Just a friendly reminder: I am not a registered mortgage broker, real estate agent, or financial advisor. The information I share on this blog is based on my personal experiences and insights. While I hope you find it helpful, please remember that how you choose to use this information is entirely up to you, and I cannot be held responsible for any decisions you make. I always recommend consulting with licensed professionals for specific advice related to your unique situation.
Buying a home is hands-down one of the most significant—and let’s be real, stressful—financial decisions you’ll make in your lifetime. With the world of mortgages being, well, a bit of a maze, it’s easy to feel overwhelmed. But, when it comes to navigating the home-buying process, I wouldn’t even think twice about using a mortgage broker. Why? Because they do all the work, tailoring the perfect mortgage to fit your financial situation and best of all—it’s FREE for you!
My husband and I have been buying a home, after home, after home, with what feels like a gazillion homes and rental properties over the years (ok, maybe not literally a gazillion, haha, you get the idea…). We’ve been through the process so many times that we could both do it with my eyes closed. So, I figured it’s high time to share what I’ve learned with you.
This guide will walk you through the entire process of how to buy a home. Whether you’re buying your first, second, or even third home, my hope is it will help you feel more confident and know what to expect every step of the way.
So, grab your favorite coffee (or glass of wine—I won’t judge) and let’s dive into making your dream of homeownership a reality!
Starting with…
Table of Contents
What are the benefits of using a mortgage broker?
Well… for one, they do all the work for you. They have access to a wide range of lenders (banks, credit unions, etc.) and can find the best mortgage rates tailored to your financial situation. Brokers save you time by comparing options, handling paperwork, and negotiating, which to be honest they often secure deals that you wouldn’t get on your own.
Our mortgage broker found an amazing deal years ago for a 1.74% interest rate from a bank called ICICI. A bank I sure had never heard of! But, we locked in for as many years as possible and are holding strong at that rate until we need to renew still.
Best of all, most mortgage broker services are typically FREE for you, as the lender covers their fees. So, you get expert advice, more options, and less stress—making the home-buying process smoother and more efficient.
How to Buy a Home in 7 Easy Steps Using a Mortgage Broker
1. Assess Your Finances
Before you even start house hunting, there are a few things you need to have in place…
Review Your Credit Score:
- Obtain your credit report from major credit bureaus like Equifax or TransUnion. (You are entitled to a free credit report annually from each of the two major credit bureaus.) Or go to CREDIT KARMA.
- Aim for a credit score of 680 or higher for better mortgage rates.
Determine Your Budget:
- Use an online mortgage affordability calculator to estimate how much you can afford based on your income, debts, and expenses. I like to use the TD Online Mortgage Payment Calculator. It’s simple, and you can enter your own rate.
Save for a Down Payment:
- Aim to save at least 20% of the home’s purchase price. In Canada, the minimum down payment is 5% for homes up to $500,000 and 10% for the portion above $500,000.
Consider using a Tax-Free Savings Account (TFSA) for tax-free growth:
- If you’ve already determined your budget, figured out how much you can afford for a monthly mortgage payment, and have a solid down payment, a mortgage broker can take it from there. They’ll check your credit score and help you explore the best mortgage options available.
2. Find a Mortgage Broker
Research and Select a Broker:
- Look for a licensed mortgage broker with a good reputation and experience in your area. Read reviews and ask for referrals.
- Use resources like the Canadian Association of Mortgage Professionals (AMP) to find reputable brokers. Use this website and simply write the city in which you live to get a list.
Initial Consultation:
- Schedule a meeting with your chosen broker to discuss your financial situation, goals, and home-buying needs.
3. Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a critical step in the process. Pre-approval helps you understand how much you can afford or ‘your borrowing power’ and signals to sellers that you’re a serious buyer. Here’s how to go about it:
Provide Documentation
To start the pre-approval process, you’ll need to gather and submit key financial documents to your mortgage broker. This helps them assess your creditworthiness and determine how much you’re eligible to borrow.
- Pay Stubs: Provide recent ‘pay stubs’ from your employer to verify your current income.
- Tax Returns: Submit your ‘T4 slips’ and ‘Notice of Assessment (NOA)’ for the past two years. These documents give lenders a clear picture of your income and tax history.
