Are you ready to take the plunge into homeownership? That’s amazing news! Becoming a homeowner is an exciting milestone that can provide long-term financial benefits.

But before you start scouring online listings, it's important to understand the basics of home buying as a first-time buyer in Canada. Here, we'll provide a comprehensive checklist to help you navigate the home buying process with ease.

Key takeaways:

First-time homebuyers in Canada may be eligible for certain benefits that can make the process more affordable.
To be considered a first-time homebuyer in Canada, you must not have owned a home in the past four years, have a minimum down payment of 5 per cent of the purchase price, and plan to occupy the home as your primary residence.
It’s also important to assess your financial situation, long-term plans, and lifestyle, as well as the current state of the real estate market in your area.

As a first-time homebuyer in Canada, you may be eligible for certain benefits that can make the process more affordable. One of the most popular programs is the First-Time Home Buyer Incentive, which provides a shared-equity mortgage with the Government of Canada.

This means that the government shares the cost of your home, reducing your monthly mortgage payments. You may also be eligible for a Land Transfer Tax rebate or a Home Buyers' Plan, which allows you to withdraw funds from your RRSP to put towards your down payment.

Owning a home can provide a sense of stability and security that renting cannot offer. You have the freedom to customize and personalize your home to your liking, and you don't have to worry about the possibility of your landlord deciding to sell the property or not renewing your lease.

On top of that, your home may appreciate in value, meaning that if you decide to sell it down the line, you may be able to make a profit. Owning a home can also help you build equity, which can provide a financial safety net in the event of unexpected expenses or emergencies.

To be considered a first-time homebuyer in Canada, you must meet certain criteria.

According to the Canadian Mortgage and Housing Corporation (CMHC), the criteria is that:

You have never purchased a home before.
Additionally, you must have a minimum down payment of 5% of the purchase price and demonstrate that you can afford mortgage payments and other associated costs.‍
You shouldn’t have owned a home or lived in a home owned by your spouse in the past four years. This means that if you owned a home more than four years ago, you may still be eligible for first-time buyer benefits.

It's important to note that the qualifications for Canadian first-time buyers may vary slightly depending on the province or territory where you're purchasing your home. For example, some provinces offer additional incentives or rebates for first-time buyers, while others may have different down payment requirements.

It's also key to understand that as a first-time homebuyer, you’ll be subject to the same mortgage stress test that all homebuyers in Canada must undergo. This means that your lender will assess whether you can afford your mortgage payments if interest rates were to rise, so you don't take on a mortgage that you can't afford.

Finally, it's worth noting that there are certain limitations on the types of properties that first-time homebuyers can purchase.

For example, if you're using the First-Time Home Buyer Incentive, the maximum purchase price of your home must not exceed four times your household income. Some lenders may also have restrictions on the types of properties they will finance, such as condos or homes in certain neighbourhoods.

First and foremost, you'll need to assess your financial situation. Owning a home comes with many expenses beyond just the mortgage payments, including:

property taxes
home insurance
maintenance costs

It's important to evaluate your budget to ensure that you can comfortably afford these additional expenses, in addition to your regular living expenses.

You should also consider your long-term plans: do you see yourself living in the same city or neighbourhood for the next five to 10 years? If not, buying a home may not be the best decision for you.

Plus, if you anticipate significant life changes in the near future, such as starting a family or changing jobs, you'll need to evaluate whether homeownership fits into your overall plans.

Another important factor to consider is your lifestyle. Are you prepared to take on the responsibility of maintaining a home? This includes everything from lawn care to making repairs when necessary. If you're not interested in or able to take on these tasks, it may be best to stick with renting.

You should also consider the current state of the real estate market in your area. Are homes selling quickly or sitting on the market for extended periods? Are prices on the rise or falling? These factors can have an impact on your ability to find a home within your budget.

The home buying process can be complex at first. But by breaking the process down into manageable steps, you can navigate the process with greater ease.

Step 1: Determine your home buying budget

The first step in the home buying process is to determine your budget. You'll need to evaluate your financial situation, either by yourself or with your partner, and decide how much you can afford to spend on a home. This will involve looking at your income, debts, and other financial obligations.

Step 2: Find a home within your budget

Once you've established your budget, you'll need to start looking for homes within that price range. You can work with a real estate agent to help you find properties that meet your needs.

Step 3: Review all home financing options

As a new buyer, it's important to review all home financing options available to you. This may include traditional mortgages, government-backed loans, and other financing options. We recommend that you speak with a nesto mortgage expert to get the best rates & strategy!

Step 4: Understand and apply all first-time homebuying incentives

There are several incentives available to first-time homebuyers, such as tax credits, rebates, and grants. It's important to understand and apply for all incentives for which you qualify to help reduce the overall cost of your home.

Step 5: Browse mortgage rates from banks and lenders

Before you can make an offer on a home, you'll need to secure financing. This will involve browsing mortgage rates from various banks and lenders to find the best deal.

Step 5: Make an offer

Once you've found a home and secured financing, you can make an offer on the property. Your real estate agent can help you through this process and negotiate on your behalf.

Step 6: Get a home inspection

Before finalizing the purchase, you'll want to get a home inspection to ensure that there are no major issues with the property.

Step 7: Close on your new home

Finally, you'll need to close on your new home. This will involve signing all necessary paperwork and paying any closing costs. Once this is done, the home will officially be yours.

You can successfully navigate the home buying process as a first-time homebuyer! It may take some time and effort, but with the right support and guidance, you can achieve your goal of becoming a homeowner.

Part of buying your first home is protecting both your home and the people who live there. Life insurance provides financial peace of mind for you and your loved ones if the unimaginable were to happen.

Life insurance provides your beneficiaries with a tax-free lump sum payout, also known as a “death benefit,” if you were to pass away. The death benefit can be used for anything your beneficiaries see fit, including:

Mortgage payments
Final expenses
Childcare costs
Post-secondary education

Term life insurance is the best option when it comes to getting life insurance to protect your home. It covers you for a set term length, usually 10, 20 or 30 years. That means you can get coverage for just as long as you need it, like the years your mortgage is active.

It’s also affordable, so you don’t have to worry about how you’ll squeeze another monthly payment into your budget.

Get a quote completely online and find out how you can save up to 20% on your term life insurance.

Final thoughts

Becoming a first-time homebuyer in Canada is an exciting and rewarding experience. ButHowever, it's important to approach the process with caution and a clear understanding of the requirements and responsibilities involved. By following this checklist and seeking guidance from experienced professionals, you can make informed decisions and find the perfect home for your needs and budget. Good luck!

FAQ: Buying a home in Canada

How long does it take to buy a house?

The timeline for buying a house in Canada can vary depending on several factors, such as the availability of homes in your preferred location, the complexity of the financing process, and the time it takes to negotiate the terms of the sale. Generally, the home buying process in Canada can take anywhere from a few weeks to several months.

How much mortgage can I afford?

The amount of mortgage you can afford in Canada depends on several factors, including your income, debt-to-income ratio, credit score, down payment, and other financial obligations. A general guideline used by lenders is the "28/36 rule," which means your mortgage payment should not exceed 28 per cent of your gross monthly income, and your total debt payments (including your mortgage) should not exceed 36 per cent of your gross monthly income.

First-time Canadian Homebuyer Checklist: What You Need to Know