Down Payment: You will need to save for a down payment, which is typically a percentage of the home’s purchase price. In Canada, the minimum down payment requirement is 5% for homes priced up to $500,000. For homes priced above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for any amount above that.
Mortgage Pre-approval: It’s advisable to get pre-approved for a mortgage before starting your house hunt. This involves providing your financial information to a lender who will assess your creditworthiness and determine the maximum mortgage amount you qualify for.
Mortgage Types: In Ontario, you can choose between fixed-rate and variable-rate mortgages. A fixed-rate mortgage locks in your interest rate for a specific term (e.g., 5 years), providing stable payments. A variable-rate mortgage fluctuates with the market interest rates, which can result in changes to your monthly payments.
Mortgage Insurance: If your down payment is less than 20% of the purchase price, you will need to obtain mortgage loan insurance through the Canada Mortgage and Housing Corporation (CMHC) or other approved insurers. This insurance protects the lender in case of default and allows you to access mortgage financing with a lower down payment.
First-Time Home Buyer Programs: Ontario offers several programs to assist first-time homebuyers. One such program is the First-Time Home Buyer Incentive (FTHBI), which allows eligible buyers to share ownership with the government, reducing the size of their mortgage. The Home Buyer’s Plan (HBP) also enables first-time buyers to withdraw up to $35,000 from their registered retirement savings plans (RRSPs) to use towards a down payment.