Buy a home in Toronto: down payment, closing costs and your purchase mortgage, explained.

The minimum depends on the purchase price: 5% on the first $500,000, 10% on the portion between $500,000 and $1.5 million, and 20% on homes of $1.5 million or more, which cannot be insured. For example, a $700,000 home needs at least $45,000 down (5% on $500,000 plus 10% on $200,000). A down payment under 20% requires mortgage default insurance.

A pre-approval is a lender's estimate of how much you may be able to borrow, based on your income, debts, credit and down payment. It usually comes with a rate hold, and many lenders allow up to 120 days. It is not a final approval: the lender still reviews the property and confirms your documents.

The stress test checks that you could still afford your payments if rates rise. You must qualify at the higher of your contract rate plus 2 percentage points or 5.25%. It affects how much you can borrow.

Budget for closing costs in addition to your down payment. They typically include legal fees, title insurance, an appraisal where the lender requires one, and adjustments. Toronto buyers also pay both the Ontario land transfer tax and the City of Toronto land transfer tax, and eligible first-time buyers may qualify for rebates on each.

A fixed rate stays the same for the term, which makes payments predictable. A variable rate moves with the lender's prime rate. Which suits you depends on your budget, your comfort with change and the cost of breaking each type: many variable mortgages carry three months' interest, while fixed mortgages can carry the greater of three months' interest or an interest rate differential.

The First Home Savings Account (FHSA) lets eligible first-time buyers contribute up to $8,000 a year, to a lifetime limit of $40,000, and withdraw for a qualifying home purchase tax-free. The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP and repay it over 15 years. Land transfer tax rebates may also apply. Eligibility rules apply to each.

In many cases, yes. Lenders and programs differ in how they treat self-employed income and a short Canadian credit history, so we match your file to lenders that fit and explain your options before you decide.

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