Step one: find out what you qualify for
Before you book showings, get a pre-approval based on reviewed documents. It sets your realistic price range and holds a rate while you shop. An online estimate is a useful starting point, not a budget - lenders count income differently depending on whether it is salaried, hourly, commissioned or self-employed.
Down payment
Minimums in Canada are tiered: 5% on the first $500,000 of price, 10% on the portion from $500,000 to $1,500,000, and 20% above that. With less than 20% down, default insurance is required and the premium is normally added to your mortgage.
Down payment funds can come from savings, a gift from an immediate family member, an RRSP Home Buyers' Plan withdrawal or an FHSA. Whatever the source, the lender will ask for documentation and roughly 90 days of account history.
How qualification actually works
GDS ratio
Mortgage payment, property tax, heat and half of condo fees, measured against gross income.
TDS ratio
The same housing costs plus car payments, credit cards, lines of credit and student loans.
Stress test
You must qualify at the greater of your contract rate plus 2% or the 5.25% benchmark rate.
Credit
Payment history and utilization matter more than most first-time buyers expect.
Existing debt
Paying off a car loan can raise your purchase power more than saving another few thousand dollars.
Closing costs to plan for
On top of your down payment: Ontario land transfer tax (with an additional municipal land transfer tax inside the City of Toronto), lawyer fees and disbursements, title insurance, a possible appraisal, a home inspection if you choose one, and adjustments for prepaid property taxes or utilities.
First-time buyers may be eligible for a provincial land transfer tax refund, and a further municipal refund in Toronto. Eligibility rules change from time to time, so confirm current amounts with your real estate lawyer rather than relying on a blog post.
Fixed or variable on a first mortgage
If a payment increase would put real stress on your budget, a fixed rate buys certainty for the term. If you have cushion and might move or refinance before the term ends, a variable rate is worth modelling - partly because breaking it later usually costs three months' interest rather than an interest rate differential.
Documents lenders typically request
Photo ID; recent pay stubs and a job letter; the last two years of T4s and Notices of Assessment; 90 days of statements showing your down payment; the agreement of purchase and sale once you have one; MLS listing; and for a condo, the status certificate. Self-employed buyers submit business financials and T1 Generals instead of pay stubs.
Next step
Send the online application - about five minutes - and we will book a short call to go through your numbers, your timeline and what a realistic price range looks like before you start shopping.