Your Essential Guide to Buying a Home in Ontario
Learn how to navigate the Ontario real estate market, secure financing, and find your dream home with our step-by-step guide.
Essential Guide to Home Buying
Introduction
Why Use This Guide?
Buying a home in Ontario can be thrilling—whether you're eyeing a condo in downtown Toronto, a townhouse in Ottawa, or a detached property in a smaller city like Guelph. The process, however, can feel complicated. This guide will walk you through each step, highlight Ontario-specific rules and incentives, and help you confidently approach the homebuying journey.
Who Is This Guide For?
- First-time buyers navigating Ontario's unique market conditions.
- Buyers relocating to Ontario need to understand local regulations.
- Anyone who wants a clear, step-by-step overview of buying a home in this province.
Understanding The Market
Market Overview
Ontario’s real estate market is diverse. The Greater Toronto Area (GTA) is known for higher prices and competitive bidding wars, while mid-sized cities like London, Kitchener-Waterloo, and Kingston may offer more affordability and stable growth. Rural properties and cottage country homes near Muskoka or Prince Edward County have their own rhythms, often influenced by seasonal demand.
Key Market Influences
- Local Economy & Employment: Areas with strong job markets (e.g., government jobs in Ottawa, tech hubs in Waterloo) often have steady price growth. Refer to chart 1.
- Infrastructure & Transit: Properties near GO Transit stations, major highways, or upcoming LRT lines often experience increased demand. New transportation infrastructure is driving migration away from the downtown core, with cities in the east extending to Oshawa, the west to Kitchener, and the north to Barrie becoming more attractive to buyers. Refer to chart 2.
- School Districts & Community Amenities: Highly ranked schools, walkable neighbourhoods, and easy access to recreational facilities can significantly impact home values. For detailed school rankings across Ontario, visit: compareschoolrankings.org.
Research Resources
- WOWA Market Reports: Offer data and market insights (https://wowa.ca/ontario-housing-market).
- Canadian Real Estate Association (CREA): reports on housing trends and affordability metrics.
- Zown Affordability Map: Determine which areas align with your income and savings, and identify the location that best suits your needs and lifestyle.
Financial Preparation & Budgeting
Assessing Your Homebuying Budget
Credit Score
Having a good credit score increases your chances of securing a favorable mortgage rate. For most lenders, a credit score above 650 is enough to qualify for a mortgage, as credit scores generally act as a binary factor for approval. There's little to no difference in interest rates between a score of 650 and 750—once you're above 650, the rates are typically the same. You can check your credit score through Equifax, your bank, or by using Zown's prequalification tool to view your credit score and affordability without impacting your credit
Down Payment
- Homes under $500,000: A minimum down payment of 5% is required.
- Homes between $500,000 and $1,500,000: You'll need 5% for the first $500,000 and 10% for the portion above $500,000.
- Homes over $1,500,000: A minimum down payment of 20% is required.
If your down payment is less than 20%, you'll also need mortgage default insurance (CMHC insurance) that will get added to your mortgage principal.
Additionally, you'll need to pay Provincial Sales Tax (PST) on your mortgage insurance. For a $1 million property with a minimum down payment, this equates to roughly $2,096. You could use our affordability calculator to see how much you can afford
Closing Costs
Typically 1.5% to 2% of the purchase price. Budget for land transfer tax, legal fees, and adjustments. Zown's assistance can cover nearly all of your closing costs, eliminating the need to save for them separately.
Mortgage Pre-Approval
Before starting your home search, get pre-approved by a lender or mortgage broker to understand your maximum budget and make stronger offers. With Zown's innovative mortgage prequalification tool, you can quickly determine your eligibility without uploading documents or impacting your credit score:
Ontario-Specific Costs & Incentives
- Local Economy & Employment: Areas with strong job markets (e.g., government jobs in Ottawa, tech hubs in Waterloo) often have steady price growth. Refer to chart 1.
- Infrastructure & Transit: Properties near GO Transit stations, major highways, or upcoming LRT lines often experience increased demand. New transportation infrastructure is driving migration away from the downtown core, with cities in the east extending to Oshawa, the west to Kitchener, and the north to Barrie becoming more attractive to buyers.
- School Districts & Community Amenities: Highly ranked schools, walkable neighbourhoods, and easy access to recreational facilities can significantly impact home values. For detailed school rankings across Ontario, visit: compareschoolrankings.org.
Defining Your Wants & Needs
Types of Homes in Ontario
- Detached & Semi-Detached: These homes are common in suburban areas, offering greater privacy and larger lots. However, they typically come with higher property taxes. Most first-time homebuyers find this category unaffordable, except in cities like Ottawa, London, Windsor, and Niagara, where prices are more accessible.
- Freehold townhouses: This category of homes is among the most popular choices for first-time homebuyers. They offer the advantage of no condo fees and are more affordable than detached or semi-detached homes. If you can find an end-unit freehold townhouse, it's almost like owning a semi-detached property..
