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Buying a Home in Canada: Step-by-Step Guide for First-Time Buyers

Buying a Home in Canada: Step-by-Step Guide for First-Time Buyers

Updated June 2025 | By WealthFusions Finance Team

Buying a Home in Canada: Step-by-Step Guide for First-Time Buyers

  1. Determine Your Budget: Calculate how much you can afford based on your income, expenses, and down payment.
  2. Get Mortgage Pre-Approval: Shop around with lenders or brokers to secure a pre-approval, which strengthens your buying position.
  3. Research the Market: Explore neighborhoods, average prices, and amenities. Use online tools like REALTOR.ca or local listings.
  4. Find a Real Estate Agent: A licensed agent helps you navigate listings, schedule viewings, and negotiate offers.
  5. Start House Hunting: Visit homes that meet your criteria. Don’t rush—compare multiple options.
  6. Make an Offer: Submit a formal offer through your agent. Include price, deposit, and any conditions (like financing or inspection).
  7. Hire a Home Inspector: A professional inspection helps uncover any hidden issues before you finalize the deal.
  8. Finalize Mortgage & Paperwork: Confirm your mortgage, sign legal documents with a lawyer or notary.
  9. Prepare for Closing: Arrange home insurance, review the closing disclosure, and transfer your down payment and closing funds.
  10. Move In: On closing day, the home is yours! Collect the keys and start your new chapter.
🏡 Tip: First-time buyers may qualify for incentives like the First Home Savings Account (FHSA), Home Buyers’ Plan (HBP), and land transfer tax rebates.

Buying your first home in Canada can be both exciting and overwhelming. With rising real estate prices, complex mortgage terms, and hidden fees, many buyers feel lost. This guide breaks down every step of the home-buying process—from budgeting to closing—so you can purchase your dream home with confidence and clarity. Let’s get started!

1. Understand Your Budget

Before browsing listings, determine how much home you can afford. Lenders use the following ratios:

  • Gross Debt Service (GDS): Max 39% of gross monthly income
  • Total Debt Service (TDS): Max 44% of gross monthly income

For example, if your household earns $100,000/year:

  • Max GDS: $3,250/month for mortgage, property tax & heat
  • Max TDS: $3,666/month including other debt (credit cards, car loans)

2. Save for a Down Payment

Minimum down payment requirements in Canada are:

Home PriceMinimum Down Payment
Up to $500,0005%
$500,000 – $999,9995% of first $500K + 10% of amount over $500K
$1 million or more20%

Tip: Use your RRSP (up to $60,000 per couple under HBP) and First Home Savings Account (FHSA) for tax-free savings.

3. Get Mortgage Pre-Approval

Getting pre-approved shows sellers you’re serious and defines your price limit. You’ll need:

  • Proof of income (T4s, pay stubs)
  • Proof of assets and debts
  • Credit score (650+ is ideal)
  • Employment verification

Mortgage Types:

  • Fixed-rate: Stable payments over term (e.g. 5 years at 4.79%)
  • Variable-rate: Rate changes with Bank of Canada (e.g. Prime – 0.5%)

4. Explore First-Time Buyer Incentives

Canada offers several programs to help first-time buyers:

  • First-Time Home Buyers’ Tax Credit (HBTC): $10,000 non-refundable = $1,500 tax savings
  • Land Transfer Tax Rebates: Up to $4,000 in Ontario, $8,000 in BC
  • First Home Savings Account (FHSA): Save $8,000/year tax-free, max $40,000
  • Home Buyers’ Plan (HBP): Withdraw up to $35,000 from RRSP per person

5. Choose the Right Location

Consider:

  • Commute time to work or school
  • School district quality
  • Crime rates (check StatsCan)
  • Access to transit, parks, hospitals

Average 2025 prices by city (CREA):

CityAvg. Home Price
Toronto$1,150,000
Vancouver$1,250,000
Calgary$590,000
Halifax$480,000

6. Hire Key Professionals

  • Real estate agent: Helps with search, negotiation, paperwork
  • Mortgage broker: Finds best rate across lenders
  • Home inspector: Prevents buying “money pits” (~$400–$700)
  • Real estate lawyer: Finalizes transaction, handles title search (~$1,000–$2,000)

7. Make an Offer and Close

Your agent will submit an offer, often with conditions (inspection, financing). After acceptance:

  • Pay a deposit (usually 5%)
  • Finalize your mortgage
  • Conduct home inspection
  • Close legally with your lawyer (30–90 days)

8. Know the Closing Costs

Don’t forget these extras:

  • Land transfer tax: 0.5%–2.5% (varies by province)
  • Legal fees: $1,000–$2,000
  • Title insurance: ~$300
  • Home insurance: ~$900/year
  • GST/HST: Applies to new builds

Conclusion & Next Steps

Buying a home is one of the biggest financial decisions you’ll ever make. With the right knowledge, tools, and team, you can avoid pitfalls and make a smart, long-term investment. Ready to start your home-buying journey?

Visit today.

Frequently Asked Questions

1. How much down payment do I need?
As little as 5% for homes under $500,000. For homes over $1 million, 20% is required.
2. Can I use RRSP or FHSA for a down payment?
Yes. RRSP via Home Buyers’ Plan (up to $35K) and FHSA up to $40K are allowed.
3. What credit score is needed?
Ideally 650 or higher for better mortgage rates, though some lenders accept lower with conditions.
4. What is CMHC insurance?
Mandatory mortgage insurance if down payment is under 20%. Cost: 2.8%–4% of loan amount.
5. Should I get a fixed or variable mortgage?
Fixed gives stability; variable may offer savings if rates drop. Depends on risk tolerance.
6. How long does the process take?
Usually 3–6 months from pre-approval to closing, depending on the market.
7. What is a pre-approval letter?
A conditional mortgage amount estimate based on your financials—valid for 90–120 days.
8. Do I need a real estate lawyer?
Yes, they handle contracts, title searches, and registration. Costs ~$1,000–$2,000.

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