Home Buyer FAQ
Frequently Asked Questions
Comprehensive Home Buyer FAQ
Everything a novice needs to know before making an offer on a home in the Ontario real estate market.
Welcome to your go-to guide for everything home buying in Ontario. Whether you’re a first-time buyer or experienced investor, this FAQ answers your most pressing questions with expert insights and up-to-date information for 2025. If you have more questions, feel free to reach out for personalized advice.
1. Financing and Budgeting
What is the minimum down payment required in Ontario?
The minimum required down payment in Canada depends on the purchase price of the home:
For homes priced $500,000 or less, the minimum down payment is 5% of the purchase price.
For homes priced over $500,000 and up to $1,499,999, you need 5% on the first $500,000 and 10% on the portion above $500,000.
For homes priced $1,500,000 or more, the minimum down payment is 20%.
If your down payment is less than 20%, you are required to purchase mortgage default insurance from providers such as CMHC, Sagen, or Canada Guaranty. The insurance premium is added to your mortgage principal.
How does the mortgage Stress Test affect what I can borrow?
The mortgage Stress Test requires lenders to qualify you at a higher interest rate than your actual contract rate. This is usually the Bank of Canada’s benchmark rate or your contract rate plus 2%. This ensures you can afford your payments if interest rates rise but reduces the maximum mortgage amount you can qualify for, so plan your budget accordingly.
How does the mortgage Stress Test affect what I can borrow?
Closing costs in Ontario typically total 1.5% to 4% of the purchase price. Key items include:
Land Transfer Tax (with possible first-time buyer rebate)
Legal and notary fees
Home inspection and appraisal fees
Title insurance (recommended)
Property tax and utility adjustments
Can first-time home buyers get financial help?
Yes. Ontario offers several helpful programs including the First-Time Home Buyer Incentive, a Land Transfer Tax rebate of up to $4,000, and the Home Buyers’ Plan (HBP), which lets you withdraw up to $35,000 from your RRSP tax-free to use as a down payment. Additionally, the new First Home Savings Account (FHSA) allows tax-free savings toward a home.
What is mortgage pre-approval and why is it important?
Mortgage pre-approval is a lender’s conditional commitment to loan you a specified amount at current interest rates, pending property approval. It gives you an accurate budget, shows sellers you are a serious buyer, and helps speed up your home purchase process.
2. Your Team and the Search
How is my real estate agent paid in Ontario?
Agents typically earn a commission (around 4-5% of the sale price, split between buyer’s and seller’s agents) paid by the seller. Buyers do not pay their agent directly, making professional guidance accessible.
When should I hire a real estate lawyer?
Hire a real estate lawyer as soon as your offer is accepted. They review the Agreement of Purchase and Sale, conduct title searches, handle contract conditions, and facilitate the transfer of ownership and closing funds.
What is the MLS and how do I access all home listings?
MLS (Multiple Listing Service) is a centralized database of properties listed by real estate agents. Buyers can access MLS listings via their agent or popular online real estate portals to see up-to-date property details and prices.
3. Offers, Conditions, and Risk
What’s the difference between a conditional and a firm offer?
Conditional Offer: Your purchase depends on conditions like financing approval or satisfactory home inspection. You can back out without penalty if conditions aren’t met.
Firm Offer: No conditions apply; the contract is binding immediately upon acceptance.
What is a bidding war and how can I prepare?
A bidding war happens when multiple buyers compete for the same property, often pushing the price upward. Prepare by knowing your maximum budget, having mortgage pre-approval, and being ready to act quickly and confidently.
How large should my deposit be and when is it due?
A standard deposit is 5% of the purchase price, due within 24-48 hours after your offer is accepted. The deposit shows good faith and is credited toward your down payment or closing costs.
Does Ontario have a cooling-off period for resale homes?
No, Ontario does not have a cooling-off period for resale home purchases. Once conditions are waived or met, the offer becomes legally binding.
What happens if I cannot get financing or conditions are not met?
If you submitted a conditional offer with financing or inspection clauses and those conditions are not satisfied, you can withdraw from the deal without penalty by the specified deadlines. Without conditions, backing out could mean losing your deposit or facing legal action.
4. Property Types and Condo Specifics
What’s the difference between freehold and condominium ownership?
- Freehold: Full ownership of the house and the land it sits on.
- Condominium: Ownership of a unit plus shared ownership of common elements, managed by a condo corporation with monthly maintenance fees.
What is a Status Certificate for condos and why is it important?
A Status Certificate provides financial and legal details about a condominium corporation, including fees, reserve fund health, any outstanding legal issues, and rules. Reviewing it is essential to avoid surprises after purchase.
What do condo maintenance fees typically include?
Fees usually cover building maintenance, amenities (like gyms or pools), insurance for common areas, landscaping, snow removal, and contributions to the reserve fund for future repairs.
Are there any special considerations when buying a condo in Ontario?
Yes. Besides reviewing the status certificate, consider the condo’s financial health, reserve fund status, upcoming special assessments, rules and restrictions, and the reputation of the property management. Also, confirm what utilities and amenities are included in fees.
5. The Closing Process
What happens on the closing date?
Ownership legally transfers to you, funds are exchanged, and you receive the keys. Your lawyer registers the deed and mortgage with the land registry office and ensures all documents are properly filed.
How does Land Transfer Tax (LTT) work and can I get rebates as a first-time buyer?
Ontario charges LTT on purchases, calculated on a sliding scale based on price. First-time buyers may qualify for a rebate of up to $4,000, which reduces the tax payable.
Should I do a final walkthrough before closing?
Yes, the final walkthrough confirms the property is in agreed-upon condition and that any negotiated repairs have been completed before you take possession.
What are adjustments on the Statement of Adjustments?
Adjustments apportion prepaid or outstanding costs such as property taxes, utilities, and condo fees between buyer and seller, based on the possession date.
Is title insurance required, and what does it cover?
Title insurance is optional but highly recommended. It protects against title defects, fraud, or legal claims that might affect your property ownership or mortgage.
What is a Home Inspection and why is it important?
A home inspection is a professional, detailed examination of the property’s condition before purchase. It identifies defects or repairs needed, giving you the chance to negotiate fixes or price adjustments, or back out if major issues are found.
What is the Agreement of Purchase and Sale (APS)?
The APS is the formal contract outlining all terms of your home purchase, including price, conditions, closing date, included items, and obligations of buyer and seller. It is legally binding once conditions are waived or met.
Can I negotiate repairs after the home inspection?
Yes. If the inspection reveals issues, you can ask the seller to repair, reduce the price, or provide credits. Negotiations are common but time-sensitive.
6. Selling Before Buying
Do I need to sell my current home before buying a new one?
It depends on your financial situation and market conditions. Selling first can give you certainty about your budget but may leave you temporarily without a home. Buying first requires strong financing and contingency planning. Consult your agent to find the best strategy for your needs.
Can I make my offer on a new home conditional on selling my current home?
Yes. Offers conditional on selling your current home protect you but are less attractive to sellers and may weaken your negotiating position. Your agent can help structure these offers carefully.
How do I coordinate timing between selling and buying?
Timing requires careful planning to align closing dates, minimize double moves, and avoid interim housing. Your agent and lawyer will coordinate the process to reduce risks and stress.
What are bridge loans and how can they help?
Bridge loans temporarily cover the gap between buying your new home and selling your current one. They can provide funds for your down payment or mortgage but come with costs and risks, so they should be used cautiously.
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