Home Buying: The Complete Guide To

The complete guide to
Home
Buying
Buying timeline.
Research & plan

How much you can afford? | Make a budget | Allocate down payment | Closing costs & mortgage insurance Page 4
Find a home
Choose a real estate agent | Get mortgage pre-approval | Consult with your agent | View homes Page 10
Make an offer
Review comparable sales | Present price and terms | Prepare to negotiate Page 17
Clear conditions
Submit deposit | Apply for mortgage | Complete a home inspection | Review condo status certificate Page 21
Close the deal

Hire a lawyer | Sign documents | Pay closing costs Page 25
RESEARCH AND PLAN HOME BUYING GUIDE 3

Research and plan.
Plan your purchase.
Research what you need, want, and can afford using Ratehub.ca’s online mortgage calculators. Prepare a budget
to determine which homes and neighbourhoods fall within your price range. Speak to a mortgage broker and get
a pre-approval so that you know how much financing you can expect to get.
You:
• Research homes and neighbourhoods
• Determine your budget/costs using Ratehub.ca’s calculators
• Save for down payment & closing costs
Your real estate agent:

• Walk you through the process so there are no surprises
• Help you plan for your future needs
• Advise on which neighbourhoods and housing types meet
your needs and maximize return on investment
• Can help you connect with a reputable mortgage broker
Your mortgage broker:

• Give you a written pre-approval with a maximum home price
• Lock in an interest rate for 90-120 days
• Help you get the mortgage that best meets your needs

Budgeting Tips.
A lot can change over time. Consider your current budget and lifestyle, and how they might change
in the next five years.
Use the mortgage affordability calculators on Ratehub.ca to figure

out how much you can afford
Once you have a home buying budget, use the mortgage payment
calculator to estimate your monthly payments, insurance premiums
and other costs
5% minimum down payment in Canada (The required minimum down

payment is determined by the purchase price of the home. Please see
the next page for more details.)
Closing costs and land transfer tax average 1.5%-4% of purchase price
First-time buyers can withdraw up to $25,000 from their RRSP tax-free

How much can you afford?
When shopping for a home, it’s important to know what you can afford. You also need to be aware
of the additional costs associated with purchasing and maintaining a property.
To determine your maximum affordability, lenders take several factors into account, including:
• Household income of the applicants purchasing the house

• Personal monthly expenses of those applicants (car payments, credit expenses, etc.)
• Expenses associated with owning a home (property taxes, condo fees, and heating costs).
• Amount of your down payment
The Ratehub.ca Affordability Calculator allows you to determine the maximum purchase price that you
can qualify for and provides an estimate of the money you’ll require to complete the purchase. It will also
show you the monthly expenses you’ll incur from owning the property.
Minimum down payment:

The minimum down payment required is determined by the price of the home you want to purchase.
Home price Minimum down payment
$500,000 or less 5%
$500,000.01 - $999,999 5% of the first $500,000 + 10% of the remaining portion
$1,000,000 or more 20%

Mortgage loan insurance
& your down payment.
Your CMHC mortgage insurance premium is based on the size of your down payment.
Canada Mortgage and Housing Corporation (CMHC) Mortgage Loan

Insurance protects the lender in the event of a default, and is mandatory
if your down payment is less than 20% of the purchase price. Your CMHC
premium is calculated as a percentage of the mortgage amount, based on
the relative size of your down payment. Homes that cost $1,000,000 or
more do not require CMHC insurance because they must have a minimum
down payment of 20%.
Click here to use our CMHC Insurance calculator to determine your

mortgage insurance costs.
Down payment CMHC Premium (%)
5% - 9.99% 4.0%
10% - 14.99% 3.1%
15% - 19.99% 2.8%
20% or higher 0.0%

What difference does your
down payment make?
Since your down payment affects your CMHC insurance premium,

it also makes a difference to your monthly mortgage payment.
For example, for a $500,000 property, a 20% down payment could

save you over $400 a month in your monthly mortgage payments as
compared to a 5% down payment.
To estimate your CMHC insurance costs and monthly mortgage

payment, use Ratehub.ca’s mortgage payment calculator.
Example calculations for a $500,000 property
Down payment 5% 10% 15% 20%
Purchase Price $500,000 $500,000 $500,000 $500,000
Down Payment $25,000 $50,000 $75,000 $100,000
CMHC Premium $19,000 $13,950 $11,900 $0
Total Mortgage $494,000 $463,950 $436,900 $400,000
Monthly Payment* $2,338 $2,196 $2,068 $1,893
* Based on 25-year amortization with a fixed rate of 3.0%

