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Writer's pictureKomal Vij

How to buy your first home in Canada?

Updated: Oct 26, 2023

Are you dreaming of owning your first home in Canada but not sure where to start?

buying your first home in Canada
Home Ownership helps you build equity with every mortgage payment.

Buying your first home is an exciting and significant milestone in life, but it can also be a complex and overwhelming process. As a potential home buyer in Canada, it's essential to have a clear understanding of the steps involved, the financial considerations, and the key factors to consider before making this important investment. In this comprehensive guide, we will walk you through the process of buying your first home in Canada, providing you with valuable insights and practical tips to help you navigate the real estate market with confidence.


Are Your Ready for Home Ownership

Before diving into the home buying process, it's crucial to evaluate your financial readiness, lifestyle preferences, and long-term goals.


Ask yourself these 5 questions before you decide if you’re ready to own a home.

  1. Am I financially stable?

  2. Do I have the financial management skills and be able to handle this large a purchase?

  3. Do I have enough savings?

  4. Am I ready to take handle all the costs that come with being a homeowner?

  5. Can I devote the time to regular home maintenance?

A good credit score is crucial when applying for a mortgage. A higher credit score can lead to better mortgage terms and lower interest rates.
Your step by step guide to buying a home in Canada - Home Buyer's Guide

Setting a Realistic Budget & Mortgage Pre-Qualification

It's crucial to assess your financial situation thoroughly. Evaluate your savings, income, expenses, and debts to determine the maximum amount you can afford to spend on a home. Consider additional costs like property taxes, insurance, and maintenance fees when calculating your budget. Talk to your mortgage broker to get pre-qualified.

Create an emergency fund for unplanned expenses.
Know your down payment options in Canada

Saving for a Down Payment & closing costs

In Canada, a down payment of at least 5% to 20% of the home's purchase price is typically required. Saving for a substantial down payment can help you secure a more favorable mortgage rate and reduce your overall borrowing costs. With a larger down payment you will owe less money over time. Remember to factor in & save for closing costs which is usually 1.5% of the property purchase price.

Tips to save down payment;

  • You must prioritize savings

  • Try to pay off your debts before considering a mortgage

  • Take advantage of the First-Time Home Buyer Incentive

  • Open First Home Savings Account (FHSA)

  • Borrow from your RRSP under Home Buyer's Plan

  • Take advantage of saving in your Tax Free Savings Account (TFSA)

Remember, when you buy your home, it’s not just the purchase price you need to worry about.
buying your first home in canada. best mortgage broker in alberta
Buying your first home in Canada can be an exciting but complex process. Image Credit: Freepik.com

Getting Pre-Approved for a Mortgage

Obtaining a mortgage pre-approval is an essential step in the home-buying process. This involves providing your financial information to a lender, who will assess your creditworthiness and determine the maximum mortgage amount you can qualify for. Pre-approval gives you a clear idea of your budget and strengthens your position as a serious buyer in the eyes of sellers. Talk to your mortgage broker who can help you find the right mortgage, best interest rates and terms to suit your needs.


Researching the Real Estate Market & House Hunting

The three most important factors when buying property are location, location, and location. To make an informed decision, you need to have a good understanding of your local real estate market as it helps you understand where you are in the real estate market cycle and whether it's better to buy, sell, or hold.

Hire and work with a professional real estate agent who will will guide you through the home search with an unbiased eye, helping you meet your buying objectives while staying within your budget. If you choose to look for a house without a realtor, you may miss important details about the local market, the property you buy, and other potential properties too.

With your real estate agent's assistance, start visiting properties that meet your requirements. Attend open houses, schedule private viewings, and pay attention to critical factors such as location, size, amenities, and proximity to schools, transportation, and other services.

Buying your first home is a significant milestone that requires careful planning, research, and preparation.
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Making an Offer and Negotiating

Once you've found your dream home, it's time to make an offer and negotiate with the seller. With your real estate agent's guidance, assess the market value of the property and decide on a competitive yet reasonable offer price. Consider recent sales of similar properties in the area and any unique attributes of the home you're interested in.

When making an offer, you can include conditions that must be met before the sale is finalized. Common conditions include a home inspection, financing approval, and a review of the property's legal documents.

Be prepared for possible counteroffers from the seller. Negotiate in good faith and remain open to compromises that benefit both parties. Your real estate agent will play a crucial role in mediating and facilitating these negotiations.


Completing Due Diligence and Home Inspections

Performing thorough due diligence for the property and getting home inspections are critical to identify potential issues with the property as it can help you avoid costly headaches.

Always invest in a professional home inspection before finalizing your purchase.

Closing the Deal

Once the mortgage & home inspection conditions are removed, your real estate lawyer will become involved to deal with conveying the property title to you. You will meet with your lawyer to sign the documentation that transfers the property ownership to you. The lawyer will also deal with your mortgage lender and handle the payment of the purchase price to the seller.

Owning your own home is a process that can be exciting, confusing, and at times stressful, but with the right knowledge and preparation, it can also be an incredibly rewarding experience.

Congratulations on embarking on this exciting journey towards home ownership!

kvij@mortgagealliance.com I (780) 233-8500


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