How to buy your first home in Canada? A Practical Guide to Help You Buy a House in Canada

Statistics Canada reported a 7.5% increase in residential construction costs, post-pandemic, in the second quarter of 2021.
Toronto · Publicado el: 24 agosto, 2021

Real estate is as yet a significant venture for Canadians despite rising home costs. Myriad home-purchasing plans were postponed due to the financial slump in the pandemic.
However, others had an ideal chance to make benefits out of lower interest rates, thanks to Covid relief policies.

The method involved with purchasing a home, regardless of whether it’s a completely separated house, apartment, or condominium, doesn’t begin when you call a real estate agent and mastermind a survey.
There are myriad facets you are supposed to attend!

In case you’ve never purchased a home before, how and where would you begin your journey to become a homeowner – well, we have formatted a bit-by-bit guide to visit you through all the important aspects of purchasing a home in Canada.

Ask Yourself before Buying your First Home

Answer these questions, to yourself, prior to getting into the home-purchasing procedures:

What are my reasons for buying a home?

There could be several reasons pushing you towards owning a house.

  • Spending savings on a solid investment i.e. home
  • Settle with family
  • Give up on renting
  • Pride of ownership

These can be some of the many reasons – clarifying your objective would help you prioritize and make mindful decisions.

Can I afford a home?

Some costs of buying a home could be:

  • Bank appraisal costs
  • Down payment
  • Homeowners insurance
  • Taxes

Since expenses are glued with making this investment, you would need to figure out the expenses and savings. You may hire a mortgage professional to give you an in-depth guide.

Your housing costs/ month should not be more than 32% of your gross household income per month as per Canada Mortgage and Housing Corporation.

Can I qualify for a mortgage?

An average Gucci purse costs $2,300. The reason for putting it like this is if you don’t qualify for a mortgage – you should stop hunting for a home and look for reasons behind this situation.

  • Bankruptcies
  • Low credit scores
  • Late payments
  • Poor employment history

These are some examples of potential mortgage disqualification grounds.

If you aspire of being a homeowner soon, resolve these obstacles and look for ways to improve credit scores for eased mortgage insurance rules in Canada.

Where do I want to live?

Location means your lifestyle choice and consequently its affordability. Planning of buying a home near the office or immediate family, take an estimation of purchasing costs there!

Am I familiar with the home-owning costs?

Purchasing a home is on one side, but owning a home has a cost too – and a homeowner cannot actually must not, skip that! You wouldn’t want to regret your purchasing decision later, right?

An estimation of annual home maintenance costs in Canada in about $5,800 annually.

These could be:

  • General Maintenance
  • Property Taxes
  • Water, Internet, Gas
  • Unexpected Repairs
  • Bills

Am I familiar with any trustworthy real estate agents?

An experienced real estate agent who knows the local market, and is ready to address your wants and needs regarding home purchase can definitely reduce the confusion, frustration, and anxiety associated with the home buying journey.

You would need a real estate agent to save you some time and effort if you are an employee or run a business.

A Practical Guide to Help You Buy a House in Canada

ⱷ Assess Your Affordability

Know your budget. Analyze your savings and spending if you have not done it already. Mortgage costs and monthly salary ratio should also be kept under check.

  • What is your household income after tax deduction?
  • How much do you spend on household expenses, groceries, bills, gas, tuition, every month; on average?
  • Now that you’ve analyzed your expenses and income – find ways you can make savings.

These savings can be utilized to clear/ pay off any debts if you own a secured credit card or unsecured credit card and other loans.

Homeownership and lifestyle expenses can be managed better once you know what you can afford!

ⱷ Down Payment and Mortgage Process

To purchase a house, you should have your own money in addition to the loan/ mortgage options.

5% is the minimum amount of down payment if your potential home’s price is $500,000 or less.

Down Payment

It is the portion of the money paid in the early phase of buying a house. You must have this money saved up before buying a house.

Down payment percentage depends upon your home’s purchase price:

Mortgage Process

Lenders analyze your credit history for mortgage approval. Shop around to get the best interest rates and suitable terms – similar mortgages may have distinct rates and terms.

Pay Off your Dues

As discussed in the mortgage portion, your credit history and debt service ratios are judged for future lending.

Dues keep on rising if you are an unsecured/ secured credit cardholder.

