First Time Home Buyer Guide

As a first-time home Buyer in Toronto, there’s a whole lot to learn. This is likely the biggest investment you’ve ever made – and the more you know about buying your first home, the better your decisions will be. So grab a glass of wine, sit back, and prepare to learn how to buy a house or condo.

Step 1

Getting Pre-Qualified for a Mortgage

The first step to buying a house or condo in Toronto is finding out how much your bank is willing to lend you. When you pre-qualify for a mortgage, your lender will look at your:

• Income
• Debts
• Downpayment
• Credit history

The pre-approval should be in writing and will include a guaranteed interest rate (usually valid for 90 days). Pre-qualifying will ensure that you know how much mortgage you can get, which in turn will help you know what price range of homes you should be targeting in your search. It allows you to focus your house-hunting efforts and eliminates the risk and uncertainty of financing once you find your perfect home.

Step 2

Developing your First Time Home Buyer Wish List

Knowing what you need and want in your home is critical. What are your must-haves, your nice-to-haves, and your no-way-absolutely-nots? How many bedrooms do you need? What kind of outdoor space do you want? What about counter-tops, appliances, and floors? You can’t get what you want if you don’t know what you want.

Of course, the location will be a big decision – what Toronto neighbourhood makes you feel at home? 

Step 3

Picking Your Team

Buying a house or condo will likely be the biggest purchase you’ll ever make – but don’t worry, you don’t need to do it alone. Your team will include:

•  A IRAM REALTOR works exclusively in your best interests. Think of your REALTOR as the quarterback to the home buying process.
• A lender – a bank or mortgage broker to take you through your financing options
• A real estate lawyer to help with the legal aspects of the purchase 

There are thousands of professionals out there (of varying quality), so ask your friends and family for recommendations, do your research and don’t be afraid to interview multiple people.

Step 4

House Hunting for First Time Home Buyers

Now that you are pre-qualified for a mortgage narrowed down your search and picked a IRAM REALTOR to work with, it’s time to start looking at listings and houses. While realtor.ca is a good place to start searching for homes, your real estate agent will send you custom listings that match your criteria.

House hunting will involve screening listings electronically, previewing properties online, and then finally going out to look at homes. This is your opportunity to get a feel for the different Toronto neighbourhoods, refine your wishlist, and ask questions. While a wishlist seems kind of scientific and is a useful tool in deciding which properties to visit, the truth of the matter is that most people walk into their perfect home and just feel it. Of course, it helps when it satisfies your needs and wants too, but don’t underestimate the power of ‘just knowing’.

Step 5

Making an Offer as a First Time Home Buyer

Congrats! Your house hunting efforts have paid off, and you’ve found the right home for you: it satisfies your wants/needs, it’s in your price range, and it feels right. The offer process is both exciting and nerve-wracking. In Ontario,  your offer must be in writing and will form the Agreement of Purchase and Sale (APS). The APS is a legally binding document which contains:

• The price you are prepared to pay
• The amount of your deposit (usually 5% of the purchase price, due within 24 hours after the offer is accepted)
• Closing date (the date you take possession)
• Inclusions you want (washer/dryer, big screen TV)
• Conditions that need to be met for the deal to go through.

Once your agent has submitted your offer, the Seller can accept it, reject it or sign back a counter offer. During these back-and-forth negotiations, you may need to compromise on small things, but a great REALTOR will work hard to get you what you want.

Step 6

Meeting Conditions and Providing The Deposit

Conditions are requirements within the Agreement of Purchase and Sale that must be met for the sale to go through. As a first time Buyer, you may have included a financing condition in your offer, or a condition that allows your lawyer to review the legal details of the property, a status certificate review condition or a home inspection condition. And of course, you’ll need to submit a deposit–an amount up to 5% of the purchase price, which is held in trust until close. Once the conditions have been met, the agreement and sale is said to be ‘firm’, and now it’s just a matter of waiting for your closing date. And of course, packing!

Step 7

Closing the Deal

You’re almost a homeowner! Closing is the point at which the ownership and possession of the property are transferred from the Seller to you. It takes place once all the legal and financial obligations have been met. Closing the purchase will be a team effort: in addition to yourself, your lawyer and your lender will all be involved in helping close the deal.