A bungalow can be an excellent starter home, especially if it has a basement you can rent out or grow into. Bungalows often sit on good lots, appeal to many future buyers and suit you from first home to family home. The trade-off is competition from downsizers and builders, and older homes that may need updates. Here’s how to decide, with real 2026 numbers.
Key takeaways
- Bungalows give first-time buyers flexibility: a basement suite, room to grow and broad resale appeal.
- First-time buyers can get a 30-year amortization on an insured mortgage.
- FHSA, the RRSP Home Buyers’ Plan and land transfer tax refunds can stretch your budget.
- Bungalow townhomes, condo bungalows and older raised bungalows are often the most affordable entry points.
Why a bungalow can make a smart first home
Many first-time buyers picture a condo or a townhouse. A bungalow deserves a spot on your list too. Here’s why.
- Income potential. Many bungalows, especially raised bungalows, have basements that can become a legal second unit. Rent can help with the mortgage.
- Room to grow. Finish the basement later for a family room, office or extra bedrooms.
- Land. Bungalows often come with a decent lot and a yard, which tends to support long-term value.
- Wide resale appeal. When you sell, you can market to downsizers, families and investors.
- One-level living. Great with a baby, a toddler or a dog, and later for aging parents.
The downsides to weigh
Bungalows aren’t perfect for everyone. Be realistic about:
- Competition. Downsizers with home equity and builders looking for lots also want bungalows.
- Age and updates. Many GTA bungalows were built decades ago and may need a roof, windows or electrical work.
- Bedrooms on the main floor. Some have only two or three, which can feel tight as a family grows.
- Price. Detached bungalows in central areas can cost more than a starter condo or townhouse.
How much do you need to buy a starter bungalow?
Under Canada’s mortgage rules, the minimum down payment is 5% of the first $500,000 and 10% of the portion from $500,000 up to $1,499,999. Here’s what that looks like:
| Purchase price | Minimum down payment | How it’s calculated |
|---|---|---|
| $500,000 | $25,000 | 5% of $500,000 |
| $650,000 | $40,000 | $25,000 + 10% of $150,000 |
| $800,000 | $55,000 | $25,000 + 10% of $300,000 |
| $1,000,000 | $75,000 | $25,000 + 10% of $500,000 |
With less than 20% down, you’ll pay mortgage default insurance. At 5% to 9.99% down, the common premium is 4.0% of the mortgage, added to your loan. First-time buyers can choose a 30-year amortization on an insured mortgage, which lowers monthly payments. The premium rises by 0.2% for that longer amortization.
You’ll also need to pass the stress test, qualifying at the higher of your contract rate plus 2% or 5.25%. Budget 1.5% to 4% of the price for closing costs on top of your down payment. Try our mortgage and affordability calculators to test your numbers.
First-time buyer programs that help
As of September 2026, these programs can make a starter bungalow more reachable:
- FHSA: contribute $8,000 a year, up to $40,000 lifetime. Contributions are deductible and qualifying withdrawals are tax-free.
- RRSP Home Buyers’ Plan: withdraw up to $60,000 per person, or $120,000 for a couple, and repay over 15 years.
- First-Time Home Buyers’ Tax Credit: up to $1,500 back federally.
- Ontario land transfer tax refund: up to $4,000.
- Toronto first-time buyer rebate: up to $4,475 on the municipal tax, inside the City of Toronto only.
The new-home GST and HST rebates don’t apply to resale bungalows. See our full guide to first-time buyer incentives in Ontario.
Affordable bungalow styles for first-time buyers
Bungalow townhomes and condo bungalows
These offer one-level living at a lower entry price, with shared maintenance. Watch the monthly fees and read the status certificate.
Older raised bungalows
Raised bungalows have bright lower levels with large windows, which suit a basement suite. Look in Durham, Hamilton, Niagara and Simcoe, where prices are often lower than central Toronto.
Fixer-uppers
A dated bungalow on a good lot can be a solid buy if you have a renovation budget. Get a thorough inspection and contractor quotes first.
Bungalow tip: Ask your mortgage agent whether rent from a legal basement unit can count toward your qualifying income. Lenders treat rental income differently, so get an answer before you shop.
Start browsing bungalows for sale under $650,000 to see what’s available in your price range.
Frequently asked questions
Are bungalows more expensive than two-storey homes?
Not always. Bungalows use more land per square foot of living space, which can raise prices in some areas, but older bungalows can be priced below newer two-storey homes nearby.
Can I rent out the basement of my first home?
Often yes. Ontario allows up to three units on most serviced urban residential lots, but you’ll need permits, fire separation and proper egress to make a unit legal.
Is a bungalow a good investment for a first-time buyer?
It can be, thanks to broad buyer appeal and income potential. Still, no home guarantees a gain, so buy based on price, condition and location.
The bottom line
A bungalow can carry you from your first home through your family years, especially with a basement that pays its way. Know your numbers, use every program you qualify for and focus on lot, layout and condition.
Talk to a mortgage agent for a pre-approval before you start touring. For a step-by-step plan, read our guide to buying your first bungalow.
