Can you afford it?

If you’re thinking about buying property, ask yourself:

• if you have enough money right now to buy the property
• if, in the next few years, you'll be able to afford to maintain both your property and an acceptable lifestyle

Use the My budget management tool or Your personal balance sheet (PDF, 233 KB) - This link will open in a new window. to see where you stand.

Evaluate your borrowing power

To determine your borrowing power, financial institutions use two calculations: the gross debt service (GDS) ratio and the total debt service (TDS) ratio.

• The GDS ratio measures your mortgage payments, taxes, heating and condo fees in relation to your income and should be no more than 32% of your gross income.
• The TDS ratio measures your total debts (housing costs, car loans, credit cards, etc.) in relation to your income, and should be no more than 40% of your gross income.

Your advisor or mortgage representative can help you evaluate your borrowing power. You can also use the online calculators:

• How much can I afford to spend on a home? - This link will open in a new window.
• Mortgage Payment Calculator - This link will open in a new window.

Tips

• Look for a home that costs less than your borrowing power. It will be easier for you to make your payments, save for a rainy day, maintain your current lifestyle and avoid financial stress.
• Make a realistic budget and take all your expenses into account.
• Plan for the future: children, renovations, new cars, travel, etc.
• Set up an automatic savings plan to guard against the unexpected (repairs, unemployment, etc.). See Protect your loved ones and your property.

Your down payment should be at least 5%1 of the purchase price or value of the property. An easy way to save up for it is by making automatic transfers to a High Interest S@vings Account or TFSA Savings Account.

Family gifts, your RRSPs (through the Home Buyer’s Plan, the HBP, maximum $50,000 per couple) and some government or municipal programs can help you save the minimum down payment. Learn more about the HBP.

See Funding sources.

Saving up a down payment isn’t the only thing to think about. You should also have about 3% to 5% of the purchase price saved up to cover additional costs like:

• inspection fees
• notary or lawyer fees
• sales tax (for new construction)
• transfer tax (welcome tax in Quebec)
• property tax adjustments
• moving costs
• home insurance (mandatory)
• cable and phone fees
• new appliances

Need some financial help?

Ask your advisor if you qualify for the Cash remittance solution for start-up costs (maximum $10,000).

If your down payment is between 5% and 20% of the purchase price, you’ll need mortgage insurance with the Canada Mortgage and Housing Corporation (CMHC) or Genworth (in the U.S.) for between 0.60% and 3.85% of the borrowed amount, depending on your down payment. Your caisse can finance the amount and forward your mortgage insurance application to the CMHC or Genworth.

New construction or existing home?

• Models - Will you buy a new construction or an existing home that needs some renovations?
• Price - On average, the price of a new property is higher than the price of an existing property, partly because of the sales taxes that apply to new construction. In Quebec, the average price of a new home is $390,0002 compared to $270,000 for an existing home.
• Sales tax - Sales tax applies only to new construction.
• Guarantee - In general, builders issue a guarantee for new homes (does not apply if you build your own home).
• Energy - Energy costs are generally lower for new homes because today’s standards are stricter than they used to be.
• Landscaping- These costs are generally higher for new homes.
• Maintenance - Maintaining existing homes is often more costly.

Single-family home, condo or rental property?

Your choice will depend on your budget, the type of investment you want to make, your need for privacy and how many people will live with you. Do you want a single-family home, a condo (undivided co-ownership), an income property or a prefab home? Do you want to build it yourself? Every situation has its pros and cons and sometimes, different financing requirements.

See Define your needs and expectations.

For your meeting with a Desjardins advisor, have all the required information and documents handy to speed up the application process.

Making a joint application? The co-borrower must be present when you fill out the form.

Proof of income

• Notice of assessment from the government (or T4 slip from the previous year if you're an employee).
  and
• If you're an employee: your most recent pay stub.
  If you're retired: official proof of income document.
  If you're self-employed: tax document that lists your income and expenses for the last 2 years.
  If you're a newcomer to Canada: in addition to the above-mentioned documents, other documents may be required to get approved.
• If you want to buy a rental unit: copy of the leases in effect.
• If you own a rental unit: tax document that lists your income and expenses for the last 2 years.

Mortgage (to buy a home)

• Down payment3
  • If you're using your savings: investment account statements with 3-month history, if outside Desjardins
  • If you're using a donation: donation letter signed by all parties and copy of the account statement that confirms that the donor has the necessary funds
  • If you're using your current home: sold home purchase offer with terms and conditions met, if applicable
• Existing home purchase
  • Accepted purchase offer with appendices
  • Vendor's declaration
  • Fact sheet describing the purchased property
  • Copy of the preliminary contract if purchased from a developer or promoter
  • Improvement plans or bids (purchase with renovations)
• Construction or self-build
  • Land purchase offer, notarized deed of sale or property tax account statement
  • Copy of the preliminary contract if built by a developer or promoter
  • Plans and specifications
  • Bids and overview of construction costs (self-build only)
  • Copy of the building permit3

Refinancing (property already purchased)

• Property tax account statement
• Mortgage account statement (for non-Desjardins mortgages)
• Mortgage-related invoices, contracts or bids3

Why you need insurance

• To protect your property and assets, Desjardins home insurance is all-risk coverage for most basic accidents like fire, theft, vandalism, wind damage, etc.
• To protect your family and lifestyle, Loan Insurance or Loan Insurance - Versatile Line of Credit will cover your loans in case of the unexpected , death or disability.

See also:

• Protect your family and lifestyle
• Protect your property

Browse real estate sites

Once you know your borrowing power and needs as a future homeowner and once you’re preauthorized, start house-hunting online or with a realtor. Don’t forget to ask questions about things like the roof, heating costs, insurance compliance of the fireplace or wood stove, age of the windows and hot water heater, inclusions, reason for moving, neighbourhood, required renovations, etc.

Check the price against the market value

Make sure the asking price is a true reflection of the market value. Work with a chartered appraiser. The municipal evaluation isn’t an accurate gauge of a property’s real market value and is used to share a municipality’s tax burden among residents.

Start negotiating

Negotiate in person with the owner or through a realtor. The most common negotiation points are the inspection report, the financing and sale of the property, inclusions, exclusions and date of possession.

Make an offer

• A lawyer, notary or realtor can help you make the offer.
• Once an offer or counter-offer is accepted and the conditions are met, you need a notary (or a lawyer in Ontario) to close the sale. The seller has to provide the deed and guarantee that the property is free of any major defects that would render it unsuitable for the intended purpose.

Get a home inspection

• Make sure the property is in a condition that is acceptable to you.
• It’s wise to call a home inspector when you are ready to make an offer. Your offer can be conditional upon a positive inspection report.
• A negative home inspection report can be used as negotiating leverage.

Get a certificate of location

Generally, the seller has to produce a certificate of location for the property.

Get financing

Contact your advisor or mortgage representative to get a mortgage.

Conclude the sale

• Go through all the steps of the transactions with your notary or lawyer, including issuing a certified cheque made out to the notary in trust.
• Agree on a possession date.