Find a home.
FIND A HOME HOME BUYING GUIDE 10
Finding the right agent.
Picking the right real estate agent is crucial to making your home search a success.
Choose an agent who is experienced, full-time, and puts clients first. Great real estate agents are backed by
an entire team who will keep track of deadlines, paperwork, and third-party services for you so you can focus
on finding the right house.
To read about the 10 must-ask questions for your real estate agent, click here.
You: Buyer’s Representation Agreement:

• Interview potential agents
• Ask about experience, service, and references A Buyer’s Representation Agreement (B.R.A.) is contract
• Sign a Buyer’s Representation Agreement
you sign with a REALTOR® that gives them the exclusive
right to represent you. In return, your REALTOR® is legally
Your real estate agent: bound to follow your instructions, maintain confidentiality,
• Actively searches new listings to show you and provide their honest opinion. Without a B.R.A., a
• Acts as a voice of reason REALTOR® can still offer you customer service, but will
• Leverages negotiation experience to get not have a fiduciary duty to act solely in your best interest.
you the best deal

Finding the right home.
Your real estate agent can help you assess the suitability of each home for your needs now, and in the future.
Your real estate agent should select homes for you based on your
criteria. In the current market, reaction time is critical to securing
the best properties. View each home carefully to determine whether
it suits your needs.
You:
• Spend time in neighbourhoods you’re considering
• View homes and select the right one for you

• Select homes to show you based on your criteria and budget
• Help assess the suitability of each property for your lifestyle and future
financial goals

Viewing tips.
These tips can help you find the house that’s right for you.
Renovated
What’s nearby? vs. non renovated Resale value
Consider what’s within walking Look closely at the physical Resale value is determined as
distance, the quality of nearby structure of houses that haven’t much by the neighbourhood
schools, and how long it will take been renovated, and the quality as it is by the home itself.
you to get to work. of work of houses that have.

Buying a condo.
Status certificate:
This legal document, prepared by the condo management company, is a current snapshot of the condo bylaws,
financial position, and relevant lawsuits. Your lawyer will tell you if there are any red flags and work with your agent
to resolve any issues.
To learn more about status certificates, click here.
Condo maintenance fees:

Monthly fees pay for building management, maintenance and common elements (hallways, fitness centres, etc).
The average maintenance fee in Toronto is estimated to be $0.65 per square foot but can easily reach $1.00 per square
foot, or more. Condo fees can change at any time.
To learn more about condo fees, click here.
Reserve fund:
Reserve funds are used to manage long-term capital projects like elevator replacements. They also serve as a cushion
for emergencies.
Special assessments:
When an unexpected large repair or improvement is necessary, the condo board may charge a one-time levy in
addition to your monthly fees. A building with a healthy reserve fund will be less likely to impose a special assessment.

Buying pre-construction.
Everything you need to know about buying a pre-construction home.
Closing delays warranty:

Tarion, Ontario’s new home warranty program, sets guidelines on how
long your closing may be delayed, and how (or if) you’ll be compensated.
These guidelines will be explained to you by the builder, and differ based
on whether you’re buying a condominium or freehold property.
Selling under assignment:

If you plan to sell your pre-construction property to another buyer prior to
closing, you’re technically selling the contract you have with the builder
to purchase and close at your price. This is a very complex sale with many
factors at play. Your real estate agent can help you understand whether
the builder allows assignments, explain the tax implications, and handle
the complexity of adjusting the deposits you’ve already paid and the cash
due at closing.
To read our complete pre-construction condo guide, click here.

Buying pre-construction.
Everything you need to know about buying a pre-construction home.
Get excited about...
Customization: A major benefit of buying pre-construction is the option to customize the finishes of your new home.
Investment: Treat upgrades partially as lifestyle choices you can enjoy, and partially as an investment in future resale value.
Watch out for...
Deposits: You may have to pay up to 25% of the purchase price in deposits over time prior to closing.
Development Levies: Your real estate agent will help negotiate what additional fees you’ll pay.
Delays: It’s common for construction projects to be delayed, sometimes for years.
Occupancy Fees: If your unit is ready to be occupied prior to the condominium being registered, you will likely be charged
interim occupancy fees by the builder.

Make an offer.
When to make an offer.
Your real estate agent will help you present a strong written offer within your financial means to get you the best
home for the best price.
There are many terms of your offer to consider. Depending on the competitive landscape of the market,
you may need to move quickly to submit an offer. Having a plan and a pre-approval can greatly help you
be prepared to negotiate on your terms.
You:
• Name your price and terms
• Understand your current and future financial position
• Be ready to make a firm offer when required

• Analyze comparable properties with you
• Work with your mortgage broker on a financing plan and risk assessment
• Advise you on how to reach your desired outcome in the current market
• Present your offer to the listing agent/seller
• Negotiate the best deal for you

• Confirm you can get financing for your chosen property and price
MAKING AN OFFER HOME BUYING GUIDE 18

What to know about bidding wars.
Bully offer:
Quickly presenting a strong offer with a strict time limit for acceptance – often just a few hours – could give you an
advantage over other buyers who haven’t prepared yet.
Firm sale:
Presenting an offer without conditions is the norm in GTA bidding wars. Discussing appraisal risk with your mortgage
broker and doing a home inspection before you offer will reduce your risk. If your offer is accepted, the sale is final.
There is no cooling off period.
Be willing to walk away:

Buying a house is an emotional process, especially when you’re in competition with other buyers. Make a plan and stick
to your budget to avoid making decisions you may regret later, even if it means walking away from a deal.
To learn more about when you should walk away from a deal, click here.

Major terms to consider.
Purchase price:
Recent sales, market trends and details specific to the property can help you judge the value of a home.
Deposit amount:
The minimum deposit amount in Canada is 5%. However, if the purchase price of the property is above $500,000,
the minimum deposit required will be higher. Be ready to deliver a certified cheque within 24 hours
Conditions:
Common conditions include financing approval, a home inspection or status certificate review, and sale of your current home.
Financing:
Your mortgage broker can discuss the risks of financing a specific property with you.
Chattels:
Any items you want included in the purchase price that aren’t physically attached to the structure of the home
(appliances, furniture, etc.) should be specifically named in your offer.

Clear conditions.
CLEAR CONDITIONS HOME BUYING GUIDE 21
Do your due diligence.
Meet your conditions within the time frame to finalize the sale.
You’ll want to call your real estate lawyer as soon as you’re ready to sign an Offer to Purchase. The offer is a legal document, so it’s
important to have a lawyer review it. You’ll also want to arrange for a home inspection. A home inspection will assess the condition
of the home, and it may reveal potential problems. If you’re purchasing a condo, you’ll also want to review the status certificate.
You:
• Submit the deposit within 24 hours
• Submit a mortgage application to your mortgage broker
• Attend a home inspection

• Can help arrange a home inspection and/or order the status certificate
• Advise you on the results
• Negotiate if there are any surprises

• Review your application
• Present mortgage options based on your situation and needs
• Secure an approval
Your lawyer:
• Intervene if the seller refuses to sign a mutual release or return your deposit

Be prepared.
Home Inspection Status certificate Mortgage documents
The inspector should give you The status certificate is a financial Be ready to provide letters
advice on the property’s structure, snapshot of the condo corporation. of employment, recent pay stubs,
roof, wiring, plumbing, appliances, It includes information on the bank account statements, recent
and HVAC equipment. reserve fund, special assessments, T4s, notices of assessment,
outstanding lawsuits, and even and a void cheque.
rules and by-laws.

If things go wrong.
Good faith:
You have a duty to act in good faith when clearing conditions. That means making a real effort to obtain financing and
being reasonable about the results of the home inspection and status certificate review.
Inspection Issues:
Every home inspection will highlight major repairs and minor/regular maintenance. If the inspection reveals information
that is drastically different from what was expected during the sale, your real estate agent may be able to help you
negotiate with the sellers to cover the cost of repairs.
Low reserve fund:

A low reserve fund relative to comparable condo developments is a sign that a condominium board has previously
been poorly managed. Reserve fund issues can cost you money if a special assessment is necessary, and impair your
ability to re-sell the unit. The size of a healthy reserve fund is relative to the age and size of the building, and the type
of structure.
Mutual release:
If you are not prepared to proceed, your real estate agent will draft a mutual release to officially cancel the sale.
Your real estate lawyer will also help if the sellers refuse to sign a release and/or return your deposit.

