A Brief Guide to Buying Your First Home – Buying a home is a big decision, and as a first-time home buyer, you will find that the buying process is much different than renting. Not only do you have to get qualified and approved for a loan, but you also need to learn about home inspections, property taxes, property insurance, and everything else that comes with being a homeowner. First-Time Home Buyer’s Incentives
Guide to Buying Your First Home
The good news is that as of 2023, the Canada Revenue Agency has enacted a first-time home buyer’s tax credit (HBTC), based on a percentage of $5,000, for new homeowners that buy a home after January 27, 2023.
Also from the Canada Revenue Agency is a new registered retirement savings plan (RRSP) rule that allows home buyers to opportunity to withdraw up to $25,000 from their RRSP, which must be paid back over time, but provides a nice kickstart for those that need a down payment.
Getting a Mortgage
The process of getting a home mortgage can be a tedious one but for good reason. Banks want to ensure that homeowners are qualified to repay their loans on time and don’t get in over their heads. This is where your credit score and income-to-debt ratio will play a large part in your qualification and the amount you will be qualified for. Banks use pre-qualification to measure someone’s likelihood of success in applying for a loan, but a pre-qualification is not a guarantee of funds. see
Once you are pre-qualified and have begun to peek at the local home listings, you will want to meet with a mortgage broker to get pre-approved, which is a step above pre-qualification and involves a look into your debt-to-income ratio and your credit history. A pre-approval letter will state how long you are pre-approved for and for what dollar amount. You will use this to determine the maximum price you can afford for a home.
Of course, some mortgage companies will want a down payment anywhere between 5% and 20%, often offering incentives for higher deposits. Also, should you choose to deposit more than required, you can use the additional amount to buy into a home more significant than what you have been pre-approved for.
Suppose you are ready to start your home-buying process. In that case, I urge you to look at our mortgage calculator & quotes section, where you can play with the numbers to determine how much home you can afford and how much you will pay based on varying down payments and interest rates. Also, when using our Canadian mortgage calculator, you will be entitled to five free mortgage quotes from trusted local providers on us. Using our mortgage calculator & mortgage quotes utility is a great way to start the home-buying process on the right foot, and it’s free!