Buying a home in Canada: a complete guide

Buying a home is one of the biggest decisions you’ll ever make, so it’s important to get it right. While so many people muddle their way through this process, you can save time, money, and stress if you do your homework first. From the early stages of setting a budget and researching your mortgage options through to house hunting and negotiation - let’s take a look at all of the steps you’ll need to take when buying a home in Canada.

It's also important, especially for first-time homebuyers, to learn all the terminology and the buying process ahead of the property purchase, and to be prepared for any legal fees that accompany this buying process. 

Building a budget


When you're in the market for a new home, building a budget is the first thing you have to do. You can't start house hunting until you’ve saved a deposit and come up with a working budget based on your current income and monthly debt. You need to know what you can afford before you start shopping for a loan.

Performing your own mortgage affordability calculations is necessary in order to set realistic expectations. While lenders will analyze your income levels, monthly debt payments, and credit information with a fine tooth comb, they're unable to break down your expenses or set workable budget limits.

It's important not to let lenders tell you how much you can afford. You need to do some groundwork and build your own budget one step at a time.

  1. What is the take-home, after-tax salary of your household
  2. What are your recurring monthly expenses
  3. List any additional expenses you'll have as a homeowner
  4. List expenses such as rent that will go away when you become a homeowner
  5. Calculate how much you can afford by comparing your income and expenses
  6. List the money you have already saved for a deposit
  7. Figure out what you can buy based on your deposit, recurring income, and recurring expenses

Along with your savings, income and expenses, it's also important to take interest rates and credit history into account. Interest rates change all the time, with the rates available at the time you get a mortgage greatly affecting what you can afford. The more you need to borrow, the bigger effect that interest rates will have on your monthly payments.

How much lenders are willing to offer you will also depend on your credit history, with a good credit score associated with a low default risk. In Canada, credit scores range anywhere from 300 to 900. A score of 650 and above is considered good, with 750 or higher deemed excellent, and a minimum score of 680 often required for mortgage approval.

Understanding your mortgage options

Not all mortgages are created equal, with different products tailored to different housing market segments. Understanding your mortgage options is crucial if you want to get a loan that meets your individual needs and expectations. Before getting a mortgage, it's important to get pre-approved for a certain loan amount. While organizations such as the Canada Mortgage and Housing Corporation (CMHC) are there to help, there really is no substitute for doing your own homework.

Conventional vs high ratio mortgages

In Canada, a conventional mortgage describes any mortgage loan up to a maximum of 80 percent of the lending value of the property. If your down payment is less than 20 percent, it's considered a high ratio mortgage and may have to be insured by CMHC or another organization against payment default.

Fixed vs variable interest rates

Making a choice between a fixed and variable interest rate is one of the most important decisions that all homeowners have to face. Fixed rates are locked down for the term of the loan, with variable rates fluctuating according to housing market conditions. Adjustable loans are the third option, with both interest rates and repayment schedules changing according to the market.

Open vs closed mortgages

An open mortgage is a flexible payment solution that allows for early and lump sum repayments. While these types of loans normally carry a higher interest rate, they give you the opportunity of paying down your loan sooner. In contrast, a closed mortgage loan always comes with a fixed payment schedule.

Loan terms and payment schedules

Along with your deposit, interest rate, and degree of flexibility, it's also important to look at your loan term and repayment schedule. This can be defined under the term 'amortization', which is the period of time over which your entire mortgage will be repaid. It's important to note that accelerated payments are only allowed in certain mortgage contracts. The mortgages can come in five-year term to up to 30-year term options. 


How to get a mortgage

Getting a mortgage doesn’t have to be difficult if you know what you’re doing. While many of the financial and risk factors analyzed by banks and other lenders are beyond your control, once you understand your mortgage options and how the mortgage process works, you can put yourself in the best possible position.

Before applying for a mortgage, it’s important to understand the difference between mortgage pre-qualification and pre-approval. While pre-qualification is an informal process that relies on information you provide the lender about your income and liabilities, pre-approval is based on a detailed risk assessment by lenders themselves in relation to a particular property.

