Steps to Buying a House in Ontario From Offer to Keys

Buying your first home in Ontario involves a lot of moving parts, and the order matters. Money questions come first, then the offer, then the conditions that protect you, and finally the legal work that ends with you getting the keys.

This walkthrough follows that order. It is general information about how a purchase usually works, and your own agreement of purchase and sale will set the exact terms, so have a lawyer review it before you sign.

Step 1: Get your finances ready

Start with a mortgage pre-approval. It is an estimate of the maximum mortgage and likely rate, based on a credit check and a review of your income, debts and assets. It does not guarantee approval, and the lender can lock the rate for roughly 60 to 130 days depending on the lender.

Plan your down payment next. CMHC says the minimum is 5% of the first $500,000 of the price plus 10% of the portion above $500,000, and that gifts from immediate family and RRSP withdrawals are acceptable sources. If you plan to use RRSP or first home savings account money, check the rules for those programs well before you make an offer.

Step 2: Make an offer

Offers commonly list the names of the parties, the price, inclusions, the deposit, the possession date, the expiry date and conditions such as inspection and financing. Even with a pre-approval certificate, you must still get final lender approval during the conditional period.

Sellers sometimes set a date to review offers. A seller's agent may hold offers to a set date and time only with the seller's specific written direction, and a general signed statement is not enough. If the presentation date or process changes, the agent must notify in writing everyone who has shown interest and update the listing notes. Pre-emptive offers should also be covered by the seller's written direction, and a note saying the seller may view them without notice is not sufficient.

How long your offer stays open, and what happens if you withdraw it or the seller counters, depends on the signed agreement. Ask a lawyer before you sign if you are unsure.

Use your conditions and do your checks

Conditions are your protection period. Typical ones are financing and inspection. During this time the lender also verifies that the property meets its standards, and the final mortgage depends on the property's value and your down payment. The lender may offer a smaller mortgage, a higher rate, a larger down payment or a co-signer.

If you are buying a condo, CMHC advises making a satisfactory status (estoppel) certificate a condition of the offer. The following table shows what to know about it.

The reserve fund statement must cover the most recent reserve fund study, the reserve fund balance at a month-end within 90 days of the certificate date, and current plans to increase the fund.

Lawyer work, tax and closing

Once conditions are satisfied, your lawyer handles the legal work. The Law Society describes the usual pieces: a requisition letter from the buyer's lawyer, a statement of adjustments, a direction on how you will take title, and an undertaking to readjust. The statement of adjustments credits the seller with the price and you with your deposits, with property taxes adjusted annually and condo fees monthly.

Title insurance is not required in Ontario and does not replace legal advice. Where a client chooses it, the lawyer should explain the searches the lawyer will not perform, such as zoning, encroachments and survey issues, and what they would reveal.

Land transfer tax is 0.5% up to $55,000, 1.0% from $55,000 to $250,000, 1.5% from $250,000 to $400,000 and 2.0% above $400,000, with 2.5% on the portion over $2,000,000 for land with one or two single family residences. Eligible first-time buyers can receive a refund of up to $4,000. On electronic registration, the refund is claimed at closing by selecting the appropriate statements in the land transfer tax section, which offsets the tax payable. If it was missed, you pay the tax on registration and apply to the Ministry of Finance within 18 months after registration.

Step 5: Keys and new builds

On closing day your lawyer completes registration and releases the keys once the funds are in place. If you bought a new home from a builder, extra protections apply. Closing date changes generally need at least 90 days' written notice. Delayed closing compensation is $150 per day for living expenses plus other receipted costs, capped at $7,500 in total. Warranty coverage starts on the date of possession, with one-year, two-year and seven-year protections for different types of defects.

What to do next

• Get a pre-approval and keep the expiry date in mind.
• Set aside the down payment and closing costs, including land transfer tax.
• Have a lawyer review the agreement before you sign, including all conditions.
• For a condo, make the status certificate a condition and read it closely.
• Confirm whether you qualify for the first-time buyer refund and how it will be claimed at closing.
• Arrange insurance and utilities before possession.

Frequently asked questions