- Townhouses & Condos: These homes are popular in urban centers and often come with condo fees but require less maintenance. While they may not be as appealing as freehold townhouses, they remain an affordable option for many first-time homebuyers and serve as a great starter home for Canadians.
- Rural & Cottage Properties: Consider well and septic systems, seasonal access, and local zoning.
Key Factors to Consider
- Commute & Transit: Does the area offer convenient access to highways or public transit lines like GO trains or local LRT systems?
- Future Needs: Planning a family? Need a home office? Think long-term to ensure you won't outgrow your home too quickly.
- Lifestyle & Amenities: Parks, recreational facilities, restaurants, and cultural venues all add to quality of life.
Building Your Homebuying Team
Zown Account Manager
Buying your first home can be overwhelming, with many moving parts to manage. At Zown, we simplify the process by assigning you a dedicated account manager who will be your single point of contact throughout your journey. They'll guide you through every step, help you navigate any challenges, and be available 7 days a week to support you. With Zown, you're never alone.
Showing Real Estate Agent (REALTOR®)
In Ontario, REALTORS® are required to be registered with the Real Estate Council of Ontario (RECO) and adhere to strict professional standards. A skilled agent brings deep knowledge of local market conditions, access to the MLS system, and expertise in guiding you through offers and negotiations. At Zown, we've curated a network of over 300 top REALTORS® across Ontario who are local experts in their respective areas. They are compensated based on the quality of service they deliver, ensuring you'll never feel pressured to make a purchase.
Offer Real Estate Agent (REALTOR®)
Compare the Big Six Canadian banks, credit unions, and mortgage brokers. A broker can shop multiple lenders to find you competitive rates and terms. You should always shop around to make sure you are getting the best rate.
Mortgage Broker or Lender
Similar to showing agents, our offer agents are highly skilled in negotiations and dedicated to securing the best deals for you. With over 20 years of experience in real estate negotiations, they bring unparalleled expertise to every transaction.
Home Inspector
Hiring a qualified home inspector, preferably one who is a member of a professional association, is crucial for identifying any major issues with the property before finalizing your purchase. For the most reliable results, we recommend choosing an inspector with an engineering or technical background.
Real Estate Lawyer
In Ontario, a lawyer is essential. They review the Agreement of Purchase and Sale (APS), conduct a title search, handle closing documentation, and ensure the transaction follows provincial laws.
Searching For Your Home
Where To Look
Online Listings
Realtor.ca, brokerage websites, and MLS listings are popular starting points for property searches. Keep in mind that some properties may be underpriced to attract multiple offers, while others might be overpriced to leave room for negotiation. That's why consulting with your REALTOR® or using an analysis tool is essential.
With Zown, you can use our platform to search for properties and access detailed insights, including offer probabilities, market value, and future appreciation potential. Additionally, with the support of Zown's account manager, you'll be able to analyze prices using comprehensive market data for more informed decisions.
Open Houses & Showings
Take your time evaluating the home's condition, ask about property taxes, utility costs, and any recent renovations. Here's a checklist to use duuring showings.
Home Showing Checklist
Evaluate The Neighborhood
- Observe the noise levels.
- Check for parking availability
- Locate nearby amenities like grocery stores, parks, cafes, and public transit options.
Inspect Utilities and Fixtures
- Test light switches and check for functioning lighting.
- Check all electrical outlets and ensure they're working.
- Verify the condition of kitchen appliances (stove, refrigerator, dishwasher).
- Inspect laundry appliances.
- Test toilets, sinks, faucets, and showers for leaks or functionality.
- Examine the HVAC system, boilers, and radiators.
Examine the Property's Condition
- Look for signs of water damage on walls, ceilings, and floors.
- Inspect windows for energy efficiency (single vs. double pane).
- Check for strange odors (e.g., mildew or mold).
Assess Living Spaces
- Take note of window views and natural light.
- Verify the size and suitability of storage spaces.
- Take measurements of rooms to ensure your furniture will fit.
Check For Noise Levels
- In townhomes or semi-detached homes, listen for sounds from adjacent units.
- For condos, check for noise from above, beside, or below.
Inspect Outdoor Areas
- Examine the yard, grass, trees, and vegetation.
- Note the orientation of the home to gauge natural light throughout the day.
Picture Your Life in the Home
- Envision where you'll eat, relax, and sleep to ensure the space meets your lifestyle needs.
Additional Checklist for Condos
Take your time evaluating the home's condition, ask about property taxes, utility costs, and any recent renovations. Here's a checklist to use duuring showings.
- Look for any new developments that could obstruct views.
- Assess building amenities (gym, pool, common areas, elevators).
- Review the condition of parking garages and storage lockers.
- Check security features like cameras, gates, and concierge services.
Tip: Take photos (with permission) to review later and help with decision-making!
