Read This Before Buying A Home

Alex Leite
3 days ago
14 min read

If you're thinking of buying a home, here's what you need to know.

Buying a home is one of the biggest decisions you'll ever make—both financially and emotionally.

It’s exciting, but let’s be honest, it can also feel overwhelming. As a mortgage broker, I’ve helped over 100 buyers navigate this journey, and I’m here to share some key things you need to know before you purchase.

These tips go in chronological order of the purchase process. Please skip over any areas you've already covered or that are not relevant to you.

Table of contents:

Budget, Down Payment and Employment
Mortgage Pre-Approvals
Searching for A Home, Putting in An Offer and Closing

Budget, Down Payment and Employment

Before you even start browsing listings, you need to get a clear picture of what you can afford, not just what the bank or mortgage broker says you can borrow.

I often hear the same thing from my clients - "I've found many homes I like."

To which I ask, "Have you gotten a pre-approval in place and saved up a down payment?"

To which most say, "No, just looking, and we want to put an offer in." Facepalm.

I apologize if you are reading this and you've done the same. I mean no disrespect. I only facepalm because looking at homes before you have a budget, down payment, and proper employment is like buying a car and not even having a drivers licence. It often leads to disappointment.

There's nothing wrong with dreaming. I've looked at homes in Hawaii and other warm climates many times (with no possibility of buying, I might add).

However, I eventually realize I can't afford it, and I can say oh well because it's not where I live or would ever live. But if you're looking for your first home or next home in the city you are actually living in, that's a different story. When you find that home you love, potential disappointment is around the corner if you DON'T do the following three things first:

Create a budget. (1-A)
Save a down payment. (1-B)
Be gainfully (fully) employed. (1-C)

Let's break down the three major components of this first step before looking at homes.

1-A - Create a Budget

A budget is essentially two things - what money comes into your bank account and what money goes out of your account. That's it.

Home living expenses happen to be the largest portion of anyone's budget. That's to be expected. It's where you spend the majority of your free time.

So creating a budget and determining how much of a living expense you can afford isn't just important, it will give you direction on where you will be living in the next 3-5 years.

What do I mean by this?

Everyone knows that owning a home in Canada is equivalent to the "American Dream" in the United States. We're all taught from a young age that when you grow up, you buy a home and raise a family there.

A budget tells us if we should follow this guidance or not. Yes, those who own a home tend to end up wealthier in the future. But that shouldn't be your rationale for deciding to buy or not.

Your budget will indicate whether you can afford to buy a home or not. If you can't, that's not always a bad thing. Depending on where you live, renting a home often makes more sense anyway.

So the lesson here is the following: create a budget. And let it tell you where you will be living in the next 3-5 years.

Use the budget example below as a guideline:

Monthly Budget Template

Category	Amount
Income
Monthly Work Income (Household)	$7000
Other Monthly Income	$0
Total Income	$7000

Expenses
Rent/Mortgage	$2000
Utilities	$500
Groceries	$1000
Transportation	$400
Insurance	$100
Debt Payments	$350
Savings	$100
Entertainment	$500
Miscellaneous	$200
Total Expenses	$5,150

Net Balance (Cashflow)	$1850

1-B - Save a Down Payment

Next, we move on to saving a down payment. If you used the chart above and ended with a net balance that is a positive number, you can start this section.

Every home purchase, and I mean every home purchase, needs a down payment. You can't buy a home with no skin in the game. Even if you were buying a home that was $100,000, you'd need a down payment. No one will let you borrow the entire down payment. This isn't 2008 anymore.

At this point, you might have already had the same thought I did after seeing my budget example above.

"Even if I saved the entire $1,850 per month, I'd only have $22,200 after a year. Homes in my area cost a gazillion dollars."

Fair enough.

But what's that savings number after two years? $44,400

And after three years? $66,700.

That's more than enough in pretty much any Canadian city outside Toronto and Vancouver.

You might wonder, "What if my monthly savings are negative or only $100 per month? I'll never be able to buy."

