Buying a home goes in a predictable order. Work through these steps and you will know your budget, your cash needs and your next decision at each stage. Source for the figures: Financial Consumer Agency of Canada.
1. Set a budget you can carry
Housing costs (mortgage, property tax and heat) should be no more than about 39% of your gross monthly income, and all your debt payments no more than 44%. Check yours with the GDS and TDS calculator, then find a price range with the affordability calculator. Your take-home pay and a monthly budget show what feels comfortable.
2. Save the down payment
The minimum is 5% of the first $500,000, 10% of the part up to $1.5 million, and 20% at $1.5 million or more. Under 20% down, you pay mortgage insurance. See the down payment calculator and the CMHC insurance calculator. First-time buyers can use an FHSA, the Home Buyers’ Plan and other programs in the first-time buyer guide.
3. Set aside closing costs
Budget between 1.5% and 4% of the price for one-time costs paid by closing day: legal fees, inspection, property tax adjustments, title insurance and, in most provinces, land transfer tax. Work out the tax with the land transfer tax calculator and the total with the closing cost calculator.
4. Get preapproved
A preapproval shows what a lender would lend you and holds a rate for a period. Lenders will ask for proof of income and of the money for your down payment and closing costs. You will be qualified at the stress-test rate: see the stress test guide. Compare offers with the mortgage comparison calculator.
5. Find the home
You can search on your own or with a REALTOR®; the seller usually pays the commission. For a condo, ask for the status certificate or Form B. Price-check a home with the comparable sales calculator.
6. Make an offer with the right conditions
Common conditions are financing, a home inspection and, for a condo, a review of the status certificate. A deposit goes with the offer. If a condition is not met, you can walk away or renegotiate within the time the offer allows.
7. Close and move in
Your lawyer or notary registers the transfer, pays the land transfer tax and settles the adjustments. Plan the move with the moving checklist, and keep an eye on the first renewal a few years out.
Try the closing cost calculator →
Official source
This guide explains general rules. Confirm your figures with your lender, lawyer, or the official source before you act.