Close the deal.
CLOSING THE DEAL HOME BUYING GUIDE 25
Become a homeowner.
The final steps are complex and time-sensitive.
Your real estate lawyer becomes crucial at this point in the process. Your lawyer will explain the legal documents to you,
register the property in your name, ensure funds are transferred, and hand you the keys to your new home!
You:
• Visit the home a few days before close for a final inspection
• Purchase home insurance
• Sign legal documents
• Pay closing costs and down payment (less deposit) via your lawyer

• Arrange your final home visit, insurance, lawyers, movers, utilities, etc.

• Explain your mortgage options to ensure that you choose the most
appropriate mortgage product, at the best rate.
• Assist you with the entire mortgage application and approval process
Your lawyer:
• Explain legal documents to you
• Conduct title search and purchase insurance on your behalf
• Handle fund transfers
• Register the property in your name and hand you your keys!

Closing costs.
Click here to go to Ratehub.ca’s complete guide to closing costs.
Down payment:
Your deposit money will be applied towards your down payment. The remainder must be paid to your lawyer before
Land transfer tax:

This tax is based on the purchase price of the property and due on closing.
Lawyer fees:
Lawyer fees typically range between $1,500-$2,000. Ask for an all-in price that includes the most common expenses
like title insurance, disbursements, and professional fees.
Title registrations and insurance:

Your lawyer will register title and purchase insurance on your behalf to protect you from future claims against your title.
This expense is commonly included in your lawyer’s fees.
PST on CMHC Insurance:

If you’re putting down less than 20%, the PST on your mortgage default insurance is due at closing and is not rolled
into your mortgage.
Adjustments:
You must repay the seller for any prepayments they made to maintenance, property taxes, or utilities.

Sample budget.
Click here to go to Ratehub.ca’s complete guide to closing costs.
Sample closing costs for a $500,000 home
5% Down Payment $25,000
Ontario Land Transfer Tax* $6,475
Toronto Land Transfer Tax* $6,475
Lawyer Fees $1,500
PST on CMHC Insurance $1,520
Status Certificate Fee $100
= Total cash needed $41,070
*In some provinces and cities, there is a rebate available to help first-time homebuyers offset the cost of their land transfer tax.

Land transfer tax.
It’s your responsibility to pay land transfer tax when purchasing a property. Land transfer tax is paid through your real
estate lawyer, is due in cash at closing, and cannot form part of your mortgage. First-time buyers can claim a rebate
on a portion of the tax.
Toronto tax:
Properties sold in the city of Toronto are subject to an additional
municipal land transfer tax.
You can use Ratehub.ca’s land transfer tax calculator to determine

how much tax you’ll need to pay. You can also determine the tax
rebate you can get if you’re a First-Time Home Buyer.

Land transfer tax.
Land transfer tax rates Ontario tax Toronto tax Combined tax
First $55,000 0.5% 0.5% 1.0%
$55,000.01 - $250,000 1.0% 1.0% 2.0%
$250,000.01 - $400,000 1.5% 1.5% 3.0%
$400,000.01 - $2,000,000 2.0% 2.0% 4.0%
$2,000,000.01 2.5% 2.5% 5.0%
Purchase price = $500,000 Ontario tax Toronto tax Tax payable
$55,000 $275 $275 $550
$195,000 $1,950 $1,950 $3,900
$150,000 $2,250 $2,250 $4,500
$100,000 $2,000 $2,000 $4,000
Total Land Transfer Tax = $12,950

First-time home buyers rebates.
Home buyer’s plan:
You can withdraw up to $25,000 from your RRSP tax-free to buy or build a home. To qualify, you must not have lived in a
home owned by you or your spouse within the last four years, and the money must have been in your RRSP for a minimum
of 90 days. You can only withdraw the money from your RRSP after you have a written agreement to buy a home.
After you buy a house, you must repay the money to your RRSP in equal installments over 15 years. If you withdraw the full
$25,000, that’s $1,667 a year. If you don’t repay the full amount each year, you’ll owe income tax on the portion you don’t
pay back.
To learn more about the RRSP Home Buyer’s Plan, click here.
Home buyer’s tax credit:

You may be able to claim a non-refundable tax credit of $750 on your income tax in the year you buy an eligible home.
To qualify, you must not have lived in a home owned by you or your spouse within the last four years.
To learn more about the First-Time Home Buyers’ Tax Credit, click here.
Land Transfer Tax Rebate:

If you’ve never owned a home before, you can claim a rebate of the first $4,000 of the Ontario Land Transfer Tax, and the
first $4,475 of the Toronto Land Transfer Tax.
To learn more about the land transfer tax rebate, click here.

