First time home buyer citadel mortgages

Tips for First Time Home Buyers in Canada (2023)

Stepping into the realm of homeownership for the first time can be both exhilarating and daunting. As a premiere mortgage broker in Canada, Citadel Mortgages is here to guide you through each step of the journey. This comprehensive guide is designed to help you navigate the process of purchasing your first home in Canada successfully.

Table of Contents

  1. Preparing for Homeownership
  2. Determining Affordability 
  3. Saving for Your Down Payment 
  4. Understanding Closing Costs
  5. Selecting the Right Mortgage 
  6. Securing Pre-approval 
  7. Choosing a Real Estate Agent
  8. House Hunting 
  9. Making an Offer
  10. Closing the Deal
  11. Frequently Asked Questions 

1. Preparing for Homeownership

The initial steps towards purchasing your first property involve a considerable amount of planning and preparation. These early stages will lay the groundwork for your homeownership journey.

1.1 Debt Clearance and Emergency Fund

The first order of business when preparing to buy a home is to clear your existing debts. Your financial health plays a significant role in your ability to secure a mortgage. A clean slate in terms of debt can increase your chances of loan approval and potentially reduce your interest rates. Additionally, having an emergency fund can provide a safety cushion for unexpected expenses after the home purchase.

1.2 Polishing Your Credit Score

Your credit score significantly impacts your mortgage approval and interest rates. Therefore, it’s crucial to review your credit report and rectify any discrepancies. Regular bill payment, maintaining low credit card balances, and avoiding new credit accounts can help improve your credit score.

2. Determining Affordability

One of the fundamental principles of being a first-time home buyer in Canada is knowing how much house you can afford. Adhering to the 25% rule can ensure that your mortgage doesn’t overburden your finances. Your monthly housing costs, including principal, interest, property taxes, and insurance, should not exceed 25% of your monthly take-home pay.

3. Saving for Your Down Payment

While an all-cash offer is desirable, it’s not always feasible for first-time home buyers. A 20% down payment is typically recommended to avoid Private Mortgage Insurance (PMI). However, a down payment of 5-10% can also be an acceptable starting point, as long as it aligns with your financial capabilities and housing costs remain within the 25% limit of your income.

4. Understanding Closing Costs

First-time home buyers in Canada should also be aware of the additional expenses associated with the closing process. These costs typically range between 2% to 7% of the home’s purchase price and include fees for attorneys, inspections, and title insurance. It’s crucial to factor these costs into your budget when planning your home purchase.

5. Selecting the Right Mortgage

Choosing the right mortgage can make a substantial difference in your homeownership journey. While various mortgage options are available, including Adjustable-Rate Mortgages (ARMs), Federal Housing Administration (FHA) Loans, and Veterans Affairs (VA) Loans, Citadel Mortgages recommends a conventional 15-year fixed-rate mortgage for first-time home buyers. This type of mortgage offers a locked-in interest rate and enables quicker payoff time, ultimately saving you a significant amount of money.

6. Securing Pre-approval

Securing pre-approval from a lender before starting your house hunt can give you a competitive edge in the market. Pre-approval indicates that the lender is willing to give you a certain loan amount under specific terms, making you a more attractive buyer to sellers.

7. Choosing a Real Estate Agent

A real estate agent can be your trusted ally in your home buying journey. They can provide valuable insights about the local market, help negotiate the best deal, and guide you through the buying process. Citadel Mortgages can connect you with expert real estate agents who understand the needs of first-time home buyers.

8. House Hunting

With your finances in order and your agent at your side, the exciting part of your journey begins – house hunting. Determine your needs and wants, and start exploring potential homes. Remember to consider factors like location, size, condition, and price when evaluating properties.

9. Making an Offer

Once you’ve found a home that meets your criteria, it’s time to make an offer. Your real estate agent can help you determine a competitive offer based on comparable home sales, the property’s condition, and the local market trends.

10. Closing the Deal

After the seller accepts your offer, the final steps include home inspections, appraisals, securing homeowners and title insurance, and finalizing your mortgage. Once all these steps are completed, you can sign the papers, receive the keys, and officially become a homeowner.

Frequently Asked Questions

1. How much down payment do I need as a first-time home buyer in Canada? Typically, a down payment of 20% is recommended. However, a down payment of 5-10% can also be an acceptable starting point for first-time home buyers.

2. How can I improve my credit score before applying for a mortgage? Regular bill payment, maintaining low credit card balances, and avoiding new credit accounts can help improve your credit score.

3. Do I need to have a real estate agent as a first-time home buyer? While it’s not mandatory, having a real estate agent can make the home buying process smoother and less stressful. They can provide valuable insights about the local market, help negotiate the best deal, and guide you through the buying process.

4. What are the closing costs I should expect when buying a home? Closing costs typically range between 2% to 7% of the home’s purchase price and include fees for attorneys, inspections, and title insurance.

5. What is a pre-approval? A pre-approval is a letter from a lender indicating that they are willing to give you a certain loan amount under specific terms. Having a pre-approval can make you a more attractive buyer to sellers.

6. What is the best option for first-time buyers? For first-time buyers, laminate countertops are often the best option. They are affordable, easy to install, and come in a variety of colors and patterns. Laminate countertops are also low-maintenance and resistant to stains and scratches, making them suitable for everyday use.

7. How much do most first-time home buyers put down? The down payment amount for first-time home buyers varies, but it is typically around 5% to 20% of the purchase price. It is important to note that a larger down payment can help you secure a better interest rate and lower monthly mortgage payments.

8. Who qualifies for first-time home buyer Canada? In Canada, to qualify as a first-time home buyer, you must meet certain criteria. This includes not having owned a home in the past four years, being a Canadian citizen or permanent resident, and intending to live in the property as your primary residence within one year of purchase. Other eligibility requirements may also apply, depending on the specific programs and incentives available.

9. What age are most first-time buyers? The age of first-time home buyers can vary, but in general, most first-time buyers are in their late 20s to early 30s. This age range is often associated with individuals who have established themselves in their careers and are ready to take the step towards homeownership.

10. How long does pre-approval for a mortgage take? The duration of the pre-approval process for a mortgage can vary depending on several factors. Generally, it takes around 1 to 3 business days to get pre-approved for a mortgage. However, it is important to note that the timeline may be longer if any additional documents or information are required. It is recommended to contact a mortgage lender or broker to get a more accurate estimate based on your specific circumstances.

Citadel Mortgages can help make your dream of being a first-time home buyer in Canada a reality. Contact us today to start your homeownership journey.

Scroll to Top

Speak to us about your mortgage journey today

Give us a call, we can answer your questions with no obligation.
Call Now

Citadel 4-Year Fixed Mortgage Rates

6.44%

citadel-mortgages.png

4-Year-Fixed

save-icon-1.png

Yes

Pre-approval

finance-13-512-removebg-preview.png

15%

Pre-Payments

download__1_-removebg-preview.png

15%

Lump sum pre-payment

Citadel 4-Year Fixed Mortgage Rates

6.44%

citadel-mortgages.png

4-Year-Fixed

save-icon-1.png

Yes

Pre-approval

finance-13-512-removebg-preview.png

15%

Pre-Payments

download__1_-removebg-preview.png

15%

Lump sum pre-payment