How to buy a house for the first time

Managing Real Estate Broker with Sapphire Real Estate, Brokerage

Qualify for a Mortgage and get a pre-approval (what it is, what to look for, and how to get it)

Qualify for a Mortgage and get a pre-approval (what it is, what to look for, and how to get it)

Mortgage pre-approval is a great tool when you're house hunting because it ensures that the buyer will be able to actually obtain financing for the home. The term "pre-qualification" is often used interchangeably with "pre-approval," but there are key differences between them:

  • Prequalification vs. Preapproval: A lender gives a borrower a general idea of what they can afford when they prequalify them; however, once they have all of their documentation in order and complete an application process, lenders will issue a formal mortgage approval letter stating that the borrower has been approved for a specific loan amount at a certain interest rate.

  • Get pre-approved now 

Understand different types of homes and decide on which one you prefer.

When buying a house for the first time, there are many things to consider. For example, do you want a condo? A townhome? What about single-family homes or duplexes? Before deciding on which kind of dwelling best suits your needs, it's helpful to understand the different types of dwellings available and how they differ from one another.

Once you've decided what type of home you like best, research its costs so that you know how much money is involved in purchasing that type of real property. And don't forget to do some research on market conditions—for example, How many other houses in your area have similar characteristics as yours and what price range are they selling at?

What is CMHC insurance?

CMHC insurance is a type of mortgage loan insurance. It's required if you purchase a home with less than 20% down—and it's really cheap. At the time of writing, it costs 0.5% of the total purchase price (that's $2,500 on a $200,000 house).

CMHC insurance works by taking your annual income and dividing it into five parts: 40%, 30%, 20%, 10%, and 10%. The "40" part goes toward paying off your mortgage, the "30" part goes toward paying for taxes and utilities (like hydro or heating), and the "20" part is for repairs/renovations such as painting or new flooring...and so on. If any part of your monthly payments gets used up by these things instead of making progress on reducing the principal balance on your mortgage then you'll have to pay an extra premium at year-end (just like any other insurance policy).

However! If you only put 5% down but can afford more than 5% down then don't worry about CMHC insurance premiums because they won't apply until next year when they reassess how much equity there is in your home based on its market value today vs how much was originally paid for it back then when it was just bought using 100% debt financing instead which doesn't require CMHC premiums if done correctly since none existed at that time either way;

The down payment (how much minimum you need for a down payment)

When you buy a house, you'll need to make a down payment. The down payment is the amount of money that you pay upfront to purchase your house. The lender will keep this money in an escrow account until they're sure that you've paid back all of your debts (including interest), and then return it to you.

The minimum down payment for first-time homebuyers varies by province or state:

  • In Ontario, Canada's most populous province, the minimum is 5% on the first $500,000 of the purchase price (or 10% if buying any part of an existing house).

  • In New Brunswick, Canada's second-most populous province, there is no requirement—anyone can buy without making a down payment!

  • In British Columbia where I live now—and which has some great places to try out camping this summer—the minimum is 5%.

Select your criteria and features of your dream home

In order to make sure that you're selecting the right home, you must first select the criteria and features of your dream home. This is an important step because it will help you filter through all of the homes for sale in your area and find those that fit your needs. Here are some things to consider:

  • How many bedrooms do I need?

  • What kind of location is ideal for me?

  • Do I want a single-family house or a townhouse?

  • What's my budget range?

Comparative analysis and prepare an offer

The next step is to gather information about the house and its market. A comparative analysis of each home is helpful, as well as understanding what makes your offer stand out from the others. The most important thing to remember when making an offer on a house is that you should always structure the offer so that you are in control at all times, but also give yourself room for flexibility if needed.

Gift from parents or family members - can I use this as part of my down payment?

If you want to use a gift from family and friends as part of your down payment, that's totally fine. However, there are two things to know about how this will affect the mortgage.

  • The first is that the lender will likely require you to document the gift with a gift letter. This letter should include details about when the money was given and by whom it was given.

  • The second thing is that the lender may limit how much of the down payment can come from gifts; check with them ahead of time if you need more information on this aspect of using family funds for your down payment.

Finally, be aware that while gifts are often considered "free money," they're not always so quick-and-easy as they seem: because these funds are technically related either through blood or marriage (or both) between yourself and whoever gave them to you, they must be tracked during building up equity in order for those investments' values not being taxed at capital gains rates where applicable


Some of the closing costs associated with buying a home

  • Land transfer tax (LTT) is a one-time tax that you pay to the government when you buy a property. The LTT rate varies by province, from 0% to 2%.

  • Lawyer fees are paid to your lawyer for their work in preparing and reviewing your purchase agreement, closing documents and other legal services during the purchase process.

  • Home inspection fees are sometimes paid by buyers but may also be charged by sellers or included as part of their offer. You can ask about this before making an offer on a property so that you know what it will cost you if there’s an inspection needed.

  • Appraisal fees are paid to an appraiser who determines the value of your home based on factors such as condition, square footage, and local real estate trends in recent years. Your mortgage lender will require this report before approving any loans against your home's value - which means you need it before closing day too!

  • Moving expenses include things like packing materials like boxes & bubble wra

  • p; transportation costs such as gas mileage; food while traveling; hotel stays while traveling etc. If moving isn't required because someone lives within walking distance it might not apply here but otherwise, talk with an agent about what applies depending on where they're moving from/to! If there's no movement involved then these won't apply either 

Comments (1)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:

Thank you for sharing the information. Buyers and sellers in your area will benefit from your expertise. Wishing you continued success.  Have a wonderful day and sell a house.  bill


May 16, 2022 11:51 AM