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Steps to Buying Your First Home

Buying your first home is an exciting life and financial milestone. It can also come with a lot of questions and big decisions. As a first-time homebuyer you aren't alone, we'll help you find the right home – and mortgage – for your life and budget. Explore what you need to know before you begin the mortgage process.

What is the home buying and mortgage process?

Knowing what to expect on your home buying journey can help you feel comfortable as you look for your first home. Understanding what documentation and responsibilities you need to take care of, as well as what your loan officer and bank will handle, can help you prepare for every stage of the mortgage process – from prequalification and application to underwriting and closing.

Download your first-time homebuyer kit (PDF)

Are you building or renovating a home with a construction loan?
Explore the construction loan application process

Are you a doctor, dentist, resident or fellow who is less than 10 years out of residency?
You may qualify for a TD Bank Medical Professional Mortgage

How much can I afford to spend on a new home?

The first step in finding your first home is knowing how much you can afford to spend. In addition to how much mortgage you're comfortable with, you'll also want to consider your current expenses plus the new ones that come with home ownership.

Understanding all the costs associated with home ownership will inform the potential price range of your future home and help you define your housing search. You can look for your first home with confidence once you identify how much you can afford. As a first-time homebuyer you may also qualify for an affordable home loan

Download this expense checklist (PDF) to help you determine your monthly and long-term expenses as a homeowner.

  • Current expenses:

    • Your monthly living expenses
    • Car payments
    • Other loan payments
    • Other monthly bills or regular expenses
    • Rainy day fund (similar to an emergency repair budget)
    • Rent for where you're living now

  • New expenses that come with owning a home:

    • Property taxes
    • Utilities
    • Homeowners insurance
    • Private mortgage insurance (PMI): if placing less than 20% down
    • Homeowners association (HOA) fees: for condos or homes in a planned development
    • Emergency repairs and ongoing maintenance costs: A general rule for estimating these costs is to set aside at least 1% of your home's value every year for home maintenance. So, for a $270,000 house, that would be $2,700 per year, or $225 per month

Estimate my monthly mortgage payment

Use TD Home Loan Match to see rate and payment options to help you find the best loan to purchase a home that fits your budget.

Calculate my rate

How much do I need upfront to buy a home?

Almost everyone who purchases a home must put money down at the time of the mortgage closing. The amount of money you'll need will usually cover these fees and expenses:

  • Mortgage down payment

    Down payments typically range from 3% to 20% of the purchase price. If your down payment is less than 20%, you may be required to purchase private mortgage insurance and, depending on your loan, you may be required to pay your first premium as part of your closing costs.

    Depending on the area your plan to purchase in, along with your income level, there may be programs sponsored by local governments or non-profit charitable organizations that provide down payment assistance. These programs can help lower the initial barriers to homeownership.

  • Home inspections

    Home inspection isn't required as part of the mortgage transaction, but many people decide to complete an inspection. Water, soil and other tests on the new home are generally only completed if the appraiser identifies an issue or it is required through a government product.

    You would cover the costs of all these services and pay the service providers directly at the time of service.

Mortgage closing costs

At TD Bank, your loan officer will provide you with a loan estimate of closing costs within 3 business days of your mortgage loan application. The closing agent or title company will notify you of your final closing costs, also known as settlement costs, within 24 hours of your closing. You should bring a certified or cashier's check for this amount to your closing.

Closing costs typically range from 2% to 6% of the loan amount. They are the fees for the services and expenses required to finalize a mortgage, and generally include:

    • New home buyer fees
      These include underwriting, credit report, appraisal, attorney and any other applicable fees
    • Insurance
      At closing, you'll pay the first year of your homeowners insurance along with title search and title insurance
    • New home prepayments
      This includes any applicable real estate taxes and insurance, including homeowners, title, flood or private mortgage insurance
    • Property taxes
      A few months of taxes are collected at closing based on the closing date and how the municipality collects
    • Per diem interest
      Closing costs include interest due on the mortgage from the date of your closing through to the last day of that month
    • Mortgage discount points
      You may decide to pay points at closing to secure a lower mortgage interest rate. One-point equals 1% of the mortgage amount charged at closing as prepaid interest. This may benefit you if you plan to reside in the property long term. Talk to your Mortgage Loan Officer about your options

What is mortgage prequalification and how do I get started?

