Getting your finances in order is the longest stage of buying your first home, and the one that shapes everything else. Done well, it lets you shop with a realistic budget, make an offer quickly and get to the notary's office without unpleasant surprises.
The recommended order, in five steps
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Step 1
Work out a comfortable budget, not just your borrowing capacity
The amount a bank is willing to lend you is calculated with debt ratios and a stress test. It doesn't account for your child care costs, your retirement savings or replacing your car. Your comfortable budget is often lower, and it's the number that should guide your search.
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Step 2
Pull your down payment together
The minimum depends on the price and the type of property: 5% on the first $500,000, and 10% on the rest for a one- or two-unit property you'll live in. Accepted sources: your savings, the First Home Savings Account (FHSA — CELIAPP in French), the Home Buyers' Plan (HBP) and a gift from an immediate family member, backed by a gift letter.
Calculate your minimum down payment → · Combine the FHSA and HBP →
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Step 3
Clean up your credit report
Your credit report, kept by Equifax and TransUnion, affects whether your loan is approved and the rate you're offered. Check it for free, get errors corrected, lower your credit card balances and avoid any new credit applications before and during the purchase.
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Step 4
Get a mortgage pre-approval
Once your documents are ready, a lender or a mortgage broker reviews your file, confirms a maximum amount and generally holds a rate for a few months. It isn't final approval yet, but it's what lets you make an offer with confidence.
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Step 5
Set aside a reserve fund
Your down payment and closing costs shouldn't drain your accounts. A common recommendation is to keep 3 to 6 months of essential expenses aside, plus a provision for maintaining the property.
What about closing costs?
Your down payment only covers the purchase price. The welcome tax, the notary, the inspection and the tax adjustments come on top, and they're paid in cash. Build them into your plan from step 2 so you don't have to dip into your reserve fund. Calculate your total closing costs →
Why this order?
Each step feeds the next. Knowing your comfortable budget tells you what down payment to aim for. A clean credit report and up-to-date documents make the pre-approval faster and more reliable. And once your financing is clear, you know how much cushion you'll have left. If you're not sure yet whether now is the right time, start with the 10-question self-assessment.
Frequently asked questions
How do I prepare financially to buy my first home?
First work out a comfortable budget, then pull together your down payment (savings, FHSA, HBP, family gift), check your credit report, get a mortgage pre-approval and keep a reserve fund for after the purchase.
How long does it take to get your financing ready?
It mostly depends on the down payment you need to put together: a few months if it's already saved, several years if you're starting from zero. The pre-approval itself generally takes a few days.
