How to Buy a Home: A Step-by-Step Guide
Tim Lyon • March 3, 2025
Buying a home is one of the biggest financial decisions you’ll ever make. Whether it’s your first home or your next one, the process can feel overwhelming without a clear roadmap. This guide breaks down each step so you know what to expect, who’s involved, and how to prepare.
What Does Buying a Home Involve?
At its core, buying a home means matching your budget with the right property, securing financing, and completing all the legal steps to make it yours. The journey usually takes 3–6 months from start to possession, though it can be quicker or longer depending on the market and your situation.
The Home Buying Timeline
Here’s how the process typically unfolds:
- Pre-Approval – Meet with a mortgage broker to review your income, down payment, and debts. A pre-approval shows what you can afford and locks in a rate if needed.
- Initial Consultation with Your Realtor – Define your search criteria, including location, size, and must-have features.
- House Hunting (1–3 months) – Tour properties with your Realtor. Share potential homes with your broker to ensure they fit lending guidelines.
- Making an Offer – Your Realtor helps draft and negotiate the offer, including important conditions (“subjects”) like financing and inspection.
- Subject Removal (7–10 days) – Work with your mortgage broker, inspector, and lawyer to complete due diligence. Once you remove subjects and provide your deposit, the home is officially SOLD.
- Preparation for Closing (2–6 weeks) – Arrange insurance, utilities, moving details, and gather your down payment and closing costs.
- Closing (3–5 days before possession) – Meet with your lawyer/notary to sign documents and pay the balance of your down payment.
- Possession Day – Final walkthrough and key handoff. Time to move in!
Who Are the Key Players?
You’ll interact with several professionals during this process:
- You, the Buyer – Deciding what you want and what you can afford.
- Realtors – The listing agent represents the seller; your buyer’s agent represents you, negotiates on your behalf, and is paid by the seller.
- Mortgage Broker – Helps secure financing, compare lenders, and structure your mortgage.
- Lender – The bank or credit union providing your mortgage loan.
- Lawyer/Notary – Handles the legal transfer of funds and property title.
- Home Inspector – Checks for issues with the property.
- Appraiser – Confirms the property’s market value for the lender.
Costs to Budget For
Beyond your down payment, you’ll need cash set aside for closing costs:
- Legal Fees: $1,400–$2,200
- BC Property Transfer Tax (PTT):
- 1% on the first $200,000 of the property’s market value
- 2% on the portion between $200,000 and $2,000,000
- 3% on the portion between $2,000,000 and $3,000,000
- 5% on any amount above $3,000,000
- There are exemptions for first-time buyers and for those purchasing newly built homes. Use my Property Transfer Tax Calculator to estimate your costs.
- Appraisal: Around $400
- Home Inspection: Around $500
- Insurance & Moving Costs: Variable
You can also use my Closing Cost Calculator to create a personalized budget.
Rule of thumb: budget 1.5% of the purchase price for closing costs. First-time buyers may need less due to property transfer tax exemptions.
Quick Summary
- Step 1: Get pre-approved so you know your budget
- Step 2: Work with the right team (Realtor, broker, lawyer, inspector)
- Step 3: Budget for both down payment and closing costs
- Step 4: Follow the process—offer, subjects, closing, possession
- Step 5: Enjoy your new home with confidence!
Next Steps
If you’re thinking about buying your first home—or it’s just been a while since your last purchase—the best place to start is a conversation. Let’s walk through your numbers and get a plan in place. Book a consultation or call 778-988-8409.
Mortgage Term Glossary
Amortization: Length of time to fully pay off your mortgage (commonly 25–30 years).
Appraisal: Professional estimate of your home’s market value, often required by lenders.
Deposit: Money you pay when your offer becomes firm; goes toward your down payment.
Down Payment: Your initial contribution toward the home’s purchase price.
Equity: The difference between your home’s value and what you owe on the mortgage.
Fixed Rate: Mortgage rate that stays the same for your term.
Mortgage Term: The length of your mortgage contract (1–5 years).
Pre-Approval: A budget put together by your mortgage broker to show what you can afford.
Stress Test: Rule requiring buyers to qualify at a higher interest rate than their actual rate.
Variable Rate: Mortgage rate that can fluctuate with the lender’s prime rate.
