Financing your home

The seven stages of getting mortgage-ready

Typical timeline for a first-time or move-up buyer in Ontario. Self-employed buyers and complex credit may need longer.

1. 1

   Define your comfortable budget — not your maximum

   Before you call a lender

   Pre-approval tells you what a lender might lend. It does not tell you what you should spend. List your fixed costs, savings goals, and how much cushion you want after the mortgage payment. In the GTA, property taxes alone can add hundreds per month; condo maintenance fees are counted in your debt ratios.

   Use our mortgage calculator with realistic tax and fee assumptions. If the payment at your target price makes you nervous, search lower — even if the bank would approve more.

   • Target a monthly housing cost you could carry through a job change or parental leave
   • Include heat, hydro, insurance, and average maintenance — not just principal and interest
   • Decide your down payment range before you fall in love with a listing
   • Share your comfort number with your agent, not only your pre-approval ceiling
2. 2

   Choose a mortgage broker or lender

   1–3 days of research

   Mortgage brokers shop multiple lenders and often find competitive rates for complex files. Banks and credit unions work well if you have a long relationship and simple income. Neither replaces the other roles on your team — you still need a lawyer for closing and a buyer's agent for the purchase itself.

   Ask about rate holds, prepayment privileges, portability if you move before the term ends, and how they handle the financing condition in your offer. A broker who responds quickly during a five-day conditional period is worth as much as a slightly lower rate.

   • Compare at least two sources — broker plus bank, or two brokers
   • Ask how long a pre-approval rate hold lasts (often 90–120 days)
   • Confirm they work with your property type — condos, multi-unit, and rural can differ
   • Avoid lenders who cannot deliver a commitment letter inside your financing condition
3. 3

   Get pre-approved with full documentation

   3–10 business days

   Pre-qualification is a conversation. Pre-approval is a lender review of your credit, income, and down payment with documents on file. In a competitive GTA offer, sellers and listing agents treat pre-approval as proof you can close.

   You will authorize a credit pull. The lender calculates how much you qualify for using federal stress-test rules: you must qualify at the higher of your contract rate plus 2%, or the current minimum qualifying rate set by regulators — whichever is higher. That often reduces your buying power compared with the sticker rate on a rate sheet.

   • Gather pay stubs, NOAs, bank statements, and debt statements before the first call
   • Self-employed buyers: expect two years of T1s, business financials, and possibly higher scrutiny
   • Get the pre-approval in writing — amount, rate hold, and any conditions noted
   • Understand whether the letter is generic or tied to a specific property (usually generic at this stage)
4. 4

   Structure your down payment

   Parallel with pre-approval

   For homes at or below $1.5 million, minimum down payment is 5% on the first $500,000 and 10% on the portion above that. Below 20% down, you need mortgage default insurance (CMHC or private insurers). The premium is added to your mortgage balance and Ontario charges provincial sales tax on the premium.

   At $1.5 million and above, you generally need at least 20% down — insurance is not available on standard high-ratio loans above that cap. Gifted down payments are common for first-time buyers; the lender requires a signed gift letter confirming the money is not a repayable loan.

   • 20% down avoids insurance and strengthens your offer in multiple-bid situations
   • Track where funds sat for 90 days — large recent deposits need explanation
   • FHSA and Home Buyers' Plan (RRSP) can supplement savings — confirm rules before you withdraw
   • Your deposit at offer time (often 5% in the GTA) comes from the same down-payment bucket
5. 5

   Understand how lenders score you

   During pre-approval

   Lenders use Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. GDS is your housing costs versus income; TDS adds other debts. Typical limits are near 39% GDS and 44% TDS, though exceptions exist. Condo fees count. Rental income from a basement suite may help only if documented and permitted.

   The stress test applies to the mortgage payment used in those ratios — not necessarily the payment you will actually make if rates are lower at funding. That is why two buyers with the same income can qualify for different amounts at different times.

   • Pay down credit cards before applying — high utilization hurts approval
   • Co-signers can help but share legal responsibility for the debt
   • New car leases and student loans reduce room in TDS
   • Ask your broker to show the math at both today's rate and the stress-test rate
6. 6

   Budget closing costs and first-time rebates

   Before you write an offer

   Closing costs are separate from your down payment. Plan for land transfer tax (LTT), lawyer fees, title insurance, home insurance, and adjustments on closing (property taxes the seller prepaid, utility accounts). In Toronto, municipal LTT stacks on top of provincial LTT — first-time buyer rebates can offset part of both, but eligibility rules have tightened; your lawyer confirms what applies to you.

   Budget roughly 1.5%–4% of the purchase price for closing costs outside the down payment. A $900,000 Toronto purchase with partial rebates can still mean $15,000–$25,000 in cash at close beyond down payment.

   • Use our land transfer tax calculator with Toronto toggled if you buy in the city
   • First Home Savings Account (FHSA) — tax-deductible contributions and tax-free withdrawal for a qualifying first home
   • Home Buyers' Plan — RRSP withdrawal up to CRA limits, with repayment over 15 years
   • Land transfer tax rebates — confirm first-time status; prior ownership anywhere can disqualify you
7. 7

   Stay approved from accepted offer to closing

   30–90 days after acceptance

   Pre-approval is not final approval. Once you have an accepted Agreement of Purchase and Sale, your lender approves the specific property, appraisal, and your unchanged financial picture. The financing condition in your APS gives you time to get a firm commitment — do not waive it unless you accept the risk of losing your deposit if funding fails.

   Your agent should keep your broker in the loop when you go firm. Send the APS, MLS listing, and status certificate (condos) immediately. No new credit cards, no financed furniture, no undisclosed job changes. Lenders re-verify employment and credit before funding.

   • Appraisal below purchase price may require more down payment or renegotiation
   • Condo lenders review the status certificate — budget the lawyer's rush fee if needed
   • Final commitment letter should match your APS price, closing date, and rate terms
   • Bring certified funds for down payment and closing costs as your lawyer instructs