Generally speaking, lenders will analyze your income, liabilities, assets, employment, and credit history. While unsustainable debt levels and a bad credit score will have a negative impact on your chances, high income and a good credit history will improve your risk assessment and enhance your chances of approval. Also look into getting a pre-approved mortgage. Pre-approval is a different process than pre-qualification, and it occurs after pre-qualification, and generally takes more paperwork. While generating more income and paying down debt is the best way to increase your options, shopping around between providers can also prove successful.

Banks vs mortgage brokers

When shopping around for a mortgage, people can choose between direct lenders such as banks and mortgage brokers. While mortgage brokers don't actually make loans themselves, they have access to a greater pool of mortgage products by acting as agents for multiple lenders.

While a broker arrangement is not ideal for everyone, mortgage brokers may be able to access loans from multiple banks and wholesale lenders, who often discount their rates for brokers. While a mortgage broker can be a great way to compare products and access the most competitive mortgage rates and terms available, they may charge processing or origination fees.

Choosing a good realtor

Once you've analyzed your budget and researched loan options, it's time to choose a realtor. There's no shortage of realtors in Canada's bustling real estate market, which can make it difficult finding someone who is perfect for you. Finding a realtor you can trust is part art and part science, with a lot of hard work in-between. By following these tips, you can find someone who is on your side.

Do your homework

If you're in the market for a new property, there is no replacement for hard work. It's important to spend time researching realtors in your area, with real estate companies and real estate agents often specializing in certain locations or property types. It doesn't matter where you are in Canada, market and location knowledge is extremely important.

Once you have a short list, take some time to interview agents and ask them specific questions. Along with their level of expertise, it's important to find someone who you're comfortable communicating with. Since you're the buyer, this person will be your "buyer's agent". 

Analyze the numbers

When it comes to property, the numbers never lie. Realtors can be compared based on the number of houses they've sold, their commission, and even how many properties they own themselves. You should also analyze relevant figures relating to sales prices, sales volumes, and time on the market in your location of choice to see how well realtors can interpret market information.

All of this information is accessible to realtors, who should be more than willing to open up and discuss the cold hard facts with you. You should also ask agents about specific sales they were responsible for, including bid and offer amounts.  

Plan for the future

You need to find a realtor with a plan for the future, someone who is willing to help you meet your property goals. Marketing plays a crucial role in many heated Canadian markets, so choose a realtor with a solid marketing plan.

Whether it's postcard mailings, online marketing campaigns, or virtual tours, specific selling strategies are needed for certain locations or types of property. While some agents offer low commission fees in order to stand out from the competition, it's better to choose someone based on their industry knowledge and marketing talent.

Getting a good lawyer

Having a good lawyer by your side is just as important as a good realtor, with a legal professional needed to review paperwork, conduct a title search, register the deeds, handle the transfer of funds, and help you avoid litigation. While many Canadians wait until the last minute to bring in a lawyer, having someone on hand during the early stages of a property purchase can save you time and money and reduce the risks associated with your deal.

Buying property is one of the largest financial transactions that Canadian will ever make, so it's important to make sure your legal rights and obligations are adhered to. Among other things, lawyers help to prepare and review mortgage and transfer documents, handle closings, and provide legal guidance relating to the purchase or sale of a property. A property lawyer is particularly important if you're buying a pre-construction condo or any type of property that has not yet been built.

Before choosing a lawyer, it's important to check with your provincial law society to ensure their standing. It's also important to select a lawyer who specializes in property cases, along with someone who is able to give you a written quote including disbursements. A good property lawyer can be found through friends and family, realtor recommendations, or online reviews and testimonials.


Searching for a house is one of the most exciting parts of any property purchase. House hunting in Canada depends greatly on your location, with the heated markets of Toronto and Vancouver offering different challenges to other parts of the country. Demand for residential real estate is high in Canada's major cities, with the National Association of Realtors predicting a 3.2 percent rise in home prices over 2018 on the back of 2017's 5.5 percent increase.

