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Welcome to your home-buying journey. Buying a home is exciting, but it also involves important financial, legal and practical decisions. This guide explains the main steps and highlights questions to discuss with your real estate professional, lender, and lawyer.
STEP 1: Define Your Must-Haves
Before browsing listings, make a shortlist of what matters most. Consider:
- The areas that work for your commute and access to schools, hospitals, parks or other amenities
- The number of bedrooms and bathrooms you need
- Accessibility or mobility needs
- Your preferred home type, once you understand what fits your budget
- Features you would like but could compromise on
Separating “must-haves” from “nice-to-haves” can help you focus your search and avoid being distracted by features that are appealing but not essential.
STEP 2: Prepare Your Finances
A lender will look at more than your credit score when assessing a mortgage application. They may consider your income, debts, credit history, down payment, and ability to manage mortgage payments.
Start by reviewing your credit reports, paying bills on time and keeping your budget manageable. Avoid taking on new debt or making major financial changes while your mortgage application is being assessed without first speaking to your lender.
Down payment basics
For an eligible home priced below $1.5 million, the minimum down payment is generally:
| Purchase price | Minimum down payment |
| $500,000 or less | 5% of the purchase price |
| More than $500,000 and less than $1.5 million | 5% of the first $500,000, plus 10% of the portion above $500,000 |
| $1.5 million or more | Generally 20% of the purchase price |
A down payment below 20% generally requires mortgage loan insurance if the mortgage qualifies for insurance. Your lender can explain eligibility, premiums, and payment options. The exact amount you need may vary with the property, mortgage product, and your circumstances.
Plan for costs beyond the down payment, including legal fees, inspection and appraisal costs, property tax adjustments, moving expenses, and land transfer tax. Ontario land transfer tax applies to many purchases; Toronto buyers may also pay Toronto’s municipal land transfer tax. Eligible first-time buyers may qualify for a rebate.
STEP 3: Speak With a Lender and Get Pre-Approved
A mortgage pre-approval can help you understand a possible price range and the lender’s estimated terms. It is not a final mortgage commitment or a guarantee that financing will be approved for a particular property. The lender will still review your finances and the property before final approval.
You can speak with your bank, credit union, or a mortgage broker. Compare the terms, costs, and conditions, and ask how changes in interest rates or your finances could affect the pre-approval.
You can make an offer without a pre-approval, but doing so may make it harder to assess affordability and financing risk. Discuss your timing and options with your lender and real estate professional before you offer.
STEP 4: Search for Homes and Understand the Market
Start with your preferred areas, budget, and basic needs. As you learn what is available, refine your search by home type, size, condition, and amenities. Online listings are useful for narrowing your choices, but photos and descriptions cannot replace an in-person visit.
Market conditions vary by area and property type:
- In a market with more homes available than buyers, buyers may have more choice and time to compare properties.
- In a market with more buyers than homes, competition may be stronger, and decisions may need to be made more quickly.
Neither asking prices nor market labels guarantee what a home will sell for. Ask your real estate professional for current, relevant information about the specific property and area.
Keep your full budget in view
Do not assume that the maximum amount a lender may approve is the amount you should spend. Allow for closing costs, repairs, maintenance, utilities, property taxes and unexpected expenses.
Consider homes below your maximum budget, including ones that may not look perfect online. A home’s layout, condition, and suitability can be easier to judge in person.
STEP 5: Choose a Real Estate Professional
In Ontario, review the RECO Information Guide before receiving services or assistance from a real estate agent. If you decide to work with an agent, read the written representation agreement carefully before signing. Confirm the services, scope, duration, cancellation terms and compensation, including who may be responsible for paying it.
There is no universal rule that the seller always pays the buyer’s agent. Compensation is negotiable and should be clearly set out in the applicable agreements. Ask questions if any term is unclear.