Tim Lyon
Mortgage Consultant
Credit. The ability of a customer to obtain goods or services before payment, based on the trust that you will make payments in the future. When you borrow money to buy a property, you’ll be required to prove that you have a good history of managing your credit. That is, making good on all your payments. But what exactly is a “good history of managing credit”? What are lenders looking at when they assess your credit report? If you’re new to managing your credit, an easy way to remember the minimum credit requirements for mortgage financing is the 2/2/2 rule. Two active trade lines established over a minimum period of two years, with a minimum limit of two thousand dollars, is what lenders are looking for. A trade line could be a credit card, an instalment loan, a car loan, or a line of credit; basically, anytime a lender extends credit to you. Your repayment history is kept on your credit report and generates a credit score. For a tradeline to be considered active, you must have used it for at least one month and then once every three months. To build a good credit history, both of your tradelines need to be used for at least two years. This history gives the lender confidence that you’ve established good credit habits over a decent length of time. Two thousand dollars is the bare minimum limit required on your trade lines. So if you have a credit card with a $1000 limit and a line of credit with a $2500 limit, you would be okay as your limit would be $3500. If you’re managing your credit well, chances are you will be offered a limit increase. It’s a good idea to take it. Mortgage Lenders want to know that you can handle borrowing money. Now, don’t confuse the limit with the balance. You don’t have to carry a balance on your trade lines for them to be considered active. To build credit, it’s best to use your tradelines but pay them off in full every month in the case of credit cards and make all your loan payments on time. A great way to use your credit is to pay your bills via direct withdrawal from your credit card, then set up a regular transfer from your bank account to pay off the credit card in full every month. Automation becomes your best friend. Just make sure you keep on top of your banking to ensure everything works as it should. Now, you might be thinking, what about my credit score, isn’t that important when talking about building a credit profile to secure a mortgage? Well, your credit score is important, but if you have two tradelines, reporting for two years, with a minimum limit of two thousand dollars, without missing any payments, your credit score will take care of itself, and you should have no worries. With that said, it never hurts to take a look at your credit every once and a while to ensure no errors are reported on your credit bureau. So, if you’re thinking about buying a property in the next couple of years and want to make sure that you have good enough credit to qualify, let’s talk. Connect anytime; it would be a pleasure to work with you and help you to understand better how your credit impacts mortgage qualification.
What affects mortgage rates? Does the Bank of Canada rate affect fixed-rate mortgages? These are questions that come up all the time, so in this this post, I’ll explain how fixed and variable rates are determined, why they don’t always move together, and what that means for you as a borrower. But to start with the short answer: While Bank of Canada announcements immediately impact variable rates, fixed rates usually have those expectations already baked in long before the announcement. That’s because fixed rates are forward-looking — they reflect where markets think rates are headed, not just where they are today. What Are Fixed and Variable Rates? Fixed Rate The interest rate stays the same for the entire mortgage term. Payments remain consistent, no matter what happens in the market. Variable Rate The interest rate changes during the mortgage term, moving up or down depending on the lender’s prime rate. Payments may stay the same (VRM) or change (ARM). How Do Fixed Rates Work? When you choose a fixed rate, the lender is guaranteeing your rate for the length of your term . To do this, they need to estimate what a fair rate will be over that time. This makes fixed rates more forward-looking — they often reflect not just today’s conditions, but also what the market expects to happen in the future. Key Points About Fixed Rates Strongly influenced by the Canadian bond market (especially the 5-year government bond yield). Lenders adjust their fixed rates based on investor expectations for inflation and future interest rates. Often, Bank of Canada moves are already baked into fixed rates before they happen. Example If bond yields suggest that rates will rise in the next year, lenders may increase fixed rates now, even if the Bank of Canada hasn’t made a move yet. How Do Variable Rates Work? Variable rates move directly with the Bank of Canada’s overnight rate. When the Bank of Canada raises or lowers its rate, lenders adjust their prime rate accordingly, and variable mortgages follow. For borrowers, the most important detail is the discount from prime , because that sets the actual rate you pay. For example, if prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. The discounts lenders offer change over time. In periods of economic uncertainty, lenders usually shrink the discount they offer, which can make new variable mortgages less attractive even if prime is coming down. Key Points About Variable Rates Directly tied to the Bank of Canada’s overnight rate, which is reviewed eight times a year. Banks adjust their prime rate in response to these moves. Your actual rate = Prime – discount (e.g., Prime – 0.5%). Example If prime is 4.95% and your mortgage is Prime – 0.5%, your rate is 4.45%. If the Bank of Canada cuts rates by 0.25%, prime drops to 4.70%, and your rate automatically drops to 4.20%. Why Don’t Fixed and Variable Always Move Together? Fixed rates reflect the bond market, which looks ahead at where rates and inflation may go. Variable rates respond directly to Bank of Canada decisions, reflecting current conditions. This is why fixed rates can fall while variable rates stay flat, or vice versa. Next Steps If you’re deciding between fixed and variable, understanding how each is set is the first step. The next is to match the right mortgage type to your budget and comfort with risk. If you’d like to review which option works best for you, I’d be happy to help. Need help with your mortgage? Book a consultation or call 778-988-8409 . Mortgage Term Glossary Amortization: The total length of time it will take to pay off your mortgage completely (typically 25–30 years in Canada). Bond Yield: The return investors get from government bonds. Used as a benchmark for fixed mortgage rates. Discount (Variable Rate): The amount subtracted from prime to determine your actual mortgage rate. Fixed Rate: An interest rate that stays the same for the entire mortgage term. Mortgage Term: The length of your mortgage contract with your lender (typically 1–5 years), after which you need to renew. Overnight Rate: The interest rate at which major banks borrow and lend money to each other, set by the Bank of Canada. Prime Rate: The interest rate banks use as a baseline for loans, influenced by the Bank of Canada’s overnight rate. Variable Rate: An interest rate that changes during your mortgage term based on lender prime rates.
