Your Guide to Buying Your First House in Ontario

guide buying house ontario

Congratulations! If you find yourself reading this guide, it means you have started to think about buying your first home. Buying your first home is one of the biggest purchase decisions you will ever make. It is important to be informed and prepared during the process which is why the team at Davids & DeLaat want to help. We have put together a guide that will help Ontario’s first-time home buyers to get a better understanding of the home buying process and important things to consider.

Prepare Your Finances and Set Your Budget

Before you start looking at homes, it is important that you understand your budget and the kind of homes you can expect to find within it. There is nothing worse than falling in love with your dream home to find out that you will not be qualified to buy it. When you are planning your budget be sure to observe your current financial situation and make a plan to get you to where you need to be to purchase a home. Some pro-tips for assessing your finances are as follows:

  1. Credit Score
    Being aware of your credit score is important because it directly affects your likeliness of lenders approving you for a mortgage. The higher your credit score, the higher your chances of being approved are, typically at a lower interest rate when compared to lower credit scores. If your credit score is on the lower end, you can work on improving it while you prepare yourself to buy a home.
  2. Find Out What You Can Afford
    When considering how much you can afford to pay for your first home there are many different online tools and calculators that can help. These tools take into accounts things like your annual income, mortgage payments, interest, bills in your home, existing debt payments, and more. They can help you to find a general idea of how much home you can afford comfortably.
  3. Save for a Down Payment and Closing Costs
    Now that you have an idea of how much you can afford when buying your home, it’s time to make sure that you have the necessary funds to make the purchase. The biggest cost at the time of purchase is your down payment. Down payments are a percentage of the purchase price of your home that you are expected to pay out of pocket while the rest is financed through a mortgage. It is important to consider the following information that applies to first time home buyers in Ontario:
Purchase Price of the House Minimum Down Payment Required in Ontario
Less than $500,000 → 5% of the purchase price (example $300,000 x 5% = $15,000)
$500,000-$999,999 → 5% for first $500,000, 10% for the value past $500,000
$1 million + → 20%

*any downpayment less that 20% must have mortgage loan insurance which can cost anywhere between 0.6 – 4.5% of the mortgage amount, the higher your down payment the lower this cost will be. If you have a minimum 20% down payment, this cost disappears.

There are also several different types of incentives that are available for first time home buyers in Ontario such as Home Buyers Plan, First Time Home Buyers Incentive, Land Transfer Tax Rebates and more. Be sure to check if you qualify for any of these incentive programs when buying your first home, if you are unsure you can contact a professional for assistance. In addition to the down payment, it is important that you save an additional 1.5 – 4% for the closing costs on your home, these costs include things like hiring a lawyer, administrative fees, home inspections, and taxes. You want to be sure you have enough cash to cover both the down payment and closing costs on your new home.

Mortgage Pre-approval

Once you have saved up and you are financially ready to take on purchasing your first home, it is time to talk to a mortgage professional and start a pre-approval process. You can go directly to a bank or you can find a mortgage broker who deals with multiple lenders at the same time and often can find you the best available terms.

The benefits of having a pre-approval is you know the maximum amount of money you can potentially qualify for, the bank or mortgage broker can help you estimate mortgage payments, answer all your questions and can typically protect your interest rate anywhere from 60-120 days after the pre-approval. To help you prepare for meeting with a mortgage professional consider having these documents and information prepared:

  • Proof of employment (paystubs, t4’s, letter of employment)
  • Proof of down payment & where it is from (RRSP, Savings, etc.)
  • List of assets (owned car, investment portfolio, etc.)
  • List of debt (credit card, school loans, car loans, lines of credit, etc.)

Find a Qualified Real Estate Agent and Buy Your Home!

Once you have an idea of how much you would like to spend and have a pre-approval, you are ready to start looking for homes! Hiring an experienced real estate agent has many benefits when buying a home. They are knowledgeable in the market and help to make the experience as stress-free as possible. It is beneficial to have an idea of what features are most important to you in a home and communicate clearly with your real estate agent so they can provide you with a list of the best matches and help you find the perfect first home!

Looking for Experienced Real Estate Agents in the Niagara Region?

If you are looking to buy your first home in Niagara Region, Ontario, contact the expert real estate team at Davids & DeLaat. We pride ourselves in our dedication to our customers and we are experienced in helping first time home buyers enter the market. We want to help you find the perfect starter home today. Take a look at the available houses for sale in the Niagara Region now!

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