A mortgage prequalification reviews your debt, income and credit history to determine if you qualify for a mortgage to buy a home. If qualified, you will receive a letter that states the loan amount you can afford. Show this prequalification letter to real estate agents and sellers to show that you're a serious buyer. Prequalification is often required before you can schedule home showings and make offers.

To get prequalified, you'll need to provide your income, debt and prospective property information and authorize a credit pull using your social security number.

If you want to get prequalified, call 1-866-325-4516 to speak with a TD Loan Officer. 

Two important aspects of mortgages to consider are:

  • Mortgage rates:

    Fixed rate mortgages have the same monthly payment for the life of the loan, which may be a good option for long-term homeowners.

    Adjustable rate mortgages (ARM) usually have low monthly payments at the beginning of the loan with the ability to switch to a fixed rate. They are generally a good option for short-term homeowners.

  • Terms:

    • 15-year fixed rate term mortgages will have higher monthly payments, but less in interest
    • 30-year fixed rate term mortgages have lower monthly payments with more interest

How do I prepare for my mortgage application?

When you apply for a mortgage, you'll need to provide your income and asset information. Here are a few things you can also do now to help prepare:

    • Get your credit report
      You can request a free copy of your credit report† from all 3 major consumer reporting companies. Read them carefully and notify the companies of inaccuracies as this may negatively affect your credit score. Your credit report and your credit score provide lenders with information about your financial background
    • Don't make any major purchases
      Hold off on making any big purchases, such as a car or furniture, until after your closing. Taking on significant new debt now can impact your mortgage loan decision and how much you can borrow
    • Start saving pay stubs along with bank and retirement statements
      Start collecting these documents as you may need to provide them to verify your application details when you apply for your mortgage

How do I make an offer on a new home?

When you find the home you want, you'll need to enter into a written contract with a written offer. Working with a real estate professional can simplify this process because they will:

  • Provide you with standard forms that comply with state and local laws
  • Guide you on your offer amount based on comparable home sales in that area
  • Present your initial offer and any counter offers to the seller and assist you with negotiations

What does a written offer on a new home include?

The written offer that your real estate agent will present to the seller includes:

    • Purchase offer
      This written proposal specifies the price you're willing to pay, as well as all the terms and conditions of the purchase
    • Earnest money
      This is money you put toward your new home with your purchase offer to show the seller your commitment to the offer (A real estate professional or attorney usually holds your earnest money and that money becomes part of your down payment, or is returned to you if your offer is declined)
    • Negotiation
      Your realtor can help prepare you for the back-and-forth with the seller on both the amount of your offer, as well as terms and conditions of the purchase
    • Purchase agreement
      Following any negotiation and modifications to your purchase offer, once a final price for the home is reached, you and the seller both sign off to create a final binding contract; this is the document you will need to start your mortgage application

More helpful mortgage resources and products

Begin your mortgage journey now

  • Online 

    The fastest way to get started with your mortgage application

    Apply now

  • By phone

    Talk with a Home Lending Loan Officer today

    1-866-325-4516 1-866-325-4516

  • Find a Mortgage Loan Officer

    Connect with a Mortgage Loan Officer in your area

    Search now

Loans subject to credit approval. Offer subject to change or cancellation without notice. Equal housing lender.

1Monthly maintenance fee can be waived with one of the following: $5,000 or more in direct deposits within a statement cycle or $2,500 minimum daily balance is maintained or maintain a $25,000 minimum daily combined balance of all deposit accounts, all outstanding home equity loan and home equity line of credit accounts, and/or mortgages in good standing (excludes credit cards and personal loans) that you choose to link.

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