First-Time Home Buyer Mortgage in London: What Should You Check Before Making an Offer?
Planning a first-time home buyer mortgage in London? Check your pre-approval, down payment, closing costs and program eligibility before making an offer.
Buying your first home in London, Ontario starts with more than finding a property you like. Before you make an offer, you need an all-in budget that accounts for your qualifying income, debts, credit profile, down payment, closing costs and ongoing monthly expenses.
The most useful first-time home buyer mortgage plan is based on verified documents rather than a rough online estimate. Resolving these questions early can help you avoid shopping above your realistic limit or being surprised by the cash required to close.
Quick summary
- Get a documented mortgage pre-approval before treating a purchase price as realistic.
- Confirm that your down payment is traceable and that you have preserved the required account history.
- Budget separately for Ontario land transfer tax, legal costs, title insurance, inspection costs and adjustments.
- Check eligibility for the Ontario first-time buyer refund, FHSA, Home Buyers’ Plan and any extended amortization option.
- Set your personal monthly limit below the lender’s maximum so the home remains manageable after closing.
Do not mistake a rough affordability estimate for mortgage pre-approval
An online calculator or verbal estimate can help you begin, but it is not the same as a lender reviewing your file. A documented London mortgage pre-approval may involve reviewing income and down-payment documents, checking credit and holding a rate. That gives you a more meaningful purchase range than a payment estimate based on information you have entered yourself.
Even a pre-approval is not a guarantee of final financing. The lender will still assess the specific property, the accepted offer, updated documents and any conditions before funding. Ask what assumptions it contains, how long a rate hold lasts and what could change the result.
Check how income, debts, credit and qualification rules affect your budget
Your maximum purchase price is not determined by income alone. Lenders may examine employment history, commission or bonus income, self-employment documentation, student loans, car payments, credit cards, lines of credit and other monthly obligations.
Credit history and the mortgage stress test also affect the amount a lender is prepared to consider. Give accurate information at the start, including debts that are close to being paid off and income that varies from month to month. Hiding or postponing a debt usually creates a documentation problem later.
Ask for two figures: the highest amount a lender may approve and the purchase price that still leaves room for property tax, heating, insurance, maintenance and changing household expenses. The second figure is the one to use while viewing homes.
Compare your down payment with mortgage insurance and cash reserves
The minimum down payment is not automatically the right down payment. For an insured mortgage, CMHC guidance states that the minimum is 5% on the first $500,000 and 10% on the portion between $500,000 and $999,999. A purchase at $1,000,000 or more requires 20% down under the cited guidance. Review the current rules for your specific purchase.
| Down payment position | What to consider | Question to ask |
|---|---|---|
| Less than 20% | Mortgage default insurance generally applies, and the premium may be added to the mortgage balance. | What will the insured payment and total borrowing cost be? |
| 20% or more | You may avoid default insurance, but using more cash can reduce your emergency reserve. | How much cash should remain after closing? |
| More than the minimum | A larger down payment can reduce the mortgage, but may limit funds for repairs, moving or unexpected costs. | Does the extra down payment improve the overall plan? |
Do not use every dollar to reach a preferred down-payment percentage. A sound plan includes money for closing and a reserve after possession.
Verify where the down payment came from and how long it has been held
Lenders need to see that the down payment is available, legitimate and traceable. Prepare recent statements for savings and investment accounts, records showing transfers between accounts and documents for any large deposit. If immediate family is providing a gift, ask what gift letter and supporting evidence are required before the money moves.
Keep a clean paper trail. Moving funds through several accounts, depositing cash or making a large unexplained transfer can delay underwriting even when you have enough money.
Documents to prepare
- Recent bank and investment statements showing the down-payment history.
- Gift documentation where an immediate family member is contributing funds.
- Employment and income records, including documents for variable or self-employed income.
- Statements for credit cards, loans, lines of credit and student debt.
- Identification and records needed to confirm first-time buyer program eligibility.
Budget for London closing costs, not just the down payment
Your cash requirement at closing can include Ontario land transfer tax, legal fees, title insurance, a home inspection, appraisal-related costs and adjustments for prepaid property taxes or utilities. London purchases are subject to the provincial land transfer tax but do not have Toronto’s additional municipal land transfer tax.