According to Dana Senagama from the CMHC, houses will continue to be a hot commodity in Canada throughout 2018, especially in Toronto, Vancouver and Calgary, where the demand outpaces the supply of affordable homes. When hunting for a home, whether it's for principal residence or rental purposes, it's important to compare locations based on asking prices, selling prices, price growth, sales volume, and time on the market. This will give you a basic understanding of the market depth and make it easier for you to compare individual properties in different locations.   

You should always make a house-hunting checklist to keep on top of things, otherwise, you might fall into the trap of comparing properties on purchase price alone. Properties can also be compared by lot size, home type, age, parking, bedrooms, bathrooms, property tax, transfer tax and land transfer tax, utilities, interior and exterior condition, and location just to name a few.

You have to know what kind of a residential property you're looking for, if it's a single-family home, condo, apartment, etc. Single-family homes are likely to be more expensive than other types of homes. It's important to look into location carefully, including traffic, noise, pollution, and access to amenities such as schools, shops, entertainment venues, and transportation hubs.   

Negotiation practices

Real estate negotiations can be complex and daunting if you don't know what you're doing. While sellers want to get the highest price and buyers want to get a bargain, especially the first-time home buyers, there's a lot of room in the middle to negotiate a good deal. Other than the purchase price itself, some of the other factors that may influence negotiations include closing costs, closing date, contingencies, warranties, leaseback, home repairs, appraisal contingency, appliances, furniture, inspection, and condo assessment if applicable.

Step 1. Research

Before making an offer, it's important to do some research. While you may need to act quickly to secure certain properties, it's crucial to understand wider market conditions such as price ranges, price growth, comparable properties, sales volume, and time on the market.

Step 2. Making an offer

When you're ready to make an offer, it's important to specify all of the terms and conditions that you want to negotiate along with the price. It's very difficult to make changes that haven't been addressed during the initial stages of a negotiation. Real estate deals in Canada require a written contract, which may differ between provinces.

Step 3. Getting a response

Once you've been presented with a response, you have three options. You can accept the offer in full, you can reject the offer outright, or you can make a counter-offer that stipulates specific changes. This offer and counter-offer process can repeat itself until both parties are happy and a final sale is made.

Making an offer

Making an offer for a new home is an intimidating process that can seem scary if you don't know what you're doing. Once you've found the perfect home, you need to make an offer and lock it down while still ensuring a fair market price. If accepted, an Offer to Purchase needs to be signed by the seller and buyer, with this legally binding agreement one of the most important documents you'll sign along with the mortgage itself. And if you're a first-time buyer, you may not be completely familiar with the process. 

The following things are normally included in a home offer:

  • the proposed purchase price
  • existing items or chattels that will be included in the sale, such as appliances and furniture
  • deposit amount
  • financial details of your mortgage loan
  • closing date
  • time period for the offer
  • conditions of the offer

Home inspection

A professional home inspection is always a good idea if you're thinking about buying a new property. While some problems are easy to see with the naked eye, others require years of experience. From building foundations and roofing through to drainage, clearance issues and plumbing, a house inspection can help to identify significant problems before they lead to significant expenses.

You should always hire a home inspector yourself instead of relying on a recommendation from your realtor. While most real estate agents, agencies, and inspectors are above board, home inspectors may feel pressure to keep the realtor happy in order to get future referrals and stay in business. It's always better to isolate the home inspection from the real estate transaction.

It's also important to pay attention to the home inspector's background, reputation, and certification. This can be difficult in some parts of Canada, with home inspectors unregulated in Ontario but regulated in Alberta and British Columbia. You need to find someone with experience, someone you can communicate with easily, and someone who is aware of problems that may arise in your location due to building standards and weather conditions.

The following areas will always be addressed in any comprehensive home inspection:

  • property grounds
  • building structure
  • exterior surfaces
  • windows and doors
  • roof and attic
  • interior rooms
  • kitchen
  • bathrooms
  • miscellaneous
  • basement or mechanical room
  • crawl space
  • plumbing
  • electrical
  • heating and cooling

Moving preparation

Moving can be exciting and stressful, often at the same time. Like many things in life, a successful move is all about preparation, from the early days of making lists and organizing insurance through to the final stages of packing and cleaning. Making and following a moving house checklist is the best way to ensure that everything is in place when the movers come around.

