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Before You Search: Financial Preparation
The Canadian home buying process effectively begins before any property search. Lenders assess buyers based on credit history, income documentation, and debt load. Checking your credit report through Equifax Canada or TransUnion Canada before approaching a lender gives you time to address any discrepancies. Both agencies are required to provide free reports to Canadians on request.
A mortgage pre-approval gives you a rate hold (typically 90–120 days) and a confirmed borrowing limit. It is not a guarantee of final approval — that happens after an accepted offer — but it narrows the price range for your search and shows sellers that you are a serious buyer.
The Stress Test: Since January 2018, all federally regulated lenders must qualify buyers at the higher of the Bank of Canada's minimum qualifying rate or the contracted mortgage rate plus 2 percentage points. This applies to both insured and uninsured mortgages. The Office of the Superintendent of Financial Institutions (OSFI) publishes the current qualifying rate. Source: OSFI Guideline B-20.
Closing Costs: What to Budget Beyond the Purchase Price
First-time buyers often underestimate closing costs. In addition to the down payment, a buyer needs to budget for several additional items that are due at or before closing.
| Cost Item | Approximate Range | Notes |
|---|---|---|
| Land transfer tax (provincial) | Varies by province and price | Ontario and BC have first-time buyer rebates up to defined thresholds |
| Land transfer tax (municipal) | Varies | Toronto charges an additional municipal LTT on top of Ontario's provincial tax |
| Legal fees and disbursements | $1,500–$2,500+ | A real estate lawyer or notary is required in all provinces |
| Home inspection | $400–$700 | Cost varies by property size and region |
| Title insurance | $200–$400 | Most lenders require it; protects against title defects |
| Property tax adjustment | Varies | You may reimburse the seller for prepaid taxes from closing date onward |
| CMHC mortgage insurance premium | 2.80%–4.00% of loan | Required when down payment is under 20%; can be added to mortgage balance |
A common rule of thumb is to budget 1.5–4% of the purchase price for closing costs in addition to the down payment. The specific amount depends heavily on province, municipality, and property value.
Finding a Property and Working with a Real Estate Agent
In Canada, buyer's agents are typically compensated from the commission paid by the seller, though this structure is evolving following regulatory changes in some provinces. The buyer's agent's responsibility is to represent your interests during the search and negotiation process.
MLS (Multiple Listing Service) listings are accessible to the public through Realtor.ca, operated by the Canadian Real Estate Association (CREA). Your agent will also have access to listing data before properties appear publicly and can arrange viewings.
Making an Offer
An offer in Canada is a written contract. In Ontario, the standard form is the Agreement of Purchase and Sale developed by the Ontario Real Estate Association (OREA). In BC, the standard form is the Contract of Purchase and Sale. Alberta uses the Residential Purchase Contract.
An offer includes the purchase price, the deposit amount (typically due within 24 hours of acceptance and held in trust), the closing date, and any conditions. Common conditions for first-time buyers include:
- Financing condition: Allows the buyer to withdraw if final mortgage approval is not received within a specified period (typically 5–7 business days).
- Home inspection condition: Allows the buyer to withdraw or renegotiate if the inspection reveals material defects.
- Sale of existing property condition: Less common for first-time buyers who are not selling another home.
Waiving conditions: In competitive markets, buyers sometimes waive conditions to make their offer more competitive. Waiving a home inspection condition or a financing condition carries real risk. These decisions should be made with full awareness of what is being given up, not as a default negotiating tactic.
After Acceptance: The Condition Period
Once an offer is accepted, the buyer has the time window specified in the conditions to complete their due diligence. During this period:
- Submit the mortgage application to your lender with the accepted offer attached
- Schedule a home inspection (within 2–3 days of acceptance in most cases)
- Review the inspection report with your inspector and agent
- Receive written mortgage commitment from your lender
- Sign the waiver of conditions to firm up the deal, or exercise your right to withdraw if a condition is not met
Closing Day
On or before closing, your lawyer receives the mortgage funds from your lender and your down payment and closing costs from you. The lawyer registers the title in your name, pays the purchase price to the seller's lawyer, and receives the keys or access codes on your behalf. In most provinces, title registration happens electronically through provincial land registry systems.
Possession time (when you physically receive keys) is specified in the offer. It is typically mid-afternoon or by a specific time on closing day, though this varies.
Provincial Differences Worth Noting
The sequence above is broadly consistent across Canada, but several provincial differences affect the experience in practice:
- British Columbia: BC has a mandatory 3-business-day rescission period on residential offers since January 2023, giving buyers a window to withdraw after an accepted offer (with a fee of 0.25% of the purchase price). This is known as the Home Buyer Rescission Period.
- Ontario: In Ontario, the non-resident speculation tax (NRST) applies to certain buyers who are not Canadian citizens or permanent residents purchasing in specific regions.
- Quebec: Transactions in Quebec are typically handled by notaries rather than real estate lawyers, and the standard offer form differs from common law provinces.
- Alberta: Alberta has no provincial land transfer tax, which reduces closing costs compared to Ontario and BC.