Eligible Ontario first-time homebuyers may qualify for a land transfer tax refund, but eligibility is governed by provincial rules. The Ontario first-time buyer refund requirements include conditions related to age, ownership history and a spouse’s ownership history.
Before viewing properties, estimate the purchase price, down payment, mortgage insurance if applicable, land transfer tax and other closing costs together. Use the Ontario mortgage and land transfer tax calculator to model a London purchase, then confirm the assumptions with your legal and mortgage professionals.
Check program eligibility instead of assuming you qualify
First-time buyer programs can reduce the cash burden or improve planning, but they are not interchangeable. An FHSA can provide tax advantages for eligible first-time buyers saving toward a qualifying home, subject to applicable limits and rules.
The Home Buyers’ Plan may allow an eligible buyer to withdraw up to $60,000 from an RRSP, but the Canada Revenue Agency sets eligibility and repayment requirements. Review the Home Buyers’ Plan eligibility rules before relying on an RRSP withdrawal.
An amortization longer than 25 years and up to 30 years may be available when a borrower is a first-time homebuyer or the property is newly built, subject to applicable conditions. The federal eligible mortgage loan regulation is a verification point, not a promise that every buyer or property will qualify.
For another perspective on questions to raise when comparing first-time buyer programs, review this first-time buyer program comparison. Confirm current requirements with the relevant government department and your advisers.
Set a monthly budget below the lender’s maximum
A lender’s maximum is a qualification boundary, not a recommendation for comfortable spending. Build your budget around the mortgage payment plus property tax, heating, home insurance, utilities, maintenance and any condominium fees. Include planned changes such as parental leave, a job transition, a vehicle purchase or a future repair.
Also consider the mortgage term, payment structure, prepayment privileges and the cost of breaking the mortgage early. A slightly lower rate may not be the best choice if the terms do not fit your plans. Ask for the total cost and key restrictions, not only the advertised payment.
Pre-offer checklist for a first London home
- Documented qualification: Confirm that income, debts, credit and down-payment records have been reviewed.
- Purchase-price ceiling: Set a maximum price based on lender qualification and your own monthly budget.
- Cash to close: Reserve funds for the down payment, land transfer tax, legal work, title insurance, inspection and adjustments.
- Program confirmation: Verify eligibility for the Ontario refund, FHSA, Home Buyers’ Plan and any extended amortization.
- Property review: Plan for an inspection and ask whether the property type, condition or location creates financing considerations.
- Offer protection: Discuss a financing condition before signing. A pre-approval does not replace property-specific underwriting.
- Updated documents: Keep statements, identification and income records current until closing.
Frequently asked questions
Do I need a mortgage pre-approval before viewing homes in London?
You can view homes without one, but a documented pre-approval is useful before serious shopping. It helps establish a realistic price range and identify documentation gaps. It does not guarantee final approval, so keep appropriate financing protections in the offer.
Is 5% down enough to buy my first home in London, Ontario?
It can be the minimum for some insured purchases, subject to the purchase price, qualification and current mortgage insurance rules. You still need separate funds for closing costs and must qualify for the mortgage.
Can I use both an FHSA and the Home Buyers’ Plan for my first home?
These are separate programs with different rules, and using one does not automatically establish eligibility for the other. Confirm how each applies to your circumstances before counting the funds.
What happens if my final purchase price is higher than my pre-approval amount?
You may need a larger down payment, a different property, a revised mortgage structure or a new qualification review. Discuss the maximum price and financing condition before making an offer.
Make the offer from a verified budget
The safest starting point for a first-time home buyer mortgage in London is the purchase price that remains workable after documented qualification, the down payment, Ontario closing costs, monthly carrying expenses and a reasonable cash reserve are considered.
Bajani Mortgage is based in London, Ontario and provides personalized mortgage guidance for homebuyers in London, St. Thomas, Ingersoll and surrounding Southwestern Ontario communities. To discuss your first purchase, visit Bajani Mortgage.
Approval, rates and product availability are set by lenders and depend on individual qualification. Nothing on this page is a guarantee of approval or a specific rate.
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