Welcome to the Houseful homebuyer guide. This guide will walk you through the homebuying process from start to finish. Whether you’re looking for a quick overview or you’re ready to dive deep on something specific, we have what you’re looking for. Learn how to get your finances in order, assemble a team of experts and make a winning offer on a home you love.
Buying a home is a major investment, and the best way to start is getting your finances in order. Most homebuyers mortgage their home. Rather than paying the entire price in cash, they take out a loan with a bank or other financial institution and pay it back over time.
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Down payment |
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| The first step is to save for a down payment. This is the amount of money you’ll need to have upfront when you finance a home. In general, you want to have 20% of a home’s price for a down payment. For example, a 20% down payment on a $500,000 home would be $100,000. Saving this much money takes time, which is why we recommend starting as soon as you can. Thankfully, there are down payment assistance programs available.
If you plan to buy a home with less than 20% of the purchase price, you’ll need to pay mortgage insurance as part of your monthly house payment. This type of insurance protects the lender if you default on the loan but goes away once your equity in the home reaches 20%. |
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Credit score |
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| While you save, you can also work on improving your credit score. Financial institutions use your credit score to decide whether they will lend you money and how much interest they will charge you if they do. Interest is the cost of borrowing money. When you pay back a home loan, you pay back the amount of money you originally borrowed plus interest. A lower interest rate means less to pay back over time and a lower monthly payment. The higher your credit score the more favourable of an interest rate you are likely to get. |
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Income |
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| Lastly, you’ll want to make sure you have a steady source of income. This will help you to qualify for loans and manage monthly payments later on. A good rule of thumb is you want to make enough money that your housing expenses amount to no more than one-third of your monthly take-home income. |
A down payment, strong credit score and reliable income will help you start the homebuying process off on the right foot. Lenders will look at all three to decide how much they are willing to let you borrow.
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Pre-qualification |
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| Even before you lock in a lender, you can work with a financial institution to better understand your budget. Pre-qualification involves a lender reviewing your financial information to estimate how much you can borrow. While you can make educated guesses on your own, pre-qualification is a more accurate measure of how much money you can borrow. Better still, it’s free and has no impact on your credit score. | |
| Get pre-qualified today |
Once you have an idea of how much you can afford to spend on a home, you can browse the housing market more seriously. The price of homes and the types of housing available will vary widely from region to region. For example, the average home in Toronto costs more than in most of the country, but there are more options available for condos and townhouses—both great ways to enter the housing market as a first-time buyer. On the flip side, while Edmonton may have fewer dense neighbourhoods, the average single-family home is more affordable.
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Searching for homes online |
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| Using a home search tool like Houseful allows you to browse the homes for sale in an area and follow regional market trends. This helps give you an idea of what neighbourhoods may best suit your needs—especially if you use the filter functionality to narrow your search to homes that fit your budget and have the features that matter most to you. Save your search on Houseful and you’ll get updates any time new homes in your search hit the market. | |
| Explore homes on Houseful |
You’ve gotten your personal finances in order, you’ve done the research to narrow your focus to a few specific neighbourhoods and you’re ready to buy a home in the next few months. What comes next? Pre-approval. Like pre-qualification, pre-approval involves a lender reviewing your financial information to determine how much you can borrow—but this time, it’s official.
When you’re pre-approved, it means that a lender has formally approved you for a specific loan amount. This means that when you’re shopping for homes, sellers know your offer has real weight behind it. Pre-approval also helps you lock in an interest rate, so you can precisely calculate what your monthly payment will be on any home.
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Pre-approval timeline |
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| You should get pre-approved if you plan on purchasing in the next 1-3 months. Why? For one, your pre-approval letter is only good for 90 days. That means that the amount and interest rate your lender approved you for can change if that window passes and you haven’t made a purchase.
Second, pre-approval counts as a hard credit inquiry. A hard inquiry happens whenever a lender needs to pull your official credit report. Hard inquiries lower your credit score slightly—there’s no way around it. The good news is, several hard inquiries around the same time (typically a 14-45 day window) will only count as one for the purposes of calculating your credit score, so you can get pre-approved by multiple lenders at the same time without taking multiple credit score hits. Once your pre-approval letter expires though, you will need another hard credit inquiry to get a new one. That’s why it’s best to get pre-approved only once you’re certain you’re ready to buy a home in the near future. |
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| Get pre-approved |
With financing in hand, you’re ready to hit the market—but you’ll need a little help. A good real estate agent has the expertise and the experience to guide you through the process of finding, touring and closing on a home. Real estate agents are licensed and trained professionals in the business of buying and selling homes. You may also hear agents refer to themselves as “Realtors”, but a real estate professional must be part of the Canadian Real Estate Association (CREA) in order to be considered a Realtor.
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Buyer’s agent |
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| If you’re searching for a home and see a listing you love, you may want to reach out to the listing agent directly. Here’s why you shouldn’t: they are already representing the seller! Instead, you’ll want to get your own real estate agent who can represent you and support your best interests, regardless of the property you’re interested in. They can contact sellers for you and help you prepare an offer, if and when you want to make one. They’ll also connect you with a network of other trusted experts who will play important roles during the closing process, like lawyers and inspectors.