- Bank Statements: Provide recent ‘bank statements’ to show your savings, assets, and ability to cover the down payment and closing costs.
- Proof of Assets: If you have additional assets, such as investments or other properties, provide documentation to prove ownership and value.
NOTE: If you’re self-employed, you’ll need to provide more detailed financial information, including:
- ‘Business Financial Statements’ for the past 2-3 years.
- ‘T1 General Tax Returns’ for the last two years.
- ‘Notice of Assessment’ to confirm your income.
- ‘Contracts or invoices’ that demonstrate steady income.
Receive Pre-Approval
Once your documentation is submitted, your mortgage broker will assess your financial situation. This includes reviewing your income, credit score, and debts. If all looks good, they’ll provide you with a ‘pre-approval letter’.
- Pre-Approval Letter: This letter outlines the maximum mortgage amount you qualify for and the interest rate you’ve been pre-approved for (which may be locked in for a certain period). The pre-approval letter shows sellers that you’re a serious buyer and gives you a clear idea of your budget.
Why Get Pre-Approved?
- Budget Clarity: Pre-approval tells you how much home you can afford, allowing you to focus on properties within your price range.
- Stronger Offers: A pre-approval letter strengthens your offer to sellers, especially in competitive Canadian real estate markets like Toronto, Vancouver, or Montreal.
- Faster Mortgage Processing: Once you find a home, having pre-approval can speed up the mortgage approval process, helping you close the deal faster.
By getting pre-approved for a mortgage, you’re putting yourself in a stronger position as a buyer and making the home-buying process smoother.
4. Define Your Home Criteria
When you’re buying a home, it’s crucial to define exactly what you’re looking for before you start touring properties. Trust me, it’s easy to get swept away by a beautifully staged house, only to realize later it doesn’t meet all your needs. Here’s how to stay focused:
List Your Needs and Wants:
Start by creating a clear list of your “must-haves” versus your “nice-to-haves.” For instance, do you absolutely need three bedrooms for the kids, a home office, or that backyard for summer barbecues? These are your non-negotiables. Then, jot down your “wants”—things like a fireplace, a finished basement, or proximity to trendy cafes. This will help you prioritize and stay within budget, especially if you’re faced with a tough choice between multiple homes.
Identify Must-Have Features:
Think about essentials like the number of bedrooms, bathrooms, and specific features like an open-concept kitchen or a garage. Consider the future too—do you plan on expanding your family or working from home permanently? Make sure your home can grow with your needs.
Research Neighbourhoods:
Your dream home isn’t just about what’s inside—it’s also about where it’s located. Research potential neighbourhoods to understand what they offer in terms of amenities (like schools, parks, grocery stores), commute times, and overall vibe. Are you looking for a quiet suburban feel or a more vibrant, urban environment? Look into safety ratings, nearby schools, and future development plans to make sure the area meets your long-term goals.
Don’t just rely on online listings—take a drive or walk through your favorite areas at different times of day to get a real feel for the place. You can also use online resources like Realtor.ca, Google Maps, and local community websites to explore potential neighborhoods before scheduling tours.
By defining your home criteria in advance, you’ll save yourself time, stay focused on what matters most, and avoid falling in love with a home that doesn’t check all your boxes.
5. Start House Hunting
This is where things get exciting! Now that you’ve nailed down your home criteria, it’s time to dive into the fun (and sometimes overwhelming) process of house hunting. But before you start touring homes, it’s important to have the right team and strategy in place.
Hire a Real Estate Agent:
One of the smartest moves you can make is hiring a real estate agent you can trust. While it might seem tempting to go at it alone, a professional with local expertise can save you time, money, and stress. Look for a licensed agent who knows the area inside and out, has a strong track record, and comes highly recommended. It’s a good idea to check out online reviews or ask friends and family for recommendations. A great agent will not only help you find homes that match your criteria but also navigate the offer process, negotiate on your behalf, and provide valuable market insights.
Search for Homes:
With your real estate agent by your side, it’s time to start searching for the perfect home. They will browse listings and share them with you, but you can also go through listings on popular Canadian real estate websites like Realtor.ca, Zoocasa, or Zillow, where you can filter by location, price, size, and features. You could even set up alerts so you can stay on top of new listings that match your criteria—trust me, homes can go fast, especially in hot markets!