1-2 months from your move

  • find a moving company and book their services
  • organize moving insurance
  • give notice if renting
  • start to get packing materials
  • book a storage facility if needed
  • organize home repairs

1-2 weeks from your move

  • notify utilities regarding disconnection
  • redirect mail
  • clean exterior spaces
  • discard unused items
  • hold a garage sale
  • research moving regulations
  • pack, pack, pack

1-2 days from your move   

  • confirm your booking with the moving company
  • finish packing
  • clean interior spaces
  • make an overnight bag
  • lock the house and hand over the keys

Closing day

After months of house-hunting and weeks of waiting, closing day has finally arrived. This is a milestone moment in any property deal, and it's important to get it right if you want to avoid future complications. From organizing inspections and insurance through to arranging utilities and getting hold of the keys, closing day is the final hurdle to overcome before you start enjoying your new home.

  1. Organize your final visit and conduct your final inspection
  2. Look into access restrictions and arrange a moving time
  3. Organize insurance and make sure there is no gap in coverage
  4. Receive your statement of adjustments
  5. Ensure payment of closing costs, including appraisal fees and mortgage insurance
  6. Notify your lawyer and organize title insurance
  7. Arrange for utilities to be connected
  8. Collect the keys and get started on your new life

Buying as a foreigner or a non-resident

Purchasing property in Canada as a foreigner or non-resident brings up a number of questions. While Canada welcomes foreign buyers from across the world, and there are no restrictions on the amount or type of property they can buy, there are some challenges regarding taxation and financing. It's important to note that each province in Canada is in charge of its own real estate transactions, with non-residents needing to do specific research for each location when hunting for a home.

International buyers sometimes need a bigger deposit compared to Canadian residents, with some lenders also restricting the number of properties they will finance to five per person. There are also tax challenges to overcome, with foreign buyers often faced with a withholding tax on capital gains when the property is sold. Additionally, a 15 percent Non-Resident Speculation Tax was introduced in 2017, with this tax needing to be paid by both non-citizens and non-permanent residents.

Foreign residents who spend less than six months in Canada can buy a home without needing to apply for residency. While owning property is not likely to improve your chances at immigration, it will be considered as part of your overall net worth. Anyone who is planning on living in the country for longer than six months needs to apply for permanent residency. Canadian banks will usually ask for a larger down payment for non-permanent residents, typically 35 percent compared to the 5 percent or 10 percent that is available to Canadian residents.

Getting a mortgage FAQ

Q. What should I check before I sign an Offer to Purchase?
A. An Offer to Purchase is an important legal contract that should only be signed after looking into financing, tax arrears, title restrictions, and building inspections.

Q. Can I include conditions in an Offer to Purchase?
A. Conditions are possible and common when drawing up an Offer to Purchase, with typical conditions based on financing, the building inspection, the terms of the offer, and the sale of your present home.  

Q. Is a lawyer needed to purchase a home?
A. While a lawyer is not required to buy a home in Canada, it's always a good idea to receive legal advice before signing important contracts.

Q. Who pays the real estate agent's commission?
A. The property seller is responsible for the realtor's commission unless it has been stated otherwise in the listing agreement.

Q. What is cheaper, fixed or variable interest rates?
A. While variable interest rates are cheaper than fixed rates, they also come with greater risk. If interest rates are relatively low, it often makes sense to lock in your loan at that fixed rate.

Q. What is the benefit of a fixed rate mortgage?
A. While they can be more expensive, a fixed rate mortgage provides additional security and makes long-term budgeting easier.  

Q. How do banks measure risk when choosing to assign mortgage loans?
A. Banks and other lenders analyze the price of the property and the deposit amount in relation to your income, assets, debt levels, and credit score.

Q. How can I improve my credit score?
A. It is possible to improve your credit score by paying down your debt as quickly as possible, meeting your current financial obligations, and improving your credit history rating.

Q. How much deposit do I need?
A. While a 20 percent deposit is needed for a conventional home loan in Canada, high ratio mortgages are available from some lenders with as little as 5 percent deposit.