To improve your credit score, you should dutifully pay off balances, if any, on your secured credit card, unsecured credit card, car/ auto loans, and student card debt. This would boost your credit history and would show you off as a low-risk borrower.

The smaller the debt, the better are your chances to be accepted for mortgages easily.

In addition to paying off your dues, it is smart to prepare the necessary documentation: e.g. employment information, saving, and investment statements.

Look for the most Suitable Rate

Over your mortgage span, tracking down the most minimal home loan rate/ option could save you thousands.

Would you ever buy expensive insurance or product without looking around for the best possible price, so for what reason should your home loan be unique?

A mortgage broker can be an immense help if you are not really sure. Other benefits of hiring one could be:

  • If you have a family or a tight working schedule, the flexible working hours of mortgage brokers are extremely convenient.
  • Since they have access to myriad lender’s loan information – depending upon your credit history, they would advise you the lenders, so you are not rejected multiple times before being accepted.

Home Buying Costs

In addition to the down payment, Canadian rules clarify paying some portion, 1.5% to 4%, of the mortgage. These are the closing costs:

  • Real Estate Agent/ Realtor

A real estate professional is hired when one desires to buy, rent, or sell a property. They may be realtors, brokers, or real estate agents.

Real Estate Agents

They clear the examination conducted by the state to become an agent. They possess a real estate license and assist in the procedure of selling/ buying property.

Depending upon the clientele, they may be:

  1. Renting Agent: They help the customers to find rental homes considering their preferences e.g. location.
  2. Buyer Agent: These agents help the potential buyers find an ideal home/ are for purchase.
  3. Listing Agent: These real estate agents assist in listing homes of sellers.


They pass the brokers exam conducted by the state, their qualifications and training are more from the agents. Real estate agents work for them.

They have three kinds:

  1. Designated Broker: He/ she work as the head of the real estate office. They make sure that all the activities in the office obey the national/ state laws.
  2. Managing Broker: Sometimes, designated brokers also perform the duties of a managing broker. A managing broker manages the administrative staff. He is also responsible for hiring and training agents.
  3. Associate Broker: Also called the affiliate broker or a broker associate. He/ she takes instructions from the managing broker.


A real estate professional who is also a member of the Canadian Real Estate Association.

  • Mortgage Pre-Approval

Look for getting pre-approved for the mortgage after you have found the real estate professional, i.e. real estate agent/ broker/ realtor; saved for the down payment, and prepared your documents.

Depending upon the situation of your debts, credit rating, and monthly/ yearly income – mortgage pre-approval would provide you the following information:

  • What mortgage rate would you qualify for?
  • What will be the amount of monthly mortgage payments?
  • What is your affordability regarding buying a house in Canada?

Whatever interest rate is allotted to you after the estimation, the lender promises the same interest – unless it drops – for the next two months.

  • Home Hunt

Some of the many factors that must be thought upon before hunting home are:

  • Locality
  • Neighborhood
  • Home size
  • Highways
  • Office
  • Traffic situation in the area
  • Recreational Spots
  • Medical services like hospitals, clinics
  • Shopping
  • Schools
  • Restaurants
  • Home itself: room sizes, lighting, kitchen, floor plan, closets, windows

Since you are deciding to make this big investment – In addition to finding a superb real estate agent and getting mortgage pre-approval, you must prioritize your priorities. Family/ work/ budget are primary factors to look upon when starting a home hunt.

  • Close the Deal

Now that you liked the house and you can apparently choose to purchase it – the completion of the transaction takes around 30-45 days, this time may vary depending upon the pre-agreed term with the broker/ real estate professional and selling party.

In this time you complete the down payment, do a home inspection, and work on the mortgage payment.

After you are done with the inspection, adjustments and repairs are made.

Meanwhile, your real estate agent and the lawyer would complete the necessary paperwork. They would also work on mortgage documents with your lender. This whole procedure completes on the real closing day!

Reasons Purchase Agreement May be Withdrawn by the Buyer

The purchase agreement clarifies the real estate transaction. It includes information like when is the potential transaction expected to complete and when can the buyer physically enter the home.

Terms and conditions of sale and the purchase price are clearly stated in such agreements.

It also covers any appliances, and equipment included in the purchase price of the house. Any repairs promised by the seller are also noted in such agreements.

Such agreements also include a portion where some reasons are pre-written in which either buyer or seller can back off from the finale of the transaction.

Some reasons due to which buyers can do so could be:

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