Mortgage 101 for New Canadians: Financing Your First Home (Part 2)

Embarking on the journey to homeownership in Canada is an exciting milestone.

However, navigating the process of financing your first home can be daunting if you are unprepared. In this Part 2 of our Mortgage 101 series, we will outline important steps to help you move ahead, prepare, and purchase your first Canadian home.

From saving for a down payment to making that first offer on your new home, we'll provide you with valuable insights tailored to newcomers like you. Everything you may need to make informed decisions on your journey to home ownership is right here.

As we covered in Mortgage 101 Part 1 understanding the fundamentals of mortgages is key to kickstart your journey. Now that you’re more familiar with the basics, here are the important steps we recommend you take to finance your first home mortgage with ease.

Step 1: Save for your down payment and explore First-Time Home Buyer programs

Saving for your down payment is a significant step towards homeownership. Did you know that as a first-time homebuyer, you can leverage various government programs designed to support your purchase? Here are a few you should know about:

1) The Home Buyer's Plan^[1] allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) towards the purchase of your first home in Canada. This plan allows you to pay back the withdrawn funds within a 15-year period.

2) The Home Buyer's Amount (also known as the First-Time Home Buyers' Tax Credit)^[2] allows you to claim up to a $10,000 non-refundable income tax credit that can be applied to certain qualifying homes.

3) The First-Time Home Buyer Incentive^[3] is a shared equity mortgage with the Government of Canada which lends to qualifying first-time homebuyers between 5% to 10% of their home’s price to help reduce their monthly mortgage payments.

4) The GST/HST New Housing Rebate offers qualifying homebuyers a GST/HST rebate on the purchase price of a home.

5) First Home Savings Account (FHSA) is a registered savings plan that allows tax free annual contribution of max $8,000 up to a lifetime maximum of $40,000 that can be used towards the down payment for your first home.

Step 2: Determine Affordability and Understand Your Credit Rating:

Assessing how much you can personally afford for a house in Canada is important to ensure you can comfortably manage your homeownership costs. TD offers tools to help you calculate your affordability something very important to secure financing.

As a newcomer to Canada, you may not have a Canadian credit history but that may not be a barrier to purchasing your first home. TD offers special mortgage programs that cater to newcomers like you, enabling you to obtain financing even if you are still establishing your credit history in Canada.

Step 3: Explore Your Mortgage Options:

It’s a good idea to educate yourself on the different mortgage options available, such as fixed versus variable rates, mortgage terms, and down payment requirements. Keep in mind that some banks have specific mortgage programs tailored to newcomers,  such programs may also have an impact on your down payment requirements.

Step 4: Get Pre-approved for a Mortgage:

Securing a mortgage pre-approval provides you with a clear understanding of your borrowing capacity – and a real edge when making offers on a home because it shows home sellers that you are a serious home buyer.  Start the pre-approval process by contacting a TD mortgage specialist.

Step 5: Go House Hunting:

With a pre-approval in hand, you're ready to embark on the exciting phase of house hunting. Consider your preferences, needs, and budget while exploring a wide range of available properties. It’s a good idea to engage the services of a trusted real estate agent who can assist you in finding the right home that meets your needs.

Step 6: Make an Offer on a House:

Once you've found the perfect home, it's time to make an offer. Collaborate with your real estate agent to develop a competitive offer that considers market conditions, recent sales of comparable properties, and your budget. Be sure to have your realtor negotiate terms that are important to you (such as the date you want to take possession) and enlist the guidance of legal professionals for a smooth and secure transaction.^[4]

Step 7: Apply for a Mortgage with Assistance from a TD Mortgage Specialist:

When you're ready to proceed with the purchase, be sure to re-connect with your TD mortgage specialist to guide you through the mortgage application process. They will help you gather the necessary documents, complete the application, and navigate any complexities along the way. Rely on their expertise to ensure a seamless mortgage approval process.

Why Choose TD?

150 years helping Canadians:

TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.

With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 60 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.

TD offers online support and resources of interest to newcomers on topics such as banking. basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience. TD has thousands of ATMs across Canada to help you take care of your everyday
banking quickly and easily.

Ready to Bank?

Learn more about TD’s New to Canada Banking Package today.         

Book an appointment to talk with a TD Personal Banking Associate about the TD New to Canada Banking Package. You can book online right away, or visit the TD website to learn more.

Legal Disclaimer: Information provided by TD Bank Group and other sources in this article is believed to be accurate and reliable when placed on this site, but we cannot guarantee it is accurate or complete or current at all times. Information in this article is for informational purposes only and is not intended to provide financial, legal, accounting or tax advice and should not be relied upon in that regard. This information is not to be construed as a solicitation to buy. Products and services of the TD Bank Group are only offered in jurisdictions where they may be lawfully offered for sale. All products and services are subject to the terms of the applicable agreement. The information in this article is subject to change without notice.

^[1] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html

^[2] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31270-home-buyers-amount.html

^[3] https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive

^[4] https://www.cmhc-schl.gc.ca/en/consumers/home-buying/buying-guides/home-buying/make-an-offer-and-close-the-deal