Here's the hard truth.

Maybe you shouldn't buy.

Owning a home is expensive. A pipe bursts, raccoons nest in your roof, or your toilet overflows. A small amount of extra monthly money won't allow you to cover these costs.

If you're renting, you don't have to worry about these things. That's the landlord's problem. Why add that stress to yourself when you already have a tight money situation?

But what if you're at the midpoint of having a positive cash flow, but it's still not substantial, maybe $500 per month, and you really want to make a purchase?

Well, you have two other options:

Borrow money on credit.
Borrow some money from family (gift).

In either case, you'll have a limit.

But both are definitely possible. A down payment using debt is possible, but you need a higher income and a good credit score. A down payment gifted from family is also possible, assuming you have a family member willing to give you the money.

I'll discuss both of these later in the pre-approval process and how they can help you with your purchase.

1-C - Be Gainfully (Fully) Employed

This last portion sounds obvious. But you wouldn't believe how many people come to me looking to buy a home who work 14 hours a week and are still in their probationary period of a new job.

This will sound bad - If you are going to be a homeowner, you NEED to have a full-time job, make at least $100,000 per year alone or as a couple, and have to have a history working in your current job field for longer than 12 months.

Period.

That's it. If that's not you, here's the good news. You can work towards this even if it takes a few years. After all, that time will pass anyway, so you might as well start planning today.

It doesn't matter what industry your job is in. Whether you work at Tim Hortons, Home Depot or are a pipe fitter, you need a consistent, full-time income and bring in at least $100,000 as a household.

As of 2025, that income will get you a home. If you don't believe me, check out our affordability calculator and check for yourself.

What's Next After You Budget, Save A Down Payment and Obtain Continuous Work?

So you've done your budget, saved a down payment, worked for a year in the same industry, and your probation period is done.

Can you look at homes yet? NO!

At this stage in the process, you still don't know how much of a home you can afford.

Unfortunately, many clients come to me and say I want to buy a $750,000 home. And I ask them, "How did you come up with that number?".

Most of them have no idea. They just saw a home they liked and said that was their budget.

Some say they used an online calculator. Fair enough.

But online calculators only tell you a portion of the approval. You need to complete a FULL pre-approval before you begin looking at homes. This involves completing a mortgage application, verifying your income, and reviewing your credit.

Mortgage Pre-Approvals

What is a mortgage pre-approval?

A mortgage pre-approval is when a bank or broker assesses your finances to determine how much money they will lend you for a house. This helps you understand what you can afford before looking at homes or making offers.

Some people have told me they got "pre-qualified" by their bank. This is similar to a pre-approval, but not quite the same.

A mortgage pre-qualification is just a rough guess by the bank about how much you can borrow without fully verifying your income, credit and financial details.

How do I Start A Mortgage Pre-Approval

Visit your local bank or search online for "Mortgage brokers near me."

This will lead you to professionals who can help you get started. Reach out to either the bank or broker and let them know you're interested in buying a home and would like to get pre-approved. If they're good, they should jump on a phone call with you right away. If they're bad, they might just send you an application link. Don't go with this person if they just send you a link.

It's critical that you talk with them first to discuss your information.

Sure, you'll be inputting a lot of the same information in the application link they send you, but you need to be able to express your goals, concerns and questions in the introduction call. Plus, you want to know who you're dealing with and get to know them a bit.

When you do end up starting an application with the link provided, they'll ask you the following:

What is your full name, date of birth and social insurance number?
What is your current address?
Do you rent, own a home or live with parents?
Is this your first time purchasing a home, or have you purchased before?
Do you currently hold a mortgage?
What is your annual income?
How much of a down payment do you have available for a home purchase?
What assets do you own? (Car, savings, investments, gold, etc).
Are you ok with a credit check?
Is there anyone else who will be on the mortgage application, such as co-borrowers or guarantors?
How much are you looking to purchase for?

It seems like a lot of questions. But my clients normally finish their mortgage application in 5-7 minutes.

