Episode 1: Helping You with Financing Your Home Purchase Episode 2: Helping You Determine Your Needs & Wants Episode 3: Helping You with Your Home Search Episode 4: Helping You Make an Offer Episode 5: Helping You Close Your Home Purchase
Episode 1 of our Home Buying Series provides you with tips on organizing your home finances so you are prepared for your home purchase.
Watch the video and then read the relative information below!
Episode 1 of 5: Helping You with Financing Your Home Purchase
Your Mortgage
Find out about your mortgage options before you start looking. There's nothing more frustrating that falling in love with a home, only to find out you can't afford it.
Pre-qualifying for a mortgage is the best way to find out how much you can afford. Your financial institution will look at your income, expenses and debt to determine how much they will lend you. Combine that amount with the money you have for a down payment, and that's your budget.
Once you have pre-qualified, consider applying for a pre-approved loan. Then, when you find the home you want to buy, it will speed up the purchasing process. For more information about planning your mortgage, see Organizing Finances.
Mortgage options Mortgages are available through a number of financial institutions; your bank is only one option. Shop around for competitive rates and options.
Down Payment
How much will I need for my initial investment in my new home? You'll need a combination of a down payment and closing costs.
Down payment The money that you pay up front for a house is the down payment. These payments typically range from 0 to 25% of the total value of the home. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own.
While it is possible to buy a home with as little as 0% down, the amount of your down payment will determine whether you will have a conventional mortgage or an insured, high-ratio mortgage.
What's the difference?
Conventional mortgage: Your down payment is at least 20% of the purchase price.
High-ratio mortgage: Your down payment is less than 20% of the purchase price and must be insured by CMHC or GEMI. An insurance premium will apply.
Closing Costs For high-ratio or insured mortgages, the mortgage provider requires the borrower to demonstrate his or her ability to cover closing costs in the amount of 1.5% of the value of the property. Closing costs can be as high as 3% of the value of the property being purchased and can vary widely depending on:
