10 steps to buy your first home

Buying your first home is a big undertaking. For most of us, it’s also the largest investment we’ll ever make. But if you’re ready to make the leap, this short checklist of 10 Easy Steps to Help You Buy Your First Home can help make the whole homebuying process simpler, smoother – and much less stressful.

Step 1: Know your credit score

A good credit score can go a long way towards helping you get approved for a mortgage with the best possible terms and interest rate. Generally speaking, a good credit score is considered to be anywhere from 660 to 900.

If you don’t know your current credit score, check with Equifax, TransUnion or your own banking app to download a free credit report. If you aren’t sure how high of a credit score you need to buy a home – or if you just want some tips on how to improve your credit score – talk to your financial advisor, or ask your REALTOR® for advice.

Step 2: Save for the down payment

In Canada, first-time homebuyers need to save anywhere from 5% to 20% of the purchase price of a home to use as a down payment. The exact amount of the down payment will depend on your budget as well as whether or not you want to pay extra for mortgage loan insurance.

While you don’t need to have a 20% down payment saved in the bank before you start house hunting, having a higher down payment can give you a wider range of choices, more flexible buying options, and some substantial cost savings either up-front or over the life of your mortgage.

Step 3: Figure out how much you can afford

Your housing budget will determine everything from the size and location of home you can afford to the features and amenities you should be looking for. So take some time to calculate how much you can afford to spend each month on all the costs that come with owning a home.

This includes your monthly mortgage payments, of course. But don’t forget to factor in other expenses like your closing costs, property taxes, utility bills, and ongoing repairs and maintenance.

Step 4: Build your team

For the vast majority of Canadians, buying a home is a team sport. From choosing your REALTOR® and mortgage broker or lender, to hiring a home inspector and real estate lawyer, your success will depend directly on having a team of professionals on your side who know the market inside out, and who you feel you can trust.

Getting an experienced REALTOR® involved early on in the process can also help you navigate all the other steps in the homebuying process without having to figure everything out on your own.

Step 5: List your wants, needs and “must haves”

The property you choose isn’t just going to be an investment. It’s also the place that you and your family will call home for years or decades to come. So make sure it has everything you’ll want or need for at least the next five to 10 years.

Start by writing a detailed list of everything you or your family are looking for in your next home – from the square footage to the number of bedrooms and bathrooms, the features or amenities, the type of property you want and the neighbourhood(s) where you want to live. Then divide that list into your “wants,” your “needs” – and the things you absolutely “must have.”

Step 6: Get pre-approved for a mortgage

Next, talk to your bank, mortgage broker or credit union about getting pre-approved for a mortgage. Being pre-approved means that your lender guarantees the amount, interest rate and terms of your mortgage for a specific period of time while you’re looking for your new home (usually two to four months or so).

In addition to letting you know how much home you can afford, getting pre-approved can also let you lock in a certain interest rate in case the rates change while you’re house hunting, and helps you save time later on when you’re ready to put in an offer.

Step 7: Start your search

Now comes the fun part! Working with your REALTOR®, narrow your search down to only those properties that fit your budget, match your needs and preferences, and are located in the communities you want to call home.

Research any homes that look like they might be a good fit online, start attending open houses to get a better feel for what’s available in your price range, and ask your REALTOR® to set up in-person tours of any properties that spark your interest.

Step 8: Choose your new home

Once you’ve got your short list of potential properties selected, sit down with your family, trusted friends and advisors, and your REALTOR® to decide which property is the right one for you. This is a great time to look back at your list of wants and needs, and make sure you haven’t gotten swept up in the excitement and forgotten any of the features that are most important to you.

Your REALTOR® can also be a great source of expertise and advice at this stage of the process, to help you make sure that the decision you make is the best long-term choice for your family.

Step 9: Make an offer

Once you know which home you want, have your REALTOR® send the seller an official Offer to Purchase. This is a legal document that outlines everything from the price you’re willing to pay to any conditions you want included as part of the deal.

For first-time buyers especially, figuring out how much to offer can be a confusing and complicated experience. A qualified, experienced REALTOR® can take care of all the paperwork for you, offer objective and honest advice – and help you negotiate the best price possible.

Step 10: Close the deal

If your offer is accepted (with or without any additional negotiating), all that’s left is to finish the process and close the deal. This includes having a home inspection done (or fulfilling any other conditions you set out in your offer), finalizing your mortgage financing, signing all the contracts with your lawyer – and getting the keys to move into your new home!

Find out more

Are you ready to buy your first home but aren’t sure where or how to begin? Contact us with any questions you may have, or to schedule your free consultation.