Question 1

How much down payment do I need in Canada?

Accepted Answer

In Canada, minimum down payment requirements range from 5% for properties under $500,000 to 10% for properties between $500,000 and $999,999. For properties $1 million or more, a 20% down payment is required. CMHC and other insurers may require mortgage default insurance if your down payment is less than 20%.

Question 2

What is the mortgage stress test and how does it affect me?

Accepted Answer

The mortgage stress test requires lenders to assess whether you can afford your mortgage at a higher rate (typically the posted rate or stress test rate, whichever is higher). This affects your borrowing capacity even if you have a good down payment.

Question 3

Can I use FHSA and RRSP together for my down payment?

Accepted Answer

Yes, you may be able to use both the First Home Savings Account (FHSA, up to $8,000 per year, $40,000 lifetime limit) and RRSP Home Buyers Plan (HBP, up to $60,000) to fund your down payment. Consult with an accountant or tax advisor to optimize your strategy.

Question 4

What are closing costs and how much should I budget?

Accepted Answer

Closing costs typically range from 1.5% to 4% of the home purchase price. These include legal fees, land transfer tax, home inspection, appraisal, title insurance, and other professional services. Your lawyer can provide a detailed estimate.

Question 5

What is the difference between fixed and variable mortgage rates?

Accepted Answer

Fixed-rate mortgages have a stable interest rate and payment for the entire term, protecting you from rate increases. Variable-rate mortgages fluctuate with the prime rate, potentially offering lower initial rates but with payment uncertainty.

Question 6

What does the land transfer tax cost in my province?

Accepted Answer

Land transfer tax varies by province. Ontario charges up to 4.15%, British Columbia up to 5%, and Alberta is tax-free. Some provinces offer exemptions for first-time home buyers. Provincial land titles offices publish rates by area.

Question 7

What must a seller disclose before I buy?

Accepted Answer

Sellers must disclose known defects affecting property value, including structural issues, flooding history, environmental concerns, and previous insurance claims. Disclosure requirements vary by province. Your lawyer and home inspector can advise.

Question 8

Do I need a real estate lawyer?

Accepted Answer

While not always legally required, a real estate lawyer is strongly recommended. They conduct title searches, review documents, arrange closing, and help protect your interests. Legal fees are typically 0.5% to 1% of the purchase price.

Question 9

What is title insurance and do I need it?

Accepted Answer

Title insurance protects against financial loss from defects in the property's title (ownership history). A one-time premium (usually $200-$400) covers you and your lender against title fraud, prior liens, or boundary disputes.

Question 10

What happens if I find defects after closing?

Accepted Answer

After closing, you generally own the property as-is unless the seller made fraudulent concealments. Home inspections before closing help identify issues. Warranty coverage and title insurance may provide recourse. Legal advice is recommended if significant defects emerge.

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