Once you’ve found homes that catch your eye, have your real estate agent schedule a viewing. During the tour, don’t be shy about taking notes or pictures (if allowed). Pay attention to details that aren’t always highlighted in listings—like the condition of the roof, the natural lighting, or the flow of the layout. It’s easy to get caught up in aesthetics, but remember to keep your original criteria in mind and check if the home fits your practical needs.
If you’re house hunting in a competitive market, it’s important to be prepared to act quickly when the right home comes along. Having a pre-approval from your mortgage broker and a clear idea of your top priorities will help you make confident decisions when it’s time to put in an offer.
6. Make an Offer
Once you’ve found a home that checks off all your boxes, it’s time to get serious about making an offer. This is one of the most nerve-wracking and exciting parts of the process, but having the right strategy and guidance can make all the difference.
Get a Comparative Market Analysis (CMA):
Before you submit an offer, your real estate agent will perform a Comparative Market Analysis (CMA). This report will help you understand the market value of similar homes in the area based on recent sales. It gives you a clear idea of whether the asking price is fair, overpriced, or a steal. Your agent will use the CMA to recommend a competitive but realistic offer price—one that aligns with the current market while also reflecting the home’s condition, location, and unique features. With this information, you’ll feel more confident when deciding how much to offer.
TIP: If you want to see what houses sold for in the area you’re looking to buy, download the House Sigma APP!
Submit an Offer:
The next step is drafting the official offer. Your real estate agent will help you create an offer that outlines key details, such as your proposed purchase price, closing date, and any conditions or contingencies. Common conditions include financing approval, home inspection, and sometimes the sale of your current home if needed. These conditions protect you by allowing you to back out or renegotiate if something unexpected comes up during the process.
A well-drafted offer is not just about the price; sometimes, a seller may accept a slightly lower offer if your conditions are more flexible. For instance, if you’re willing to offer a quicker closing date, fewer contingencies, or a larger deposit, it can make your offer more attractive.
Negotiate Terms:
Once your offer is submitted, you may receive a counteroffer from the seller. This is where the negotiation comes into play. The seller might ask for a higher price, a different closing date, or adjustments to the conditions. It’s important to stay flexible, but also firm in your financial limits and needs. Your real estate agent will act as your negotiator, using their expertise to advocate for your best interests.
Don’t worry if this part of the process feels a little intense—it’s all part of the home-buying journey! Be prepared to go back and forth a few times before reaching an agreement. Once both parties agree on the price and terms, you’ll move forward with signing the purchase agreement, and the home is officially under contract.
7. Sign the Purchase Agreement
Once both parties have agreed on the price and terms, it’s time to sign the purchase agreement. This legally binding document outlines all the terms of the sale, including the agreed-upon price, closing date, and any contingencies like home inspection or financing.
Schedule a Home Inspection
Before finalizing the deal, schedule a home inspection to make sure there are no hidden issues with the property. If the inspection reveals any major problems, you may be able to renegotiate the price or request repairs.
Finalize Mortgage and Financing
Now that you’re under contract, it’s time to work with your mortgage broker to finalize your mortgage. Your broker will ensure all documents are in order, lock in your interest rate, and coordinate with the lender for the loan approval.
Sign Closing Documents with a Lawyer
In Canada, a real estate lawyer is essential to finalize the purchase. Your lawyer will review all closing documents, including the deed, mortgage agreement, and title transfer. They’ll also ensure that any outstanding issues (such as liens or unpaid property taxes) are cleared. Once everything checks out, you’ll sign the documents and officially become the homeowner!
Transfer Funds and Get the Keys
On closing day, your lawyer will facilitate the transfer of funds from your mortgage lender and ensure all closing costs (e.g., legal fees, land transfer taxes) are paid. Afterward, you’ll receive the keys to your new home!
Here are a few more reads you may be interested in…
- HOW TO SAVE: THE NO-SPEND CHALLENGE GUIDE
- 20 Essential Tips on Finance to Empower Beginners in Financial Wellbeing
- How to Save $10,000 in One Year: A Clear Guide
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