How to buy a house in Canada (in 8 steps)
Key takeaways
- You’ll need more than just a down payment. Aim to save at least 5–20% for your down payment, plus an extra 3–5% for closing costs like land transfer taxes and legal fees.
- Get pre-approved before you start house hunting. Pre-approval helps you understand your budget and locks in your rate for up to 120 days.
- A good credit score makes a big difference. A score of 680+ will get you access to better mortgage rates. Lower debt levels also help you qualify for a larger mortgage.

Aditi Gupta, Content Specialist
This piece was originally published on September 28, 2020, by Jordann Brown and updated on July 10, 2025 by Aditi Gupta.
Buying a home is one of the biggest financial decisions Canadians will make, and it's no secret that affordability remains a challenge. As of June 2025, the national average home price edged up to $691,299, according to CREA. While mortgage rates have eased thanks to the Bank of Canada cutting its Overnight Lending Rate from 5% in July 2024 to 2.75% by March 2025, borrowing costs are still higher compared to pre-pandemic levels. That means even with some rate relief, rising home prices and elevated interest rates continue to squeeze buyers, especially those entering the market for the first time. Let’s walk through how the homebuying process works and how to financially prepare before making an offer.
How can I purchase a home in 8 steps?
The steps on how to buy a property are the same whether you’re buying a house, a townhouse or a condo. For simplicity, our examples will focus on how to buy a fully-detached home.
Step 1: Save for a down payment
In Canada, you need to put down at least 5% of the home purchase price as a down payment. For homes between $500,000 and $1.5 million, you’ll need 5% of the first $500,000 and 10% of the rest of the price. For homes valued at $1.5 million or more, the minimum down payment is 20%.
You might already have this saved, but if not, there are a few ways to get there. You can use the Home Buyer’s Plan to withdraw up to $60,000 in savings from your RRSP, tap into the tax-free First Home Savings Account (FHSA), or use a gift from an immediate family member (with a signed letter stating it’s not a loan). It’s usually best to save as much as possible for your down payment because a larger down payment can help you:
- Lower or avoid mortgage default insurance premiums
- Build more equity in your home
- Reduce your monthly mortgage payment
- Pay less interest over time
For example, on a $500,000 home, putting 20% down instead of 5% could lower your monthly mortgage payment by over $400 and save you nearly $12,000 in interest over five years — all while avoiding mortgage insurance premiums.
*Assuming a 5-year fixed mortgage rate of 4.09%.
Step 2: Get your finances ready
While you’re saving for your home down payment, take the time to get your finances and paperwork organized. If you have any credit debt, student loan debt, car loans, or a line of credit with a balance, now is a great time to pay those off. Lowering your debt levels will have a positive impact on your credit score and debt service ratios – two key factors lenders use to determine how much they'll lend you. According to CMHC:
- Your gross debt service (GDS) ratio, which includes housing costs like your mortgage, property tax, and heating, should be no more than 32% of your gross monthly income.
- Your total debt service (TDS) ratio, which indicates housing costs plus other debt payments, should stay under 40%.
Most lenders look for a credit score of at least 680 to approve you for the best mortgage rates. If your score is below that, you may still qualify for a bad credit mortgage that comes with higher rates, stricter conditions, or a smaller loan amount. It’s worth checking your credit report early and taking time to improve your score if needed.
Step 3: Prepare your mortgage documents
When you apply for a mortgage, your lender will ask for a long list of documents to verify your income, assets, and financial obligations. Getting these ready early will make the approval process smoother, especially if you need to act quickly once you find the right home. Here’s your "Buying a House" document checklist:
- Current employment information, such as a T4, pay stub or letter from employer
- Other sources of income, like investments or business income
- Savings and investment statements for the past 90 days
- If you are planning to use the Home Buyer’s Plan, proof of withdrawal from your RRSP
- If you are using a financial gift from a family member, you’ll need a letter stating the gift is not a loan
- A void cheque for your mortgage payments
- An inventory of all other debts and assets, like cars and car loans
Tip: If you're self-employed or earn variable income, your lender may ask for extra documentation like tax returns or business financials, so give yourself a head start by gathering those early.