A buyer’s agent is legally required to provide you with a document called a Buyer Representation Agreement (BRA). This outlines details like the property type you’re seeking, services the buyer’s agent will provide, commission to be paid, and other details. Keep in mind, it is the seller that pays the commission fees earned by the buyer’s agent. A BRA protects both parties and can incentivize agents to be more proactive because you’ve committed to terms that protect them, too. While you’re not legally required to work with a real estate agent when purchasing a home, a great agent is a major value-add. If you’re interested in buying a home soon, they’re a great person to have in your corner. |
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| Connect with an agent today |
You’ve done all your homework, you’ve assembled a team of professionals and you’re ready to make moves. Now comes the fun part: touring homes.
Touring homes is an exciting step. You get to picture yourself in new places and imagine what the next stage of your life will look like. That said, it’s easy to get caught up in the excitement and be distracted from any red flags.
In today’s digital home search environment, you may have a good feeling about a property before you even see it in person, especially if the listing has beautifully staged photos, a nice view, or even a new marble countertop. A checklist of what to look for can help keep you grounded as you evaluate every home you see.
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Trade-offs |
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| Visiting homes in-person is also one of the best ways to think through what you’re willing to trade off. It gives you the opportunity to see how the features you’ve prioritized relate to the listing price—and your budget. It’s unlikely that you’ll find a home that checks every single one of your boxes, so making a list of priorities can keep you focused on what matters most to you. | |
| Browse homes |
You found it: the home you want to make your own. It’s in an area you like, it has the features you want and it’s in your budget. Time to make an offer!
When it comes to making an offer, your real estate agent is your strongest ally. They have tools to help you understand how much homes have recently sold for in the area and where the home you’re interested in sits in comparison. They’ll offer advice on how to craft an offer that is competitive but with your interests in mind.
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Doing the math |
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| It’s easy to be impulsive once you’ve found the home you want, especially after a long search. Take time to thoroughly review all of the costs, including your down payment and estimated monthly costs. Make sure you factor in recurring expenses like HOA fees, if they apply.
There’s always a chance that someone else loves the home as much as you do. Think about how you want to approach situations like a bidding war. How far does your budget really stretch and what is your hard limit? Make sure you’ve discussed these possibilities with your agent before you’re in negotiations so they understand how competitive, risky or careful you want to be with your offer. |
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Negotiating |
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| When you make an offer, one of three things will happen:
1. The seller will accept the offer. The list price of the home isn’t necessarily what it will sell for. In a more competitive market, you may need to offer above asking price, and in a less competitive market, you have more room to make an offer lower than what it’s listed for. If your offer is significantly lower than the asking price, it’s in your best interest to include some kind of explanation, such as market data from your agent to support your position. |
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Conditions |
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| The dollar amount of your offer is important, but so are the attached conditions. A condition is a term that the seller must meet in order to finalize the home purchase. As a buyer, your conditions will outline situations where you can back out of the deal or renegotiate your offer, such as issues that come up during an inspection. Having fewer conditions can make your offer more appealing to a seller and can be valuable if you don’t want to put forward more money. That said, conditions usually exist to protect you and your interests, so you’ll want to think critically about when and where to waive them. |
Once a seller accepts your offer, you’ve reached the final stage of your homebuying journey. Congrats! You almost have the keys, but there are a few final steps. The full closing process can take about a month, and while the process will differ a bit between provinces, here’s what you can generally expect.
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Appraisal |
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| If you are financing your home through a lender, they will want an official appraisal of the property. This means that a licensed, third-party appraiser will visit the home and determine its value so that your lender can justify the amount they are lending you. Generally, the appraiser will spend 30 minutes to one hour examining the property, after which they will write an official appraisal report and share it with your lender a few days later. This is an essential step prior to finalizing your mortgage. If the appraisal comes in lower than your offer price, you won’t be able to borrow the amount required for the mortgage. |
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Inspection |
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| In addition to having the home appraised, you’ll also want to have the home inspected. In an inspection, a licensed professional will visit the home to determine its overall condition. This protects you as a buyer, as it lets you know exactly what you’re purchasing. An inspection may uncover issues that neither you nor the seller knew about and could affect the nature of your offer. |
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Transfer of ownership | ||||
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| If after the appraisal and inspection you’re still ready to move forward with purchasing the home, your agent, lawyer and lender will work with you and the seller’s representatives to finalize the transaction. Prior to closing day, your lawyer will inform you of the total funds you owe. In addition to your down payment, this will include a number of closing costs, many of which are your responsibility as the buyer.
*Only on resale homes **Only on new build homes On closing day, you’ll need to bring a cashier’s check or proof of wire transfer for the total amount. You’ll also need two pieces of ID, your SIN number and proof of property insurance. You pay these funds to your lawyer when you sign the mortgage registration documents. |
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Getting the keys |
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| Once the seller receives their payment, you will officially own the home. In most cases, your agent will receive the keys on your behalf and hand them off to you. Then, it’s time to celebrate—you’re officially a homeowner! |
