FAQs for First-Time Home Buyers

1. What’s the difference between getting pre-qualified and pre-approved?

• Pre-qualification gives you an estimate of what you can borrow based on basic financial info.

• Pre-approval is a lender’s commitment (subject to conditions) and demonstrates to sellers that you’re a serious, ready buyer.
  
  

2. How much do I need for a down payment?

• 5% for homes up to $500,000

• 10% for the portion between $500,000–$999,999

• 20% for homes over $1 million (no CMHC insurance available).
  
  

3. What other costs should I budget for?

Closing costs usually add 3–5% of the purchase price and may include:

• Land transfer tax (municipal + provincial in Toronto)

• Legal fees and disbursements

• Title insurance

• Home inspection

• Moving costs

• Adjustments (e.g., prepaid taxes or utilities)
  
  

4. Do I qualify for any first-time buyer incentives?

Depending on your income, purchase price, and location, you may be eligible for:

• First-Time Home Buyer Incentive

• RRSP Home Buyers’ Plan

• Land transfer tax rebates (municipal and provincial)
  
  

5. Should I buy a condo, townhouse, or freehold home?

It depends on your budget, lifestyle, and maintenance preferences. Condos often have lower entry prices but include monthly fees; freeholds offer more control but higher upkeep.

6. Do I need a home inspection?

Yes, especially for older homes. It can reveal costly issues before you commit. Even in competitive markets, you may want a pre-offer inspection.

7. How much should I set aside for renovations?

If you’re planning updates, budget an extra 10–20% on top of your estimate for unexpected costs.

8. How long does the buying process take?

From offer to closing, it can be as short as 30 days or as long as 90+ days, depending on financing, inspections, and the seller’s preferred timeline.

9. What’s the difference between a down payment and a deposit?

• Down Payment

  • The total amount of money you put toward the purchase price of your home.

  • It’s usually at least 5% of the purchase price  (more for higher-priced homes) and is paid at closing.

  • Your down payment comes from your own savings, RRSP, or gifted funds, and it’s combined with your mortgage to cover the full purchase price.
    
    

• Deposit

  • A good-faith payment you make when your offer is accepted.

  • In Toronto, it’s often 5% of the purchase price and is due within 24 hours of the offer being accepted.

  • The deposit is held in trust (usually by the listing brokerage) until closing, and it becomes part of your total down payment.
    
    

10. How do I make a competitive offer?

Work with a realtor who understands your target neighbourhood. Having pre-approval, a flexible closing date, and deposit funds ready can make your offer stronger.

FAQs for Downsizing

1. When is the right time to downsize?

It depends on your lifestyle, finances, and long-term plans. Many people downsize when maintaining a larger home becomes time-consuming, costly, or no longer suits their needs.

2. Should I buy first or sell first?

Whether to buy first or sell first depends on a few key factors: if the market is competitive and homes are selling quickly, buying first can secure your next property. Selling first gives you a clear budget and avoids the risk of carrying two mortgages. It also comes down to whether you can financially manage two mortgages at once and how easily your current home is likely to sell.

3. How do I figure out what my home is worth?

A professional market evaluation will compare recent sales, your home’s condition, and current market trends, giving you a realistic picture of what you can expect to sell for.

4. What should I do with all my belongings?

Start early by sorting items into keep, sell, donate, or discard. Consider hiring a professional organizer or estate sale service to make the process easier.

5. Will downsizing save me money?

In many cases, yes, reduced mortgage payments (or none at all), lower utility bills, and less maintenance. But factor in condo fees, property taxes, and potential renovation costs in your new home.

6. What’s the best type of home for my next stage?

It comes down to lifestyle. Condos offer low maintenance, amenities, and walkable access to shops, restaurants, and transit. Townhomes provide more space with less upkeep, ideal for busy schedules or frequent travel. Smaller detached homes give you privacy and a yard without the work of a larger property. Choose what best supports how you want to live.

7. Are there tax implications when I sell?

If your home is your principal residence, you’re generally exempt from capital gains tax in Canada. However, if you own investment properties or a second home, tax rules differ; consult an accountant.

8. How do I choose the right location?

Think about walkability, transit access, healthcare, social connections, and proximity to family. Downsizing can be an opportunity to move closer to the lifestyle you want now.

9. Should I renovate before selling?

Targeted updates such as fresh paint, updated lighting, and staging, can make your home more appealing without major costs. A realtor can guide you on the changes that add the most value.

10. What if I need extra storage?

Many downsizers use off-site storage for seasonal items, family keepsakes, or furniture they’re not ready to part with. Some condos also offer dedicated storage lockers.

Frequently Asked Questions for Upsizers

1. Should I sell my current home before buying a new one?

It depends on your finances, market conditions, and comfort with risk. Selling first gives you a clear budget and avoids carrying two mortgages, but buying first may be better in a competitive market if you find the right home quickly.

2. How do I know what my current home is worth?

A professional market evaluation will compare recent sales, market trends, and your home’s unique features. This helps set a realistic price and informs your upsizing budget.

3. What extra costs should I expect when upsizing?

Beyond the purchase price, factor in land transfer tax, legal fees, moving costs, higher property taxes, increased utility bills, and possible renovation costs.

4. Should I renovate my current home before selling?

Sometimes minor updates (painting, staging, landscaping) can boost value without major investment. Your realtor can recommend updates with the highest return for your neighbourhood.

5. Will I need a bigger down payment?

Likely, yes. Since your upsized home will be more expensive, your required down payment will increase, especially if you want to avoid CMHC mortgage insurance.

6. What’s the best time to move up in the market?

The ideal time depends on interest rates, seasonal market activity, and your personal situation. Often, upsizing is easier when prices in your current market segment are strong, giving you more buying power.

7. How do I manage the gap between selling and buying?

You can negotiate flexible closing dates, arrange bridge financing, or secure temporary housing to make the transition smoother.

8. Is it harder to compete for larger homes?

Family-sized homes in certain Toronto neighbourhoods can attract multiple offers. Having mortgage pre-approval, a strategic offer plan, and a realtor who knows the area well will help you stand out.

9. Should I stay in my current neighbourhood or explore a new one?

Upsizing is a chance to re-evaluate your lifestyle needs—schools, commute, amenities, and future growth potential. Sometimes moving a few blocks or into a neighbouring area can significantly increase value for your budget.

10. How do I ensure I don’t overextend financially?

Be clear about your budget from the start, include all ongoing costs, and leave a cushion for unexpected expenses after you move in.