Rural Considerations:
Check zoning bylaws, water quality for wells, and ensure septic systems are up to code.
Keep Market Conditions In Mind
In hotter markets like Toronto, expect fewer days on market and possible bidding wars. Be prepared, have your finances in order, and trust your agent's advice on pricing strategies.
Making An Offer
Agreement of Purchase and Sale (APS)
When you find a property you're interested in, it's crucial to conduct a comparative market analysis (CMA) to determine its true value. Your offer agent can also engage with the seller's agent to understand their expectations and assess how they align with market trends. It's worth noting that sellers often have higher expectations when they initially list their property, but these expectations typically adjust as the property stays on the market. Reviewing the number of days on the market is, therefore, an important consideration.
Zown provides a powerful tool to evaluate property valuations, estimate offer acceptance probabilities, and more. Access this unique tool here.
Using all available data, your offer agent will develop a tailored negotiation strategy. Once an agreement is reached, your agent will prepare the Agreement of Purchase and Sale (APS) using standard OREA forms. This document will outline key details such as the purchase price, closing date, included fixtures (e.g., appliances), and any conditions.
Conditions (Contingencies)
Common conditions in Ontario include:
- Financing Condition: Ensures you can secure a mortgage for the specific property.
- Home Inspection Condition: Protects you from unexpected repair costs.
- Status Certificate Review (Condos): For condo purchases, your lawyer can review this document to identify any issues in the condominium corporation's financials or rules.
Once your offer is accepted, you'll typically be required to provide a deposit within 24 hours. This deposit, usually 3-5% of the property's value, is held in trust and applied toward your purchase at closing. If the conditions of the offer are not waived, the deposit will be refunded to you within five business days.
Deposit
Once your offer is accepted, you typically provide a deposit within 24 hours. This deposit is held in trust and credited to you at closing. This is usually between 3-5% of the property value. In the case the conditions are not waived, the deposit will be returned to you within 5 business days.
Waiving Conditions
You typically have 3–7 business days to fulfill the conditions outlined in your offer.
- Financing Condition: To complete this step, you'll need to submit the Agreement of Purchase and Sale (APS) to your mortgage broker or bank for final approval of the mortgage. Your lender may require an appraisal to ensure the property's value supports the mortgage amount. If the appraisal is lower than expected, you may need to increase your down payment or renegotiate.
- Inspection Condition: You'll arrange a property visit with your showing agent and a certified inspector, typically lasting two to four hours. During this time, the inspector will assess the home's structure, roof, plumbing, electrical systems, and other critical components. Minor issues are common and often easily addressed. However, if the report reveals significant problems, you can consider renegotiating the purchase terms or even withdrawing from the deal. Expect to pay between $300 and $500 for a thorough inspection.
- Status Certificate Condition (for condos): A lawyer will review the status certificate to ensure the condo corporation has sufficient reserve funds, is in good financial standing, and has no red flags. This review helps confirm the property is a sound investment. Some lawyers may charge an additional fee of around $250 to conduct it.
In a competitive market, it's not unusual for buyers to submit offers without conditions to appeal to the seller. Having a mortgage pre-approval can give you the confidence to remove financing conditions if you're comfortable with the property's market value. However, even in a bidding war, it's generally best not to waive the inspection or status certificate conditions, as doing so can expose you to unforeseen and potentially costly issues later on.
Finalizing Your Financing & Closing Details
Title Search & Insurance
Your lawyer ensures the property’s title is free of liens and encumbrances. In Ontario, it’s common to purchase title insurance, which safeguards you against title fraud and other issues that may arise after closing. The cost usually ranges from $400 to $1,200, depending on the purchase price.
Mortgage Approval & Underwriting
Once your offer is accepted and becomes firm, promptly provide any remaining documents your lender requests to prevent financing delays. We generally suggest waiting until about 14 days before closing to lock in your interest rate, as rates are expected to decrease. However, if you believe rates may rise before you close, consider locking in sooner.
Insurance
- Home insurance is required by law in Canada, and most lenders insist that coverage be in place on your closing day. Expect to pay around $100 per month. This insurance typically protects against damage to your home and belongings caused by events outside your control.
- Mortgage Insurance (If Applicable): If your down payment is under 20%, you’ll need mortgage default insurance from CMHC or another insurer. The cost is added to your mortgage balance. The premium varies based on your down payment amount:
- 5%–9.99% down: 4%
- 10%–14.99% down: 3.1%
- 15%–19.99% down: 2.8%
Adjustments & Taxes
Your lawyer calculates any necessary adjustments for property taxes, utilities, and other prepaid expenses so that costs are shared fairly between you and the seller. For example, if you close mid-month, the seller pays their portion up to the closing date, and the lawyer will reflect this proration on the final statement. With Zown, your lawyer will arrange a call approximately two weeks before closing to confirm that all details are in order, ensuring a smooth closing process.