The Complete First-Time Home Buyer Guide to Ontario, in Fourteen Steps

The purchase, in the order it happens

Buying your first home is exciting, and it becomes overwhelming quickly if you meet the steps out of order. The easiest way to understand it is as a sequence of stages: financial preparation, then mortgage, then location, then property, then offer, then due diligence, then financing, then legal closing, then homeownership.

This is the process Robin asks first-time buyers to understand before they begin.

Step 1 — Establish a comfortable budget

Do not begin with a listings site. Begin with your finances. Income, minus debts, minus regular expenses, minus savings goals, minus estimated housing expenses, gives you a comfortable housing budget.

Your housing costs include the mortgage, property taxes, insurance, utilities, maintenance, condo fees, parking and transportation. The maximum mortgage a lender approves is not automatically your ideal budget, and treating it as one is the most common mistake at this stage.

Step 2 — Understand your down payment

Current federal guidance sets a minimum down payment that steps up in bands as the purchase price rises, and a down payment below the threshold in those rules generally requires mortgage loan insurance.

Confirm the current bands and thresholds with your mortgage professional. Then compare the scenarios rather than assuming a larger down payment is automatically better — a smaller down payment plus insurance and a larger down payment with a smaller loan produce different monthly costs and leave you with different amounts of money afterwards.

Step 3 — Explore the First Home Savings Account

The FHSA can be particularly valuable for an eligible first-time buyer. CRA provides participation room in the year the first FHSA is opened, with an annual limit and a lifetime contribution limit, and contributions are generally deductible subject to the rules.

This is something prospective buyers should investigate well before they are ready to make an offer, because the participation room only starts once the account is open.

Step 4 — Understand the Home Buyers’ Plan

Eligible buyers may also be able to use the federal Home Buyers’ Plan to withdraw from an RRSP toward the purchase, subject to eligibility and the program rules, with the amount generally repaid to the RRSP over a set period.

Speak with a qualified financial or tax professional about whether the FHSA, the HBP, both or another strategy makes sense for your situation.

Step 5 — Get a mortgage pre-approval

Before serious shopping, speak with a mortgage professional. They will look at your income, employment, credit, existing debts, down payment, the property type you are considering and the mortgage terms.

Remember what a pre-approval is: preparation, not permission to spend every dollar it names.

Step 6 — Budget for closing costs

Your down payment is not your only upfront expense, and closing costs are where first purchases most often go wrong in the final two weeks.

• Land transfer tax — provincial, plus municipal inside the City of Toronto.
• Legal fees and title insurance.
• Home inspection, and an appraisal where required.
• Property tax and utility adjustments.
• Moving costs and home insurance.
• Condo-related expenses, including the status certificate fee.
• New-construction adjustments where applicable.

Step 7 — Choose your city before choosing your house

This is one of Robin’s strongest recommendations. Do not fall in love with a house and then convince yourself the location works.

Work through employment, commute, family, schools, transit, lifestyle, affordability and future plans first, and let the shortlist of communities come out of that. Brampton, Mississauga, Kitchener, Cambridge, Milton, Toronto, Vaughan, Caledon, Oshawa, Burlington, Oakville and Hamilton are all different answers to different versions of that question.

Step 8 — Determine your property type

A condo can offer a lower entry price in some markets and less exterior maintenance, but the condo fees and the corporation’s finances matter enormously. A townhouse can balance space against price. A semi-detached may provide more space than some townhouses while costing less than a comparable detached property. A detached home offers more independence and often more land, at a higher purchase price and a larger maintenance responsibility.

Do not choose based on prestige. Choose based on your financial and lifestyle needs.

Step 9 — Begin your search

Create two lists before you view anything. Must-haves are things like your maximum budget, the number of bedrooms, location, parking and commute. Nice-to-haves are things like a finished basement, quartz countertops, a large yard, upgraded flooring or a fireplace.

The discipline is simple and it is the whole point of writing them down: do not sacrifice a must-have because you fell in love with a nice-to-have.

Step 10 — Evaluate the property

Before making an offer, consider the comparable sales, the property’s condition, the neighbourhood, the taxes, the renovations, the lot, parking, the basement, future resale considerations and any potential major repairs.

For condominiums, add the corporation’s documents and the related due diligence to that list — the building’s finances are part of the property you are buying.

Step 11 — Build the offer strategy

An offer is not only about price. It is price, deposit, closing date, conditions, inclusions, exclusions and other terms, and each of those is a lever.

Your strategy should reflect this property and this market — not a tactic you saw in a video six months ago in a different market.

Step 12 — Complete the appropriate due diligence

Depending on the transaction, this can include the home inspection, financing, lawyer review, the status certificate, insurance, permit questions, property information and comparable sales.

Different properties require different due diligence. A new build, a resale detached home, a condominium and a power-of-sale property each need a different set of checks, and using a standard list on all four is how things get missed.

Step 13 — Prepare for closing

Once the transaction becomes firm, stay organized. You are now coordinating your REALTOR®, your mortgage professional, your lawyer and your insurer.

Confirm the deadlines and the funds required for closing early, in writing, and do not take on new credit between the firm deal and the closing date.

Step 14 — Plan for life after closing

Keep an emergency reserve. Homes require maintenance and something eventually breaks — the HVAC, the roof, appliances, plumbing, electrical, landscaping, condo fee increases where applicable, and general repairs.

Buying the house is only the beginning of homeownership, and the households that enjoy it are the ones that still have money left the month after they move in.

Robin’s first-time buyer perspective

Your first home does not need to impress everyone. It needs to work for you.

Robin would rather see a first-time buyer purchase a property they can comfortably carry than stretch financially to buy a bigger house. You can upgrade later. Your first home should help build your future, not make every month financially stressful.

Common questions

How much down payment do I need? It depends on the purchase price and your mortgage circumstances. The federal minimum steps up in bands as the price rises — confirm the current bands with your mortgage professional before you plan around them.

Can first-time buyers get a longer amortization on an insured mortgage? Federal mortgage reforms expanded the maximum amortization for insured mortgages to first-time home buyers and buyers of new builds, subject to the applicable requirements. Confirm the current maximum and the eligibility rules with your mortgage professional.

Should I buy the maximum amount I am approved for? Not necessarily. Qualification and comfortable affordability are different concepts, and only one of them has to live with your monthly budget.

What city should I buy in? There is no single best city. Employment, commute, budget, family, lifestyle and property type should determine your shortlist.