Step 4: Check for rebates and grants
Buying a home is expensive, so make sure you aren’t making the process more costly than it needs to be. Take the time to check whether you’re eligible for any rebates or grants. Here are some common programs available to first-time homebuyers:
- Home Buyer’s Plan: Withdraw up to $60,000 from your RRSP for a home down payment, tax-free.
- Land transfer tax rebate: In several provinces and in Toronto, first-time home buyers are eligible for a land transfer tax rebate. If you are buying a house in Ontario, for example, you may receive a partial refund of Toronto’s land transfer tax up to $4,475.
- Home Buyer’s Amount: A $5,000 non-refundable federal income tax credit, which can reduce your taxes by up to $750.
- GST/HST New Housing Rebate: This is a partial rebate on the GST or HST you paid on the cost of your new home.
In addition to the programs above, there are several other incentives available through federal, provincial, and even municipal governments. To learn more about what’s available in your province, check out our first-time home buyer guides:
- Alberta First-Time Home Buyers
- British Columbia First-Time Home Buyers
- Manitoba First-Time Home Buyers
- New Brunswick First-Time Home Buyers
- Newfoundland and Labrador First-Time Home Buyers
- Nova Scotia First-Time Home Buyers
- Ontario First-Time Home Buyers
- Prince Edward Island First-Time Home Buyers
- Quebec First-Time Home Buyers
- Saskatchewan First-Time Home Buyers
Step 5: Shop around for a great rate
Finding the lowest mortgage rate could save you thousands, or tens of thousands, in interest over the life of your mortgage. Fortunately, shopping around for the best mortgage rate is easy when you use a mortgage broker. Instead of applying to multiple lenders yourself, a broker does the heavy lifting. You’ll fill out one application, and they’ll shop it around to find the most competitive rate and terms available.
Here’s the difference between securing the lowest mortgage rate versus the standard posted rates at big banks on a $500,000 home:
Step 6: Get a mortgage pre-approval
If you’ve saved your down payment, organized your documentation, and found a mortgage broker, now is the time to get pre-approved for a mortgage. Mortgage pre-approval is free and doesn’t commit you to a single lender, but it does give you a chance to find out the following information to inform your house hunt:
- How much you can afford to spend on a house
- How much your maximum monthly mortgage payment could be
- What mortgage interest rate is available to you
If you like the mortgage rate and lender, you can lock in that rate for up to 120 days. Locking in the mortgage rate means that if rates rise, you’ll still access the lower rate. If rates drop, don’t worry, your lender will honour the lower rate.
Check out our list of pre-approval dos and don’ts to make the process smoother.
Step 7: Find a home
Finally, the fun part – house-hunting! With your mortgage pre-approval in hand, your maximum purchase price in mind and a substantial down payment, you’re ready to contact a real estate agent and begin your house hunt. Here are our top tips:
- Find a real estate agent who specializes in the type of house or neighbourhood you prefer (family referrals are a great place to start).
- Avoid representing yourself if you are a first-time home buyer. It’s better to rely on the expertise of an experienced agent.
- Make a list of “must-have” and “nice-to-have” features for your future house. It’s important to know where you can be flexible.
- A beautifully staged home might distract you from structural or maintenance issues. Bring a checklist, take photos, and focus on layout, lighting, and condition, not the decor.
- Research the market in your ideal neighbourhood to make sure home prices and your maximum purchase price are in sync.
- Your budget shouldn't stop at the purchase price. Think about property taxes, condo fees, utilities, and renovation needs. Your dream home should also be affordable month to month.
- In a competitive market, the best homes don’t last long. Have your documents ready and keep your agent in the loop so you can move quickly if needed.
Step 8: Make an offer and seal the deal
When you find the house you want, things will move fast – but don’t panic! Your real estate agent will help you prepare and submit an offer to purchase. If you're buying in a competitive market, you may be up against multiple bids to buy that house, so it’s important to act fast but thoughtfully.