Buying with a partner.
If you’re a first-time home buyer (FTHB) but your partner isn’t, you can still claim a portion of these rebates:
Rebate amount
Program Description
On your own With partner (not a FTHB)
Home Buyers’ Access money from your RRSP

tax-free for your down payment $25,000 $25,000
Program
Ontario Land Transfer Get a rebate on your provincial

Up to $4,000 Up to $2,000
Tax Rebate land transfer tax
Toronto Land Transfer Get a rebate on your municipal

Tax Rebate land transfer tax Up to $4,475 Up to $2,237.50
First-Time Home Get money back in federal

$750 $0
Buyers’ Tax Credit tax relief

70 Richmond Street East, 4th Floor
Toronto, ON M5C 1N8
1.800.679.9622

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The complete guide to

Research & plan

Close the deal

RESEARCH AND PLAN HOME BUYING GUIDE 3

Your real estate agent:

Your mortgage broker:

RESEARCH AND PLAN HOME BUYING GUIDE 5

Use the mortgage affordability calculators on Ratehub.ca to figure

5% minimum down payment in Canada (The required minimum down

First-time buyers can withdraw up to $25,000 from their RRSP tax-free

RESEARCH AND PLAN HOME BUYING GUIDE 6

• Household income of the applicants purchasing the house

Minimum down payment:

Home price Minimum down payment

$500,000.01 - $999,999 5% of the first $500,000 + 10% of the remaining portion

$1,000,000 or more 20%

RESEARCH AND PLAN HOME BUYING GUIDE 7

Canada Mortgage and Housing Corporation (CMHC) Mortgage Loan

Click here to use our CMHC Insurance calculator to determine your

Down payment CMHC Premium (%)

10% - 14.99% 3.1%

15% - 19.99% 2.8%

20% or higher 0.0%

RESEARCH AND PLAN HOME BUYING GUIDE 8

Since your down payment affects your CMHC insurance premium,

For example, for a $500,000 property, a 20% down payment could

To estimate your CMHC insurance costs and monthly mortgage

Example calculations for a $500,000 property

Down payment 5% 10% 15% 20%

Purchase Price $500,000 $500,000 $500,000 $500,000

Down Payment $25,000 $50,000 $75,000 $100,000

CMHC Premium $19,000 $13,950 $11,900 $0

Total Mortgage $494,000 $463,950 $436,900 $400,000

Monthly Payment* $2,338 $2,196 $2,068 $1,893

* Based on 25-year amortization with a fixed rate of 3.0%

RESEARCH AND PLAN HOME BUYING GUIDE 9

You: Buyer’s Representation Agreement:

FIND A HOME HOME BUYING GUIDE 11

Your real estate agent:

FIND A HOME HOME BUYING GUIDE 12

FIND A HOME HOME BUYING GUIDE 13

To learn more about status certificates, click here.

Condo maintenance fees:

To learn more about condo fees, click here.

FIND A HOME HOME BUYING GUIDE 14

Closing delays warranty:

Selling under assignment:

To read our complete pre-construction condo guide, click here.

FIND A HOME HOME BUYING GUIDE 15

Get excited about...

Watch out for...

FIND A HOME HOME BUYING GUIDE 16

Your real estate agent:

Your mortgage broker:

MAKING AN OFFER HOME BUYING GUIDE 18

Be willing to walk away:

MAKING AN OFFER HOME BUYING GUIDE 19

MAKING AN OFFER HOME BUYING GUIDE 20

Your real estate agent:

Your mortgage broker:

CLEAR CONDITIONS HOME BUYING GUIDE 22

Home Inspection Status certificate Mortgage documents

CLEAR CONDITIONS HOME BUYING GUIDE 23