Your mortgage application will then go to your broker. From there, they will assess your income, down payment and credit score to determine how much of a mortgage you can afford and your maximum purchase price.

Your broker should provide you with a list of documents that you'll need to send alongside your application. Those can include:

Recent pay stub
Letter of employment
T4 slip or even the past two years T4s
Identification (drivers licence or passport)
3-month bank statements showing your down payment available
Articles of incorporation if you're self-employed.
Business bank statements if you're self-employed.
Existing mortgage statement, if you have a mortgage.

This isn't an exhaustive list, but it's a good starting point for your pre-approval.

From here, your broker should be able to get you pre-approved within a couple of business days. A week at the most. Sometimes it takes longer to get a pre-approval in place due to employment status or unique circumstances. We generally chat with our lender partners to verify if they will accept the income if it's unique.

For example, I had a client once who worked in the automotive industry and was laid off for a few months because of a shutdown. He was still being paid employment insurance and a lower income from the company, but I couldn't be sure lenders would accept his income.

I spoke with our lenders and was able to verify, and since there was a return-to-work date and we verified it through the letter of employment, we could get him approved. But this took about a week. Another reason why your pre-approval is so important. If you put in an offer on a home and it took a week to find out if you're approved, you'd likely be in trouble.

Once you have your pre-approval number in hand, what should you do?

You are probably thinking, start looking for a home. Unfortunately no. But almost there.

Make sure to ask your broker the following questions about your pre-approval:

Were my income documents satisfactory for the pre-approval?
Is there any way to increase my pre-approval amount?
If property taxes increase or decrease, how does this affect my pre-approval?
If condo fees are added, how does this affect my pre-approval?
If I add a car payment between now and putting in an offer, how does that affect my pre-approval?
If I can come up with a larger down payment, how does that affect my pre-approval?
How long is my interest rate good for?
How long is this pre-approval valid for?

This isn't an exhaustive list, but these are definitely some questions you should be asking your broker in case there are areas to increase your pre-approval or if you're concerned that property taxes or other factors will increase.

From here, you can finally start looking. Let's go!

PS. If you want to see an example of my pre-approval process, click here for a short video of me showing a pre-approval.

Searching For A Home and Putting in An Offer

3-A - Home Search

Once you've completed all of the steps above, you can finally look at homes. You might think this is the easiest part, but oftentimes it's the most difficult and stressful.

Why?

Homes are expensive. Darn expensive.

So it can get stressful and discouraging, thinking you won't be able to afford any of the ones you like. The good news is that homes are just like investment opportunities; they continue to pop up.

People are always buying, and people are always selling. If you don't see a home in your parent's neighbourhood right now that is in your pre-approval budget, wait. Someone in that neighbourhood will eventually sell.

On the flip side of seeing the expensive homes, there is great fun in looking at multiple different homes and imagining yourself living there. I always recommend that my clients see at least 3 homes before making an offer. And make sure all 3 are different layouts.

Three different layouts are important because they give you a perspective of what you DON'T like. Yes, what you DON'T like. Not just what you like. So, when you visit a couple of homes that aren't your style, you'll know for sure what homes are your style.

3-B - Putting In An Offer

I'll start here by mentioning the BIGGEST mistake people make when putting in an offer to purchase.

They are unaware of the deposit amount they'll need once their offer is accepted. What is a deposit? It's an amount you give to the sellers to show you're serious, and it's kept until the home closes. This can be $5k, $10k, all the way up to $100k (if the home is super expensive).

You need this deposit within 24 hours of your offer being accepted. So prepare to have it ready in your chequing account or an account that is readily available. Because if you don't have it available, the seller might go to the next offer.

Now that that is out of the way, you need to know five things when making an offer:

Purchase price
Property taxes
Condo fees or homeownership fees
Closing date
Condition of financing/inspection dates

The purchase price is the final amount you will pay for the home. It should be within your pre-approval budget and personal budget.