When choosing an agent, consider:
- Whether they know the areas and types of property you are considering
- How they communicate and how available they will be
- The services they will provide and what is outside the agreement
- Their experience with the kind of transaction you are planning
- Whether you feel comfortable asking questions and discussing concerns
You can also check an agent’s registration through RECO. If the same brokerage or agent may represent more than one party in a transaction, ask how that works and what choices you have before deciding whether to consent.
STEP 6: View Properties Carefully
During showings, focus on location, layout, condition and whether the home fits your needs. Consider bringing a measuring tape, taking notes and, where permitted, taking photos for your personal reference.
Look for signs of water entry or moisture, unusual odours, visible cracks, damaged finishes, and signs of deferred maintenance. Pay attention to the roof, basement, windows and major systems, but remember that a showing is not a substitute for a professional inspection.
Ask about the age and condition of key systems, recent repairs, property taxes, utilities, and any renovations. If you are considering a condominium, ask for and review the relevant condominium documents with your lawyer.
STEP 7: Make an Offer
Before submitting an offer, review the price, deposit, closing date, included and excluded items, and any conditions with your real estate professional. Consider speaking with your lawyer before signing, especially if you have questions about the agreement.
Depending on your circumstances, an offer may include conditions such as:
- Financing: Gives you time to obtain the financing described in the condition.
- Inspection: Gives you time to arrange an inspection and respond as the agreement permits.
- Sale of your existing property: Makes the purchase subject to selling your current home, if the condition is drafted that way.
- Condominium document review: Gives you time to review documents such as the status certificate with your lawyer.
A condition does not automatically let you cancel in any circumstance. Its wording, deadlines, and the steps required to satisfy or waive it matter. Have your agent and lawyer explain these before you sign.
A seller may accept, reject or counter an offer. In Ontario, buyers who have made an offer are entitled to know the number of competing offers; the seller decides whether other offer details are shared, subject to applicable rules and written direction.
The deposit is paid according to the agreement and credited toward the purchase on closing. Confirm the amount, deadline, payment instructions, and who will hold it before sending funds.
STEP 8: Arrange Financing, Inspections and Legal Review
After your offer is accepted, work promptly with your lender to complete the mortgage application. The lender may request documents about you, the property, and your finances. Ask the lender for its specific list; requirements differ.
If your agreement includes an inspection condition, arrange the inspection within the agreed timeframe. An inspection provides an opinion about the home’s observable condition; it does not guarantee that every defect will be found. Your right to take action based on the inspection depends on the wording and deadlines in your agreement.
An appraisal is usually arranged for the lender’s purposes and is separate from a home inspection. If the appraised value differs from the purchase price, discuss the implications with your lender and lawyer. It does not automatically cancel the purchase agreement.
Your lawyer will review title and closing matters and explain title insurance options. Title insurance may protect against certain covered title-related risks; it is not a substitute for a home inspection or legal review.
Arrange appropriate home insurance before closing, as your lender may require proof of coverage. If you are buying a condominium, ask your lawyer about the condominium corporation’s insurance and what coverage you need for your unit and belongings.
STEP 9: Prepare for Closing Day
Your lawyer will tell you how much money to provide for closing and when it is due. This usually includes the balance of your down payment after the deposit, closing costs, and any required adjustments.
Closing costs can include legal fees and disbursements, land transfer tax, title insurance, property tax or utility adjustments, and other transaction-specific expenses. Their total varies, so ask your lawyer for an estimate.
On closing, your lawyer coordinates the transfer of funds and registration of the purchase. Once the transaction has closed and the required steps are complete, you can take possession according to the agreement and receive the keys.
Important Note
This guide is general information, not legal, mortgage, tax, or inspection advice. Rules, costs, and eligibility depend on the property and the buyer’s circumstances. Confirm important details with your Ontario real estate professional, lender, lawyer, and other qualified professionals.
The province provides current land-transfer-tax guidance. (cmhc-schl.gc.ca)
