Buying your first home is an exciting milestone, but navigating the mortgage process can come with many questions, especially when it comes to down payments, credit requirements, and mortgage qualification.

Whether you're just starting to save or ready to begin your home search, understanding your options can help you make informed decisions and take the next step toward homeownership with confidence.

First Off - How Much Down Payment Do You Need?

One of the biggest misconceptions among first-time home buyers is that you need a 20% down payment to purchase a home.

In Canada, you may be able to buy a home with as little as:

• 5% down on the first $500,000 of the purchase price
• 10% down on the portion between $500,000 and $1.5 million
• 20% down for homes priced at $1.5 million or more

For example, if you're purchasing a home for $600,000, the minimum down payment would be $35,000.

With less than 20% down payment, you will need to pay for mortgage default insurance.

Read more about down payment requirements here -> All About Down Payment 

Don't Forget About Closing Costs!

Your down payment isn't the only expense you need to prepare for when buying a home. Closing costs are additional expenses which must be paid before or on your closing date to complete your property purchase.

Depending on your property and mortgage requirements, additional expenses & closing costs may include:

• Land transfer tax, after applicable rebates
• Real estate lawyer fees
• Title insurance
• Property appraisal fees, if required
• Home inspection fees
• Property tax and utility adjustments
• Moving expenses
• Applicable mortgage broker or lender fees

If you don't have sufficient funds to cover your required closing costs, you may be unable to complete your home purchase on the agreed closing date. 

This could result in closing delays, additional expenses, or potentially losing your deposit and facing legal consequences if you're unable to complete the transaction. That's why planning ahead is so important! Knowing how much you need to save beyond your down payment can help you avoid unexpected financial stress and be better prepared when it's time to close on your new home.

Housing Expenses

It's also important to understand what your ongoing housing expenses may look like. Your mortgage payment is only one part of your total monthly homeownership costs!

You should also consider:

• Property taxes
• Home insurance
• Heating, electricity, and water
• Condo maintenance fees, if applicable
• General home maintenance and repairs

Make sure to determine a comfortable budget rather than focusing only on the maximum mortgage amount you may qualify for.

Read more in detail about all the costs to buy a home -> A Complete Guide to Budgeting for a Home Purchase 

First-Time Home Buyer Programs

There are several government programs and incentives designed to help eligible first-time buyers save toward their purchase and potentially reduce certain home-buying expenses.

Depending on your circumstances, you may qualify for one or more of the following programs:

First Home Savings Account (FHSA)

The FHSA allows eligible first-time buyers to save toward their first qualifying home through a registered savings account.

Eligible contributions are generally tax-deductible, and qualifying withdrawals are tax-free.

The program offers an annual participation room of $8,000 and a lifetime contribution limit of $40,000, subject to applicable rules.

Home Buyers' Plan (HBP)

The Home Buyers' Plan allows eligible buyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) toward purchasing or building a qualifying home.

Withdrawals made under the program are subject to repayment requirements.

Eligible buyers may be able to use both the FHSA and HBP toward the same qualifying home purchase.

Ontario Land Transfer Tax Refund

Eligible first-time home buyers in Ontario may qualify for a provincial land transfer tax refund of up to $4,000.

If you're purchasing a property in Toronto, you may also qualify for an additional municipal land transfer tax rebate, subject to eligibility requirements.

These programs can help reduce some of the upfront costs associated with purchasing your first home.

Common Mistakes to Avoid Before Buying a Home

Taking on New Debt

Avoid financing vehicles, opening new credit cards, or making large purchases before your mortgage closes.

Changing Jobs

A significant employment change during the mortgage process may affect your approval.

Not Budgeting Enough

Aside from your down payment, remember to budget for closing costs, legal fees, adjustments, and moving expenses. Broker fees can apply in certain situations.

Assuming You'll Be Declined

Many buyers disqualify themselves before speaking with a mortgage professional. You may have more options available than you think.