The property taxes and condo fees are important because higher property taxes can affect your pre-approval.

The closing date is the day you will get the home.

The condition dates are the extra items you should be aware of. These can be negotiating factors, but they are also important to protect you from home issues and make sure you can get financing on that specific property. For example, I had a client once who purchased a home for $400k, and the bank only thought it was worth $385k.

The client had a dilemma. He could either back out of the deal by using his condition of financing, or come up with the extra $15k shortfall.

The condition of financing gives you the flexibility to pull out of a deal in the event that any of the financing for your mortgage falls apart or you can't get approved for any reason. The inspection also helps with this in the event there are any major structural issues with the home.

3-C After Your Offer is Accepted

Once your offer is accepted, you will need to finalize your financing on the property.

Even if you had a pre-approval, that approval is to give you the maximum purchase price. The lender still needs to verify that the property fits your pre-approval criteria. After your offer is accepted, you'll receive your purchase and sale agreement and any applicable amendments.

The most common amendments are a Schedule A, a Schedule B and a notice of fulfillment.

You can send these documents to your broker or have your realtor send them along with the MLS document. Your broker or bank will then look to get you approved for that specific property. This should take 3-5 business days.

If you have a condition of financing, some lenders will put your application as a priority and get you approved even within a day.

After you're approved, the lender will ask for any outstanding documents for your purchase.

These can include:

Purchase & Sale Agreement (Including Amendments)
MLS Document
Property Appraisal (Virtual or In Person)
Income Documents (Pay Stub, T4, T1, Letter of employment etc).
Signed Commitment Letter (Mortgage Paperwork)
Home Insurance
Realtor Deposit Receipt
Down Payment Documents (3-month bank statements, investment statements, gift letter or firm sale of home)
Void Cheque or Pre-Authorized Deposit Form
Identification (Drivers Licence or Passport)
Your Lawyer's Contact Information

This isn't an exhaustive list, but it serves as a good starting point. Your bank or broker may ask for more or less, and it may seem like a lot, but the bank needs to do its due diligence.

After all, would you lend out hundreds of thousands of dollars without knowing who you were working with? Once all of the conditions above are completed and the bank/lender is satisfied, they will send the necessary information to your lawyer. These are called lender instructions. Essentially, these instructions tell your lawyer all of the things needed to be done to finalize the transaction. The lawyer then acts on behalf of the lender and will conduct additional due diligence with you, the borrower.

It can seem annoying, but this is a significant amount of money being moved around, so due diligence is necessary.

You'll sign more paperwork with the lawyer and bring your remaining down payment to the lawyer's office, or deposit it into the lawyer's trust account. This happens about a week before closing. Your initial deposit will be subtracted from your down payment. For example, if you're putting a $100k down payment total and you initially put a $25k down payment, you'll only need to come up with another $75k.

Once this is all completed, you'll wait for your closing date and then receive the keys on the closing day. Your lawyer will either give you the keys directly, or the selling realtor will leave the keys in the lockbox at the house.

That's All There Is To It. Sort of...

If you feel like this has been a lot of information, me too.

I've tried to answer some of the most common questions I receive, as well as some lesser-known issues and roadblocks that arise during the home-buying process.

If you found this helpful at all, feel free to leave a comment below. I also provide a lot of mortgage content on my Instagram page. Buying a home is a marathon, not a sprint. Take your time to research, plan, and understand your options. And don't go it alone—reach out for help if you need it.

If you’re feeling stuck or want to talk through your mortgage options, email me at alex@triedandtruemortgages.ca. I’d love to help you make this exciting step as smooth as possible. Happy house hunting!

TL;DR:

Budget & Save: Create a budget to assess affordability and save a down payment; even small monthly savings add up over time.
Get Pre-Approved: Secure a mortgage pre-approval to know your borrowing limit before house hunting, requiring stable employment and income verification.
Offer & Close: Ensure a deposit is ready for offers and finalize financing with documents like purchase agreements and insurance, completing the process with your lawyer.