Tips for Purchasing Your First Home in Canada - AstroWealth Skip to main content

Things to Consider When Purchasing a Home

Purchasing a house is a huge financial investment that requires several decisions along the way. Before purchasing a home, especially if it’s your first time investing in real estate, take the following factors into consideration before making that step. 

  1. Confirm that you are ready to buy a house – Take some time to go over your financial situation, career goals, life goals, and other circumstances before deciding if it’s the right time to buy a home. It’s a huge life change and financial decision, so make sure you’re ready to take the leap. 

  2. Save for a downpayment and closing costs – In 2019, the average down payment was 12% for all homebuyers, but if you can put down 20% you’ll be in a better financial position. Take some time to make a plan to save for a downpayment and closing costs in order to put down as much money as you can afford. 

  3. Ensure you have a consistent income stream – In order to secure a mortgage, you have to show a stable and reliable income stream to verify that you will be able to pay your mortgage payments on time. If you’re employed by a company, recent pay stubs often suffice; however, if you’re self-employed, you may need to submit tax returns and other documents the lender asks for. 

  4. Make sure you’re not tied to a lease – If you’re currently renting and looking to buy a home for the first time, ensure you time your purchase for when your lease is up unless you are able to break your lease early. 

  5. Check your credit score – Lenders will likely review your credit score to determine mortgage rates and payment terms. If you have time, try to increase your score as much as possible in order to get better loan terms (see our post “How to Build and Improve Your Credit Score” to learn more). Often, you can access your credit score through your credit card company. 

Steps to Buying a Home:

After verifying that you’re ready to buy a home, have enough money saved up, and ready to sign a mortgage, follow the steps below to buy your home. 

  1. Find a mortgage lender – Shop around for the right mortgage for you by researching banks, online lenders, credit unions, and other providers. It’s important to find a lender who is easy to work with, knows the area you’re looking to buy in, answers your questions, and is helpful throughout the process. 

  2. Get preapproved for a mortgage – Once you’ve found the right lender, apply to get preapproved for a mortgage so when you find the perfect home, you’re ready to make an offer. 

  3. Set your budget – To create your home buying budget, start by calculating your debt-to-income ratio to get an idea of how much money you can afford to spend each money on a mortgage. You should also take into consideration property taxes, homeowners insurance, and homeowners association fees when building your budget.

  4. Consider hiring a real estate agent – Real estate agents represent you throughout the process, helping you find homes that meet your budget, write offers, negotiate, and sign your house. It’s important to find the right agent for you, so talk to friends and family to find recommendations and talk to as many agents as you need before committing to the right one. You can opt to manage the selling and purchasing of your home yourself, but make sure you know how the process works, including local and municipal laws, in order to do so. 

  5. Determine the area you want to buy in – Take into consideration factors such as commute time, public transportation, the neighborhood, safety, and schools when determining your ideal area. 

  6. Start house hunting – Make a list of the features you need to have in a home and what would be nice to have. For example, square footage, number of bedrooms and bathrooms, neighborhood, outside space, etc. 

  7. Make an offer – When you find your perfect home, your agent will submit an offer. The offer typically includes the price you’re willing to pay and the deadline for the seller to respond, among other things. Your offer is either accepted, rejected, or the seller can make a counteroffer. Depending on the seller’s response you may have to negotiate for a while before purchasing your home.

  8. Get an inspection and appraisal – If your offer is accepted, you should next get an appraisal and home inspection to give you an idea of the home’s condition and value before fully committing. Typically, this step of the process costs a couple hundred dollars. You should also consider using a conditional offer structure that is dependent on the results of the appraisal, including house repairs and maintenance requirements.  

  9. Secure your financing – Secure your final loan approval by keeping your finances in order during the underwriting process. For example, avoid large purchases, late payments, or sudden changes to your credit during this time.

  10. Sign the papers and close the sale – Once everything is complete, you’re ready to close the sale. Consider including a lawyer in the final closing process to handle the logistics and contract. Once everything is set, you’ll pay your closing costs, get your house keys, and sign the closing papers to secure your new home! 

Helpful Resources During the Home-Buying Process

Check out the following resources for financial support when buying a house in Canada. 

  • Home Buyers’ Plan – Government-run program that allows individuals to borrow up to $25,000/year from their retirement savings plan.

  • Home Buyers’ Tax Credit – Allows first-time home buyers to recover $5,000 of their down payment and closing costs in tax credit.

  • First-Time Home Buyers’ Incentive – First-time homebuyers who have the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.

  • GST/HST New Housing Rebate – You can receive a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house.

  • Municipal government programs – Many different cities/regions in Canada offer their own government-run down payment assistance programs for homebuyers or renters. For example, the Region of Peel gives households who are currently renting in Peel the opportunity to attain homeownership by providing a 20-year forgivable loan.


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