What If You Have Bad Credit?

A low credit score doesn't mean you can't get a mortgage!

While major banks often have strict lending guidelines, we work with lenders who consider factors beyond just your credit score.

You may still have options if:

• Your credit score is not great
• You have collections on your credit report
• You've gone through a consumer proposal
• You have limited credit history

At Brevity Capital, we understand that every situation is different, and our alternative lending solutions can help you purchase a home, while rebuilding your credit.

What If Your Income Isn't High Enough?

Many potential buyers assume they won't qualify because they don't earn six figures.

However, mortgage qualification depends on several factors, including:

• Household income
• Existing debts
• Down payment amount
• Credit history
• Property taxes and housing costs
• Employment stability

If you have concerns about qualifying, we can look at your financial situation and find the best solution for you to buy a home.

Buying Your First Home While Self-Employed? No problem!

Self-employed individuals often face challenges when applying for a mortgage through traditional banks.

If you're self-employed as a business owner, contractor, freelancer, or commission-based employee, you can still qualify for a mortgage with the right lender.

When self-employed, you need to apply with certain lenders who consider factors beyond standard employment income, and that's where we can help.

These are some commonly requested documents for a self-employed mortgage application:

• Personal and business income tax returns
• Notices of Assessment
• Business bank statements
• Financial statements
• Business registration documents

Consult with our team at Brevity Capital to go over the documentation required and explore suitable mortgage options based on your business and financial circumstances.

Beyond the Banks: Exploring More Mortgage Options

Did you know that applying directly through your bank isn't your only option when purchasing a home? As a mortgage broker, we work with banks, alternative lenders, and private lenders. Having access to multiple lenders allows us to explore mortgage solutions for buyers with different financial backgrounds.

Alternative & private lenders can be especially beneficial for buyers who have:

• Credit challenges
• Unique income situations
• Self-employment income
• High debt ratios
• New to Canada
• Difficulty qualifying 

Every lender has different qualification requirements, mortgage products, and lending guidelines. Our role as your mortgage broker is to help you understand your available options and identify a mortgage solution that aligns with your financial circumstances and homeownership goals.

Get Pre-Approved for a Mortgage

Before beginning your home search, one of the most important steps is understanding how much you may qualify for.

A mortgage pre-approval can help you establish a realistic budget and make more informed decisions when searching for your first home.

It can help you:

• Understand your potential borrowing capacity.
• Estimate your monthly mortgage payments.
• Determine a suitable home-buying price range.
• Review your down payment and existing financial obligations.
• Identify potential credit or income concerns early.
• Explore available mortgage options before making an offer.

Start With a Consultation at Brevity Capital

Not sure whether you're ready to purchase a home? You don't need to have everything figured out before speaking with a mortgage professional.

At Brevity Capital, we'll review your income, credit history, existing debts, and available down payment to help you understand how much you may qualify for based on your financial situation.

If you're not quite ready to purchase, we can also help identify areas you may need to work on to put yourself in a stronger position to buy a home.

Note that a mortgage pre-approval is a planning tool, not a commitment to purchase a home or a guarantee of final mortgage approval.

How We Help First-Time Home Buyers

Purchasing your first home is a major milestone, and having the right mortgage guidance can make the process easier.

With access to major banks and a wide network of other lenders, Brevity Capital offers mortgage solutions for buyers with different financial circumstances, including:

• Buyers with as little as 5% down payment
• Individuals with credit challenges
• Self-employed borrowers
• Buyers with unique income situations
• Those seeking mortgage options beyond traditional banks

From exploring your financing options to navigating the mortgage approval process, our team is here for you.

Ready to take the first step toward homeownership? Contact Brevity Capital today for a free consultation! 

Call: (905) 814-4455
Email: [email protected]

*O.A.C. Terms & Conditions Apply. All mortgage approvals are subject to lender guidelines, insurer requirements and borrower qualification.