make the process as simple as possible. On this page, you'll find the most important things you'll need to know about buying your first home in Montreal. First-time home buyer regulations are generally set on a provincial or municipal level, so it's good to get information specific to where you live.

 

Across Canada, most provincial first-time homebuyer programs are a rebate of the land transfer taxes that you are required to pay in your home province. Montreal has a land transfer tax, but does not offer a rebate of the tax to first-time homebuyers. However, the province does offer an additional Home Buyer's Tax Credit, in addition to the federal credit.

Because Montreal has relatively high real estate prices compared to the rest of Canada, not having a rebate of the land transfer tax makes it especially important for first-time homebuyers to get the best mortgage deal possible.

 

Montreal land transfer tax

Land transfer taxes in Montreal a little complicated, but we've broken them down below. Montreal has a slightly higher set of land transfer taxes than the rest of Quebec, being the largest city in the province.

While the rates themselves are comparable with other provinces, they don't get quite as high as the tax rates in Ontario or British Columbia. Outside of Montreal, they cap out at 1.5% of the purchase price. Inside Montreal, the highest tax rate is 2.5%.

The rates are listed in the table below.

 

 

For properties valued up to $500,000, your land transfer tax will be the same whether you live in Montreal or not. However, if your home costs more than $500,000, the land transfer tax will be higher in Montreal than in the rest of Quebec.

To calculate the land transfer tax on specific property purchase prices, use our Quebec land transfer tax calculator.

 

Montreal Home Buyer's tax credit

While the province of Quebec does not offer a rebate of the land transfer tax for first-time homebuyers, it does offer a tax credit.

The Quebec Home Buyer's tax credit works the same way as the federal Home Buyer's tax credit, which is explained in more detail below. It offers a credit of up to $750 on your tax return in the same year that you buy your first home.

While most first-time home buyer grants and tax rebates exist at the provincial level, there are some programs that are federally administered. This means that they're available to first-time home buyers in every province and every city, including in Montreal.

Below are a few of the main federal programs that you should look into when buying your first home. Keep in mind that they may have different eligibility criteria than the programs in Montreal do, so be sure to look into the details. First, though, check out this helpful video on first-time home buyer programs in Canada, then read on to learn more. 

UPDATE: As of March 31, 2024, the First-Time Home Buyer Incentive will be discontinued. Read our blog post Federal government cancels the First Time Home Buyer Incentive to find out more.

First-Time Home Buyers Tax Credit

The First-Time Home Buyers Tax Credit is a pretty straightforward program for people who've bought their first home. It's a tax credit of up to $750 that can be claimed on your tax return in the year you purchased the home.

The First-Time Home Buyers tax credit is also available to Canadian home buyers with a disability, even if it isn't their first home. If this might apply to you, it's worth speaking to a mortgage broker or your mortgage provider about it.

RRSP Home Buyers' Plan

The RRSP Home Buyers' Plan lets you borrow up to $60,000 from your RRSP (registered retirement savings plan) in order to fund the down payment of your first home. This limit was raised from $35,000 by the federal government on April 11, 2024, and is in effect as of April 16, 2024. For couples, the maximum amount you can borrow is $120,000.

You will need to pay this amount back over the next 15 years. If you fail to pay it back, you'll be charged income tax on the unpaid amount (your RRSP deposits should already have been tax-deferred).

GST/HST New Housing Rebate

If you have purchased a new, off-the-plan, or substantially renovated property, you will likely need to pay GST or HST on it, on top of your other closing costs. The GST/HST New Housing Rebate aims to make this less of a burden for first-time home buyers.

This rebate is equal to 36% of the GST paid on the purchase. You'll receive the full rebate if your home has a market value of $350,000 or less. For homes priced between $350,000 and $450,000, you'll receive a partial rebate.

As a first-time home buyer in Montreal, finding and qualifying for the best mortgage rates in Canada might seem like a daunting task. However, it's less effort than you might assume, especially thanks to modern tools like the ones on Ratehub.ca.

Below are a couple of tips, tricks, and tools that can help you find and be approved for the lowest mortgage rates in Canada, even as a first-time homebuyer.

Comparing rates from multiple lenders

Mortgage rates will always vary between different mortgage providers, even on the exact same product! This is because every lender has a different marketing and monetization strategy, and is comfortable with different levels of risk. For example, if you are a particularly risky borrower, the mortgage providers offering the lowest rates may not approve your mortgage, forcing you to borrow from a lender with higher rates.

The best way to make sure you're getting the best rate that you're able to be approved for is to compare quotes from multiple mortgage providers. We can help you do this - just click "let's get started" at the top of this page to begin the process. It's totally free to use and could help you save a lot of money by finding a lower rate.

Using a mortgage payment and affordability calculator

It's important to know how much you can afford. Setting your sights too high will make it harder to be approved for a mortgage, and can end in disappointment. Most first-time home buyers will have some limitations on their budget, so it's a good idea to understand how much you can actually afford to borrow.

Our mortgage calculators can help you understand how much your regular payments are likely to be (payment calculator), how large a mortgage you can afford to borrow (affordability calculator), as well as whether it's worth refinancing your mortgage (refinance and penalty calculators). The first two are most useful for first-time home buyers - use the links below to get started.

Saving a larger down payment

Saving a larger down payment will - assuming you were to buy the same home - reduce the overall size of your mortgage. This is good for a couple of reasons. Firstly, it will result in you paying less interest over the course of your mortgage, which can save you thousands of dollars.

Secondly, it makes it easier to qualify for a mortgage. Your lender will look at the ratio between your income and your expected mortgage payments (along with your existing debt payments) in order to decide whether to approve your mortgage application. A lower overall mortgage amount will make this calculation more favorable for you.

Paying off your existing debts

As mentioned above, your mortgage provider will consider your income against your expected mortgage payments when deciding whether to approve your mortgage application. It will also consider your existing debt payment obligations. Your lender needs to be confident that you'll be able to make your mortgage payments, even after paying off your other debts.

To increase the odds of passing this test, it's a good idea to pay off as many of your existing debts as possible. This includes student loans, credit cards, auto loans and any other outstanding debt that you may be carrying.

Increase your credit score

Increasing your credit score is another way to help you get a lower mortgage rate. If you have good credit (at least 600) you should be able to get a mortgage approved from most of Canada's larger mortgage providers, which are the ones that tend to offer the lowest mortgage rates.

If you have a score of less than 600, you may be forced to get a mortgage from a "B-lender" or a private mortgage provider. These lenders take on risker borrowers, but they charge a much higher mortgage rate. If your credit score isn't good, it could be worth improving it before you apply for a mortgage.