Buying Your First Home: Where Do You Start?
Buying your first home starts well before you find the perfect property. The first step is understanding what you can comfortably afford and getting a clear picture of your mortgage options.
A mortgage pre-approval can help you understand your potential price range, estimated payments and the amount you'll need for a down payment. It can also help identify any issues that may need attention before you start making offers.
We'll walk you through the numbers, explain the process in plain language, and help you get prepared so you can start your home search with confidence.
How Much Down Payment Do You Need?
One of the biggest questions for first-time home buyers is how much they need to save for a down payment. In Canada, the minimum down payment depends on the purchase price of the home:
$500,000 or less:
Minimum 5% of the purchase price.
More than $500,000 but less than $1.5 million:
Minimum 5% on the first $500,000, plus 10% on the portion above $500,000.
$1.5 million or more:
Minimum 20% down payment.
If your down payment is less than 20%, you'll typically require mortgage default insurance. Your down payment may come from sources such as your own savings or an eligible non-repayable gift from a relative, depending on your situation and lender requirements.
You don't need to figure all of this out on your own. We'll help you determine how much you'll need based on your price range, where your down payment can come from, and what mortgage options may be available to you.
Example: A $400,000 Home
5% minimum down payment = $20,000
That's a very relevant price point for Newfoundland and makes the rule instantly understandable.
Example: A $750,000 Home
On a $750,000 purchase, the minimum down payment would be $50,000 — 5% on the first $500,000 and 10% on the remaining $250,000.
Don't Forget About Closing Costs
Your down payment isn't the only money you'll need when buying your first home. There are additional costs associated with completing the purchase, so it's important to budget for these expenses before you start house hunting.
Closing costs can vary depending on the property and your situation, but may include:
Legal fees and disbursements
You'll need a lawyer to complete the legal work involved in purchasing your home and registering the necessary documents with the Government of Newfoundland & Labrador.
Property tax adjustments
Depending on when you close, you may need to reimburse the seller for property taxes they've already paid for part of the year.
Home inspection
While not technically a closing cost, many buyers choose to have the property professionally inspected before completing their purchase.
Appraisal
In some situations, your lender may require an appraisal to confirm the property's value.
Home insurance
Your lender will generally require proof that appropriate property insurance is in place before your mortgage funds.
How much should you budget?
Rather than focusing only on your down payment, we'll help you understand the additional funds you should have available for closing based on your particular purchase. That way, there are fewer surprises when closing day arrives.
How Much Home Can I Afford?
The purchase price you're approved for depends on more than just your income. Your existing debts, down payment, credit history, property taxes, heating costs and current mortgage rates can all affect how much you qualify to borrow.
But qualifying for a certain amount doesn't necessarily mean you should spend that much.
We'll help you look at both sides of the equation — what you can qualify for and what payment you're comfortable carrying — so you can set a realistic price range before you start looking at homes.
Ready to Start Your First Home Journey?
You don't need to have everything figured out before you reach out. Whether you're ready to buy now or just starting to think about homeownership, we'll help you understand your options, get prepared and know what your next step should be.