Once your offer is accepted:
- You’ll pay a deposit, which counts toward your final purchase price.
- You’ll finalize your mortgage with your broker or lender.
- You’ll book a home inspection, which could lead to renegotiations if major issues are found.
If all goes well, you’ll secure your financing, and your real estate lawyer will handle the final steps, including the title transfer, down payment transfer, and closing paperwork. The entire process can take 30-60 days, depending on the terms of the offer to purchase. And then… keys in hand, you’ll officially be a homeowner.
Are you ready to buy a house?
Homeownership comes with major responsibilities – financial and otherwise. You're not just buying a property; you're taking on a long-term commitment that could be worth half a million dollars or more. That’s why it’s crucial to do some early self-checks. Ask yourself:
Do you have enough saved for upfront costs?
In addition to your down payment, you’ll need to save 3–5% of the home’s purchase price for closing costs. On a $500,000 home, that’s about $15,000–$25,000. Typical closing costs include:
- Land transfer tax: $12,950 (in Ontario, for example)
- Legal fees: $1,000
- Title insurance: $500
- Home inspection: $500
Also read: Should you borrow for your down payment?
Is your income steady?
Owning a house or condo means being responsible for all of the bills and unexpected expenses related to repair and maintenance. Unlike a renter, you can’t call your landlord when the roof starts leaking, so it’s vital to ensure you have a steady income that can sustain both your monthly and unexpected expenses. You can use our mortgage payment calculator to help you determine what your monthly expenses will be in various scenarios.
A steady income doesn’t just help you stay afloat; it also improves your chances of qualifying for a mortgage. Most lenders prefer stable, salaried income when assessing applications. If you’re self-employed or a large portion of your earnings come in the form of commissions and/or bonuses, buying a house can be a little more complicated, so it’s a good idea to speak to a mortgage broker nice and early.
What are your local market conditions?
While home prices in Canada have cooled from pandemic peaks, they’re still high in many regions due to ongoing supply shortages. And although the Bank of Canada has cut interest rates recently, today’s borrowing costs are still higher than what we saw in 2021 and early 2022.
You can’t perfectly time the market, but it’s smart to understand the conditions you’re buying into. Ask yourself:
- Are mortgage rates relatively low right now?
- Is your local market favouring buyers or sellers?
- Will you face bidding wars, or have more room to negotiate?
Before you buy, make sure you’re comfortable with your future mortgage payments and that you can handle them even if rates rise again.
Are you confused between renting and buying?
If you’re not quite sure whether now’s the right time to buy, that’s okay – it might not be. In some cases, renting is the more practical move while you shore up your finances, build credit, or wait for better market conditions. Here’s when it might make sense to rent a little longer:
- You haven’t saved enough for a down payment or closing costs
- Your income isn’t steady yet, or you're still paying off high-interest debt
- You’re not ready to settle in one place for at least 3-5 years
- You’d rather avoid the added responsibility of maintenance and repairs
Try running the numbers and compare your current rent with a projected monthly mortgage payment. It’s a simple way to see if buying is financially realistic right now, or something to plan for down the line.
The bottom line
Buying a home is a long-term commitment that works best when you’ve done the groundwork. You don’t need to have every answer before you start your homebuying journey, but you do need a solid plan, realistic expectations, and a clear sense of your financial limits. If you still have questions, our mortgage brokers are here to offer advice that’s free, judgment-free, and actually helpful.
Also read:
- Should you always save a 20% down payment?
- What is an amortization schedule?
- 7 tips to get approved for a mortgage
- The Bank of Mom and Dad and your down payment
- The dos and don'ts of getting a mortgage pre-approval
- The Tax-Free First Home Savings Account
- Mortgages and inflation: How do they affect each other?
- Should I buy a house in a recession?
Aditi Gupta, Content Specialist
Aditi Gupta is a content specialist at Ratehub, with a focus on creating informative content about mortgages.