Before purchasing a home, a key step is to find out how much you can afford. One way to find out whether or not you can afford a home is to get a pre approval – this is also a mandatory step before you buy a home. Your mortgage lender will pre approve you for a mortgage based on certain criteria such as your income, monthly expenses, and savings. It is important to keep in mind that there are many costs involved in purchasing your home, and it will be a good idea to plan ahead and start saving for those costs. These costs include a down minimum down payment of 5% – 20%, and up to legal fees, property taxes (varies from region to region and according to the size of the property and attached land being purchased), maintenance, land transfer taxes, home insurance, and monthly bills.
Keep in mind that if you are only able to put 5% down, the 5% applies to the price of a home that is $500,000 or less. If the price of the home is above $500,000, 5% applies to the first $500,000 and a minimum of 10% for the remaining portion. For example if your mortgage is $700,000, you can pay a minimum 5% ($35,000) for the first $500,000 and 10% for the remaining $200,000 (10,000), giving you a minimum of $45,000 down payment for a mortgage of $700,000.