First-Time Home Buyers

A Complete Guide For First-Time Home Buyers In Canada

Buying a home is a dream of many. Nothing can be compared to the feeling of walking into your own home. But buying your first home in a new country can be confusing and difficult. Most first-time home buyers opt for home mortgages. Nowadays buying a house through a mortgage has become a useful option for those who cannot arrange a big amount at a time. Before getting a mortgage, a person needs to take care of certain things such as arranging the documents, choosing the right lender, etc. This article will hopefully resolve, most of your confusion and you will soon be in your new home.

Who Is A First-Time Home Buyer? A first-time homebuyer is a term that is used to refer to an individual who is going to buy his own first property or a principal residence for the first time in his life. They are often qualified for special benefits such as some special grants, a down payment, and assistance with paying the closing costs that are being sponsored by the federal and state governments. There are also some private lenders that provide some incentives and special loans to first-time homebuyers. 

Under the Department of housing and urban development, the definition of a first-time home buyer is a little broad, and it includes:

– Single parents

– Married people who don’t own a principal residence in a three-period time prior to their purchase.

– Homemakers that are Displaced, even if they have a house with a spouse

– People who live in a non-permanent house such as an RV.

These were all the definitions that clearly define what a first-time home buyer actually means. 

Instructions To Buy Your New Home In Canada As A New Comer.

After getting to Know that you are eligible to buy your first home in Canada, you should learn the process of purchasing it. Because thinking to buy a home and going through the entire process are two ultimate different things. Especially in Canada because the home buying process here is a little unique. To help you out and make it easier for you, we have listed some steps that help you buy your home in a smooth process.

–        Know How Much You Can Afford– When it comes to purchasing a house in Canada there is no question of bargaining or any other ifs, buts, or because housing prices in Canada are pretty expensive. The normal price of a house in Canada is around $716,000, and it is expected that this figure will rise in the upcoming years. Keeping these things in mind it is very necessary that you know what you can afford. And remember that you will have to pay both your mortgage and you’re homeowner’s insurance, and property taxes every month. 

–        Get A Pre-Approved Mortgage– After getting an idea about how much you can afford or how much you can spend on your monthly costs and down payment, the next thing you are going to do is to get a pre-approved mortgage. In Canada, most lenders, as well as banks, offer a pre-approval, in which you get to know about the maximum loan amount you are qualified to get. And to get a pre-approved mortgage, you need to provide some details like your income, debts, and assets. After submitting all this information, the lender will go through your application and either accept or refuse your request for pre-approval within 60 to 130 days. And once you get the approval you can start searching for your new home.

–        Start Searching Your Home– Now after you have got a pre-approval, it’s time to look for your home. Now you have an idea about how much you can afford and how many expenses you can cover, so start to look for the home that comes under your preferred price range. As a newcomer, you can also take help from real estate agents which will help you in getting a good residence.

–        Make An Offer– After finding your ideal house within your price range, you can make a good offer on the property. In Canada making an offer requires putting a deposit first, and this deposit is not your down payment. But this amount will eventually go under the down payment when you close the deal, but if you walk out before closing the deal then you can lose your money.

–        Have A Home Inspection– Get your home inspection done before you make an offer or close the deal. A home inspection is a mandatory norm in Canada because it helps the buyer from any potentially dangerous and serious problems, which they can face after purchasing the home.

–        Finalize Financing Options– Before you close your deal, make sure that your financing options are up to date, and your paperwork is ready or not. If you were already pre-approved for a loan, then you will continue working with your lender to get your mortgage approved. These things happen within a few weeks. And after it’s done you need to sign some paper works and finalise your new home.

Types Of First-Time Home Buyer Programs.

The Canadian government has brought three different programs to help first-time buyers- the home buyer’s plan (HBP), the home buyer’s amount tax credit, and the First-Time Home Buyer Incentive. Other than these programs they also provide land transfer tax refunds to first-timers. Let us study these programs in detail.

–        Home Buyers Plan or HBP– This plan allows first-time home buyers in withdrawing up to 35 thousand dollars from their RRSPs on a tax that is used during the time of purchase in Canada. To come under the category of a first-time home buyer, the individual should not have lived in any home owned by themselves or their partners in a preceding four-year period outlined by the CRA. But the four-year requirement can be waived when the purchase made is for a more suitable and accessible home. If you and your partner are qualified under the plan, then each of you can withdraw up to 35 thousand dollars, which means both of you can withdraw a sum of 70 thousand dollars. 

