How to buy a home in Canada

If you only read one section, read this. Buying a home is a sequence of predictable steps—your job is to keep the file ‘boring’ for underwriting and to keep your cash-to-close organized.

Use this checklist as your map. Then dive into the sections below for the details and the gotchas.

Before you look at listings, decide what you’re optimizing for: stability, space, school catchment, commute, or long-term cost control. Renting can be the right choice if your timeline is short or your cash buffer is thin.

CMHC frames homebuying as a step-by-step journey: decide if ownership is right, check financial readiness, finance your home, find the right home, make an offer and close, then maintain and protect your investment.

Lenders don’t approve a home price—they approve a monthly payment inside qualification rules. A common way to think about affordability is debt-service ratios: housing costs (mortgage payment, property taxes, heat, and often a portion of condo fees) compared to income, plus your other debts.

Government of Canada guidance commonly references housing costs around 39% of gross monthly income and total debt around 44% as affordability guidelines, but lender rules and product rules can differ.

Then the stress test: for uninsured mortgages at federally regulated lenders, OSFI’s minimum qualifying rate is the greater of your contract rate + 2% or 5.25%. Translation: your approval is based on a higher rate than the one you may actually pay.

Canada uses tiered minimum down payments based on purchase price. The $500,000 and $1.5 million thresholds matter for how much you need up front.

Also: lenders and insurers care about the source of funds. Savings are simple; large recent deposits, gifted funds, or overseas assets need documentation. If you want speed later, document now.

If you’re eligible, first-time buyer tools can help you build or access a down payment. The biggest mistake is assuming a program changes your affordability—most programs change cash flow or taxes, not lender qualification.

FHSA: a registered plan designed for eligible first-time buyers. CRA notes participation room is $8,000 in the first year you open an FHSA, with a $40,000 lifetime limit.

RRSP Home Buyers’ Plan (HBP): CRA states the withdrawal limit is now $60,000 and the increase applies to withdrawals made after April 16, 2024 (repayment rules apply).

A pre-approval helps you shop with a realistic budget and reduces financing surprises. A strong pre-approval should reflect verified income, debts, down payment sources, and stress-test affordability—not just self-reported numbers.

Pragmatic rule: if you’re writing offers, you want conditions and timelines that match your lender turnaround time.

Your buying team usually includes: a mortgage broker/lender, a lawyer or notary for closing, and often a realtor. Using a realtor is optional; Government of Canada guidance notes the seller typically pays the realtor’s fees when you buy a home (details vary by agreement and province).

If you’re buying a condo, add: reviewing strata/condo docs, fees, and special assessments to your diligence process.

Offers are where planning becomes real. Your deposit timing, financing condition, inspection condition, and closing date should match the reality of your lender’s process and your cash-to-close plan.

If you remove conditions too early, you may trade speed for risk. A strong file and a realistic timeline often beat a rushed ‘perfect’ offer strategy.

After you have an accepted offer, underwriting becomes more detailed. The lender may require an appraisal, updated documents, and confirmation of down payment sources.

Keep your file stable: no new debt, no job changes without a plan, and no large unexplained deposits.

Closing costs are one-time expenses paid by the time the sale is completed. Government of Canada guidance notes you should be prepared to spend between 1.5% and 4% of the home’s purchase price on these costs.

Typical items can include legal fees, home inspection, title insurance, appraisal costs (if required), and property tax or utility adjustments. Land transfer tax (or property transfer tax) is province-specific and can be one of the largest line items.

On closing, your lawyer/notary handles the title transfer and funds distribution. Your job is to ensure all conditions are met before that date and your funds arrive on time.

In your first month, set up property taxes (if not included in payments), utilities, and a maintenance buffer. Keep a folder of closing documents for renewals, insurance, and future refinancing.