Buying a home for the first time can certainly be daunting. You need to learn the process, understand the real estate terms, and make a sound financial decision all at the same time. It’s easy to see why many first-time home buyers are too intimidated to even get started.

What if there was an easier way? Well, now there is. We’ve put together this first-time home buyer’s guide to help you make sense of the process.

All information is ordered according to the flow of the processes themselves, giving you a glimpse into the process from start to finish. By the time you finish with this article, you’ll be prepared to purchase your first home.

Do You Have the Minimum Downpayment?

You’ll be required to make a downpayment before buying your first home. In Canada, the minimum downpayment is 5% for homes costing $500,000 or less, with a higher down payment required for more expensive homes.

Saving up for this downpayment is usually a long process and a big hurdle for first-time home buyers. Having a savings plan is vital, complete with a target goal and regular contributions.

Additionally, make sure that your monthly budget is able to accommodate a new mortgage payment. While in some cases this payment is lower than rent, it may be higher depending on your situation.

Here are a couple of expenses you will need to budget for:

  • Mortgage payment
  • Property taxes (if you don’t blend it into the mortgage payment)
  • Home insurance
  • Upkeep and maintenance

Becoming a homeowner is an exciting milestone, but like most things in life, careful planning is required to protect your investment.

Get Pre-Approved Before Your First Viewing

Pre-approval is music to a seller’s ears. While not a hard requirement, being pre-approved for a mortgage should be considered essential.

After you have saved up your down payment, it’s time to start hunting for a mortgage. You may think to ask the financial institution you already have a relationship with, but finding the best rate may require you to shop around.

Mortgages are big business for financial institutions, and it’s in their best interest to offer competitive rates. As a first-time home buyer, you will need to fill out several applications, providing key information like:

  • Relevant tax documents like your T4
  • Current employment status
  • Total debt
  • Government-issued IDs
  • And other documents the bank may require

Your primary figure to focus on is the interest rate. Even half a percentage point can make a huge difference when it comes to your monthly payment and how much you will end up paying in interest over the life of the mortgage.

Should You Use a Mortgage Broker?

A mortgage broker is a specialized broker that helps you find the best mortgage possible. They have established relationships at big banks, credit unions, and smaller lenders. Using all of their connections, they’re able to access rates and products that aren’t even available to you.

This means that a mortgage broker is usually a great decision. They take most of the tough work out of the equation, helping you make an informed decision. The best part is that most mortgage brokers are paid by the financial institution (via commission) that you end up selecting at no added cost to you.

Do You Qualify for Any First-Time Home Buyer Incentives?

There are several programs that provide various benefits to first-time home buyers. The goal of each of these programs is to help these new buyers successfully make their first purchase.

Some of the common first-time home buyer programs in Canada are:

  • All eligible first-time home buyers may receive the Home Buyer’s Tax Credit, which generally works out to a tax rebate of $750
  • The Home Buyer’s Plan, known as HBP, is a program offered by the Canadian government that allows first-time home buyers to borrow up to $35,000 from your RRSP, completely tax-free, for your down payment
  • Land transfer tax rebates are available to first-time buyers in certain provinces: Prince Edward Island, Ontario, and British Columbia offer programs like these. In Ontario, first-time home buyers can receive up to a $4,000 credit

Other programs may be available in your area as well. Look for any government agencies or nonprofits that assist first-time home buyers with getting into their new home.

Schedule Home Viewings That Fit Your Criteria

At this point, you are pre-approved for a phenomenal mortgage and you’re ready to start viewing homes. Where do you start?

Before you even start looking at properties online, make a list of must-haves. What features do you absolutely require? Make a list so that you can refer to it throughout the process.

This might go without saying, but just to be safe, never view a property that you simply can’t afford. That’s a waste of everyone’s time, and it might even make houses within your price range seem less appealing.

Now, it’s time to start looking at properties. Head online and start looking at listings. Browse the photos, read the descriptions, bookmark listings that you like. If there are any specific questions that come to mind, make a note of them so that you can ask them at a future date.

Once you’ve made your list, it’s time to contact your real estate agent. They will contact the listing agents and arrange a viewing. It’s typically up to your real estate agent to handle scheduling and include driving time between properties, along with being aware of any overlapping appointments.

After you’ve decided on your next home, it’s time to make an offer. Since you already got pre-approved, you’ll be ready to make an offer once you find a property with all your must-haves for the right price.

Your real estate agent will advise you if it is currently a fast-paced market or a slow-paced market. Depending on the market speed, you may need to make your offer the same day you view the property. If it’s a slower market, then you may be able to take more time to weigh your options.

After you make an offer, you simply wait for the seller to accept. If they do, you’ll move on to the next step in the process: determining closing dates and costs.

Consider Closing Dates and Costs

Deciding on the closing date is more important than it might seem for one simple reason: if you are unable to close the loan on the closing date, you may lose the opportunity to buy that home and have to start over.

Even without going to this extreme, choosing the right closing date can minimize closing costs and make the rest of the buying process go smoothly. There are legal and real estate professionals that all need to complete their jobs before you become the home’s new owner. Giving them time to work will typically pay off.

A good general rule is to set a closing date that’s 30-45 days after the offer has been accepted. This will give the professionals plenty of time to go through the document-heavy process of buying a home.

Closing costs also need to be considered. These costs cover a variety of administrative and legal fees that must happen before you can take ownership of your new home. Generally, closing costs can range from 1.5 to 4% of the total purchase price. Additionally, there may be additional expenses that occur during this process.

Some of the common closing costs that you can expect are:

  • Home inspection fee
  • A deposit to hold the home that counts towards the deposit
  • Mortgage default insurance may apply depending on your down payment amount
  • Land transfer tax
  • Title insurance
  • Legal fees

Make sure that you understand all of the closing costs that apply to your transactions. Remember, there may also be a first-time homebuyer program that helps you cover closing costs. It’s well worth looking for these programs in your area.

When the closing date arrives, a series of events happen that make you the new owner of the home. These events are:

  1. Your lender sends the mortgage funds to your lawyer
  2. You provide the down payment, less the deposit, to the lawyer along with any other closing costs
  3. Your lawyer pays the previous owner, the house is registered in your name, and you receive the keys (and deed) to your brand new home

Now, you’re ready to unpack your moving truck and truly take ownership of your new home.

Ready to Buy Your First Home? Let’s Get Started!

Now you understand the entire home buying process from a high-level overview. You’re ready to start saving and begin the process of becoming a homeowner. Before you know it, you’ll be relaxing in your new home.

Are you thinking of purchasing your first home? I love helping first-time home buyers find the perfect place to call home. Get in touch and we can get the process started!

Hi, I’m Joel, a real estate professional based in Toronto.

My approach is simple—I put you first. I believe in open communication, total transparency, and meaningful results. I’ll guide you through the real estate process, market values, and always keep the focus on you—and your needs.