Before withdrawing the money, it is required that you enter into an agreement to build or purchase a home that you want to occupy as your residence. Purchasers are supposed to return the money back to RRSP within 15 years. And if they fail to do so then the amount that is outstanding will be subject to tax when you are filing your income tax return. –        Home Buyers Amount Tax Credit– Earlier known as the first-time home buyers tax credit, the home buyers’ amount tax credit program is a program that helps the first-time buyers with the price associated with the purchase of their property. It is a five-thousand-dollar non-refundable income tax amount that was acquired after January 27, 2009. For an eligible purchase, the highest credit amount is $750. You become eligible if 1) you and your partner have acquired a qualifying home. 2) you never lived in any other home owned by you or your partner in the year of the acquisition or during those four-year periods.

–        First-Time Home Buyer Incentive– This program is launched by the government of Canada for first-time home buyers. Under this offer, the first-time buyers get a 5% or 10% of a newly constructed house. To be eligible for this offer the purchases must be a Canadian citizen, non-permanent resident, permanent resident, and must be authorised to work in Canada, the buyers must have a minimum qualifying down payment amount. 

Here, the homebuyer is required to repay the incentive based on the current market value of the property at the time of the repayment equal to the percentage of the real home used to know the incentive, up to the highest repayment amount equal to:

• Where the value of the home has increased, the incentive is more than 8% per annum on the incentive amount. • Where the value of the home has decreased, the incentive is less than 8% per annum on the incentive amount. The purchaser is required to pay the incentive after 25 years, or after the property is sold, whichever comes earlier. Or the purchaser can also repay the incentive in full amount during any time before.

How To Find The Best Mortgage Lender.

If you want to find the best mortgage Lender, then you need to spend some time shopping around and searching for a reliable and trustworthy mortgage broker. You can consider different options like local credit unions, banks, online lenders, and other available options. And before you finalise your mortgage lender ask about loan terms, rates, down payment requirements, closing cost, mortgage insurance, closing cost, and all other kinds of fees, and then compare these details with another available offer.

A good mortgage broker acts on behalf of you and assists you in making good decisions. So that you land the right deal under your budget, and they also help to renew or refinance your mortgage. The brokers play a vital role, in helping with the facilitation of mortgage procedures and providing good financing options that are best suited for you. Thus, if you are a first-time buyer and don’t have much knowledge about real estate then it is very necessary to get a good mortgage lender before purchasing your home.

Benefits of getting a private home mortgage:

Private lenders are lenders that are not from a bank or credit union. It is difficult for first-time home buyers to get a home mortgage from a bank due to low credit scores, regulations of the bank, etc. For such buyers, a private home mortgage is a boon. Unlike banks or credit unions, private lenders do not have many regulations. This gives many advantages to home buyers. Some of the main advantages of getting a private home mortgage are given below: • Easier to qualify– Large banks have various levels of the process before providing loans to clients. It might be difficult for many buyers to provide so many documents at the same time. Private home mortgages are much better in this respect. They have a lenient qualification process which is much easier. Instead of focusing on credit history, they focus on current income, assets, and ability to repay the mortgage.

  • Adjustable Interest rates– Banks or traditional lenders follow a set interest rate. On the other hand, private lenders can adjust the rate according to the needs of the borrower. If someone wants long-term loans, their rates can be set accordingly. Also, if someone wants shorter-period loans, the interest rates can be adjusted accordingly. 

Flexibility– Private Mortgages are flexible in various respects. They can adjust the interest rates according to the requirements of the borrower so that repayment of the loan does not feel like a burden. They make the loan borrowing process easy for self-employers. Many people who start their own business, do not have income proofs or other such documents. Banks hesitate to provide loans to people with irregular or unverifiable income. A private mortgage can offer loans to them also. 


In this article, we have summed up all the relevant information that you need to get a home mortgage. You should keep all the information in mind and then apply for a mortgage. Choosing the right lender is the most important step in getting a mortgage. You should take all the steps carefully before applying for a loan.