Owning a home in the metropolitan hub of Canada, Toronto, is a big milestone in many people’s lives. This home is more than just a place to live and sleep – it’s a symbol of your stability, security, and personal achievement. And when you manage to achieve this homeownership dream at a young age, it can truly feel like hitting a home run!
But wait – can you actually buy an MLS listing in Toronto no matter how young you are? Let’s explore how old you need to be to become a homeowner below!
What’s the Minimum Age for Buying a Home in Toronto?
If you’re looking to buy a house in Toronto, you must be at least 18 years old. This is because when you buy a home, you’ll be required to sign a lot of contracts and agreements such as the purchase agreement and mortgage documents. These home-buying documents are legally binding and hence you need to be of legal age to sign them. So, as long as you meet the minimum age requirement of 18 and can handle the other homeowner responsibilities, you’re good to go in buying a home in Toronto.
Things You Need to Buy an MLS Listing in Toronto
Reaching the age of 18 is not enough to become a homeowner. You also need to fulfil other requirements in order to buy a home in Toronto such as –
- Your Credit Score Must Be Solid
Mortgage lenders typically look for a credit score of at least 620 but if you’ve a higher credit score, it could be even better. You can secure a favourable interest rate and terms with such a high credit score.
- You Should Put Aside Money for the Down Payment
The down payment is the amount of money you have to pay upfront for your new home in Toronto. The minimum down payment for MLS listings in Toronto up to and below $500,000 is 5% of the home’s purchase price. For homes between $500,000 and $1,000,000 price tags, you’ll have to put down 5% for the first $500,000 and 10% for the remaining amount. Lastly, those above $1,000,000 need a 20% down payment.
- You Must Keep Your Debt-to-Income (DTI) Ratio Low
To qualify for a home loan in Toronto, lenders usually prefer a DTI ratio of 36% or lower. This means that your monthly debt payments including the mortgage of your new home should not cross 36% of your gross monthly income.
- You Should Provide Your Income Statements
Mortgage lenders need to see proof of income to ensure you can afford the mortgage payments of your new home in Toronto. These documents typically include pay stubs from your current job, bank statements showing regular deposits, and tax returns if you’re self-employed. In case you’re just starting out in your career, you might need to provide extra documents as proof of your stable income.
- Prove That You Have Been Steadily Employed Over Time
Another thing you’ll need to prove to get a loan for buying an MLS listing in Toronto is a stable employment history. Ideally, you should have been with your current employer in Toronto or elsewhere for at least two years.
- You Should Get a Mortgage Pre-Approval If You Can
Unlike the above points, this one is not a “you-must-essentially-have” requirement but more like a “good-to-have” requirement. A loan pre-approval letter shows sellers that you’re a serious homebuyer (even when you’re young) and can afford the home. It also gives you a better idea of how much you can borrow for your new home in Toronto, helping you set a realistic budget.
Can You Buy a House if You Haven’t Turned 18 Yet?
In Canada, you need to be 18 to enter into a legally binding contract, such as a mortgage or a property purchase agreement. However, there are ways to get around these age restrictions if you’re determined to buy an MLS listing in Toronto before you turn 18.
Here’s how it can be done –
- Parental or Guardian Involvement
One common way is to have a parent or legal guardian help with buying the home. These guardians can sign all the legal documents of home-buying on your behalf. You’ll still be involved in the home-buying process and can make decisions but the formalities will be handled by someone older.
Cons to Buying a Property in This Way –
True, you can be involved in the decision-making of the home-buying process in this way. However, since the legal documents will be signed by someone else, the legal aspects of the transaction are not in your hands. This can lead to disagreements or issues if your legal decisions regarding buying the home clash with the guardian.
- Trust Fund or Custodial Account
Another method is to set up a trust fund or custodial account where the assets are managed by a trustee until you reach legal age. In this case, the Toronto MLS listing would be held in trust until you’re 18 at which point the ownership would be transferred to you.
Cons to Buying a Property in This Way –
Using a trust fund or custodial account means the property is not yours until you turn 18. Because of this setup, your ability to make decisions about your new home such as renting it out or making any big changes could be delayed. Moreover, managing a trust involves legal fees and administrative costs which can hike up your homeownership costs. You also need to ensure the trustee manages your new home well which can be a concern if the trustee is not fully committed.
- Joint Ownership with an Adult
You can also buy your new home jointly with an adult like a parent or another responsible adult. In this case, the adult co-owner and you will have shared ownership over the property.
Cons to Buying a Property in This Way –
The adult co-owner will have ownership rights and responsibilities over the MLS listing in Toronto which can limit your control over the property. You might have disagreements with the co-owner, leading to ugly conflicts and an overall difficult homeownership experience. Also, both parties will be responsible for mortgage payments and property upkeep, which can be a problem for you if the other party is not responsible.
Being 18 Doesn’t Automatically Make You Ready to Own a Home
Buying a house in Toronto at a young age sure can offer you many advantages. First, you get the chance to build equity sooner and will also have more time to benefit from property appreciation. Additionally, being a homeowner young can offer you a sense of stability and accomplishment, not to mention how proud your family and loved ones will feel.
But just because homeownership is a big achievement doesn’t mean you should rush into it once you turn 18. You should only buy an MLS listing in Toronto when you’re truly ready, financially and emotionally.
Being financially ready means having a stable income, a good credit score, and enough savings for a down payment and other home-buying costs. On the other hand, being emotionally ready means feeling confident in your homeownership decision, understanding homeownership responsibilities, and being prepared for this long-term commitment. Once all these boxes are ticked (age, financial, and emotional requirements), you can make the big leap into homeownership with confidence.
