Question 1

How much down payment do I need to buy a home in Ontario?

Accepted Answer

In Canada, the minimum down payment depends on the purchase price. For homes under $500,000, you need at least 5% down. For homes between $500,000 and $999,999, you need 5% on the first $500,000 and 10% on the remaining amount. For homes $1 million or more, you need a minimum 20% down payment. Keep in mind that if your down payment is less than 20%, you'll also need mortgage default insurance (CMHC).

Question 2

Can I buy a home with only 5% down payment?

Accepted Answer

Yes, you can purchase a home with as little as 5% down payment if the purchase price is under $500,000. However, you'll need to qualify for mortgage default insurance through CMHC, Genworth, or Canada Guaranty. This insurance protects the lender and is added to your mortgage. The good news is that insured mortgages often have lower interest rates than conventional mortgages.

Question 3

What is CMHC insurance and when do I need it?

Accepted Answer

CMHC (Canada Mortgage and Housing Corporation) insurance is mortgage default insurance required when your down payment is less than 20% of the purchase price. The insurance premium ranges from 2.8% to 4% of the mortgage amount, depending on your down payment. This premium is typically added to your mortgage and paid off over the amortization period. CMHC insurance protects the lender if you default on your payments.

Question 4

What's the difference between fixed and variable mortgage rates?

Accepted Answer

A fixed-rate mortgage locks in your interest rate for the entire term (typically 1-5 years), providing predictable payments. A variable-rate mortgage fluctuates with the Bank of Canada's prime rate, meaning your payments or amortization can change. Fixed rates offer stability and are easier to budget. Variable rates historically average out lower but come with more risk. Your choice depends on your risk tolerance and financial situation.

Question 5

How long does the home buying process take in Ontario?

Accepted Answer

The typical home buying process in Ontario takes about 30-90 days from offer acceptance to closing. Here's the breakdown: mortgage pre-approval (1-5 days), house hunting (varies), making an offer and negotiations (1-7 days), home inspection (3-5 days), mortgage approval (5-10 days), and final closing procedures (30-60 days). First-time buyers often take longer for house hunting as they learn the market.

Question 6

What rebates are available for first-time home buyers in Ontario?

Accepted Answer

First-time buyers in Ontario can access several rebates: Ontario Land Transfer Tax Rebate (up to $4,000), Ontario Municipal Land Transfer Tax Rebate (up to $4,475 if buying in Ontario), First-Time Home Buyer Tax Credit ($10,000 non-refundable credit = ~$1,500 savings), and the RRSP Home Buyers' Plan (withdraw up to $60,000 tax-free). Combined, these can save you over $10,000 on your first home purchase.

Question 7

What closing costs should I budget for?

Accepted Answer

Beyond your down payment, budget 1.5-4% of the purchase price for closing costs. This includes: Land Transfer Tax (Ontario + Ontario if applicable), legal fees ($1,500-$2,500), title insurance ($300-$500), home inspection ($400-$600), appraisal fee ($300-$500), moving costs ($500-$2,000), and immediate home expenses. For a $800,000 home, expect approximately $25,000-$40,000 in total closing costs.

Question 8

Do I need a real estate agent to buy a home?

Accepted Answer

While you're not legally required to have a real estate agent, working with an experienced buyer's agent provides significant advantages: access to MLS listings, market expertise, negotiation skills, help with paperwork, and professional networks (inspectors, lawyers, mortgage brokers). In Ontario, the seller typically pays both agents' commissions, so buyer representation is essentially free for you.

Question 9

What is the stress test for mortgages in Canada?

Accepted Answer

The mortgage stress test requires you to qualify at either the Bank of Canada's 5-year benchmark rate or your contract rate plus 2%, whichever is higher. This ensures you can afford payments if interest rates rise. For example, if your actual mortgage rate is 5%, you must qualify as if paying 7%. This reduces the maximum amount you can borrow but protects against financial hardship.

Question 10

Should I get pre-approved for a mortgage before house hunting?

Accepted Answer

Absolutely! Mortgage pre-approval is essential before house hunting. It tells you exactly how much you can afford, locks in an interest rate (typically for 90-120 days), shows sellers you're a serious buyer, speeds up the closing process, and helps avoid disappointment from looking at homes outside your budget. I recommend getting pre-approved as your first step in the home buying journey.

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