FAQ

1. Assess Your Income and Savings

• Calculate Gross Income: Start by calculating your total gross monthly income (before taxes and deductions).
• Determine Your Down Payment: Factor in how much you have saved for a down payment. A down payment of at least 20% of the home’s price helps you avoid Private Mortgage Insurance (PMI), though it’s possible to put down less. 

2. Evaluate Your Debt-to-Income (DTI) Ratio 

Lenders use your DTI ratio to assess your ability to repay a loan. It’s calculated by dividing your total monthly debt payments by your gross monthly income. 

• Front-End Ratio: This is the percentage of your gross income that goes towards housing costs (principal, interest, taxes, insurance). Many lenders prefer this to be at or below 28%.
• Back-End Ratio: This includes all your monthly debt payments (credit cards, car loans, student loans) plus your future housing costs. Lenders typically seek a total DTI ratio of 36% or less, though some programs may allow up to 43%. 

3. Get Pre-Approved for a Mortgage 

A mortgage pre-approval is a conditional commitment from a lender stating how much they are willing to lend you based on your financial information. This is a crucial step as it gives you a realistic budget for house hunting. 

4. Factor in All Housing Expenses

Your monthly housing cost is more than just the mortgage payment (principal and interest). Be sure to include: 

• Property Taxes
• Homeowner’s Insurance
• Mortgage Insurance (PMI) if your down payment is less than 20%
• Homeowner’s Association (HOA) Fees (if applicable)
• Utilities and Maintenance Costs: Budget for ongoing maintenance, repairs, and fluctuating utility bills. 

5. Budget for Closing Costs

These are fees associated with completing the real estate transaction. Closing costs typically range from 2% to 5% of the total loan amount and must be paid at closing. 

By carefully considering these factors and consulting with a financial advisor or mortgage lender, you can establish a clear and affordable budget for purchasing a home.

Yes, there are several programs available to provide this assistance. Several Federal and Regional programs are listed below:

Federal Home Buying Assistance

• First Home Savings Account (FHSA): A tax-free registered plan that allows you to save up to $40,000 (with an annual contribution limit of $8,000) toward your first home.
• Home Buyers’ Plan (HBP): Allows first-time buyers to withdraw up to $60,000 tax-free from their RRSPs to put toward a home purchase.
• First-Time Home Buyer’s Tax Credit (HBTC): Provides a non-refundable tax credit of up to $1,500 (calculated as 15% of $10,000) for eligible buyers.
• Note: The federal First-Time Home Buyer Incentive (a shared equity program similar to Australia’s BuyAssist) ceased accepting applications on March 21, 2024.

Regional & Specific Programs

• Montreal Home Purchase Assistance: Offers subsidies between $5,000 and $15,000 for purchasing new homes, with potential bonuses for environmental certifications like LEED or Novoclimat.
• Manitoba Rural Homeownership: Offers forgivable loans of up to 25% of the purchase price for specific rural communities.
• New Brunswick Home Ownership: Provides repayable loans for up to 40% of an existing home’s price for those with household incomes under $40,000.