The Ontario Teacher’s Guide to Buying a House

TL;DR

• Buying a house as an Ontario teacher starts with understanding how lenders view your salary.
• Your employment status (permanent vs. occasional) is the biggest factor in mortgage approval.
• Getting pre-approved is your essential first step to set a clear budget and lock in a rate.
• Existing student debt will reduce how much house you can afford by affecting your debt ratios.
• Don’t forget to budget for closing costs like the Land Transfer Tax (LTT) and legal fees.

Welcome to Your Home-Buying “Syllabus”

Getting a teaching job in Ontario is a huge achievement. You have a stable, respected career that banks generally love. But the path from being a new teacher on the supply list to getting a permanent contract means your income history can be tricky for a lender to understand.

Your journey to buying a house in Ontario requires a special plan. This guide is your “syllabus”—a clear, simple roadmap that breaks down the unique mortgage rules and financial steps that apply to you as an Ontario educator.

Before You House Hunt: Get Your Mortgage Pre-Approval

Think of mortgage pre-approval as your permission slip to start house shopping. It is the single most important first step when looking for a house to buy.

Why is getting pre-approved so important?

1. It Sets Your Budget: It tells you the maximum amount a lender will give you. This prevents you from falling in love with a home you can’t afford.
2. It Locks Your Rate: When you get pre-approved, the lender often guarantees a specific interest rate for up to 120 days. This protects you if rates go up. And if rates drop, you get the better rate.
3. It Makes You Serious: Real estate agents and sellers take your offer much more seriously when you have a pre-approval letter in hand.

If you are ready to get started now, use our handy mortgage calculator to estimate your payments.

How Your Teaching Income Affects Your Mortgage Qualification

The biggest difference between one teacher’s mortgage application and another is the status of their employment contract: permanent vs. occasional (supply).

Lenders want one thing above all else: stable income they can count on.

Getting a Mortgage with a Permanent Contract (The Easiest Path)

If you have a permanent teaching position, the process is very straightforward.

Lenders will use your full base salary as the qualifying income from day one. You will simply need to provide a formal letter of employment from your school board confirming your position, salary, and start date.

Qualifying as an Occasional or Supply Teacher (The Two-Year Rule)

If you are a supply, occasional, or Long Term Occasional teacher, your job is generally seen as “variable income.” This makes the process a bit more complex, but certainly not impossible.

• Lender Rule: Most major lenders will require you to provide a minimum of two years of steady income history (T4s and Notices of Assessment).
• The Calculation: The bank will then take the average of your income from those two years and use that average as your qualifying income.

This is where working with a specialized mortgage agent truly helps. We know how to gather the right documents and present your income history in the best light possible to lenders, even when your pay grid is constantly changing.

What about maternity or parental leave?

If you are currently on maternity or parental leave but have a guaranteed contract to return to work, you can still qualify! Lenders will typically accept your full, pre-leave contract salary as your qualifying income, as long as you have a formal letter from your employer with a specific return-to-work date.

Student Loans and Your Mortgage: Understanding Debt-to-Income Ratios

You worked hard for your education, and that comes with student debt. The good news is that student debt does not stop you from buying a house. However, it does reduce the maximum mortgage amount you can borrow.

Student loan payments, along with any other monthly debt (car payments, credit card minimum payments), are factored into your debt-to-income ratio. However, student loans payments are fixed, so they may not impact your mortgage qualification as much as you think.

The Debt-to-Income (DTI) Ratios Explained

Lenders use two main ratios to check if you can afford the mortgage:

1. Gross Debt Service (GDS): This measures your housing costs (mortgage payments, taxes, heating, and condo fees) against your gross income. Lenders generally want this under 39%.
2. Total Debt Service (TDS): This adds all your other debt payments (student loans, car loans, etc.) to your housing costs. Lenders typically want this number below 44%.

Hot Tip #1: If you are actively saving for a down payment and carry other debts, focus on paying down revolving debt (like high-interest credit cards or unsecured lines of credit) first. Reducing those small but constant monthly payments will often free up more room in your TDS ratio than paying down a large, low-interest student loan.

Hot Tip #2: Call your student loan provider (usually OSAP) and ask them to reduce your payment to the minimum allowed. Do this 1 or 2 months before you apply for a mortgage. That way the loan payment is as small as possible, impacting your debt-to-income ratio less. Once you have the keys to your new home, you can start to tackle student debt at full throttle if you’d like.

Special Programs: Accessing Incentives for Homeownership

As an Ontario teacher, you may be eligible for general first-time buyer programs and specialized industry programs.

First-Time Home Buyer Perks (HBP & FHSA)

The Federal Government offers two excellent registered savings programs for first-time home buyers that can help you with your down payment:

• The Home Buyers’ Plan (HBP): This program allows first-time buyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plan (RRSP) to purchase a home. You have 15 years to repay it, starting two years after the withdrawal.
• Tax-Free First Home Savings Account (FHSA): This newer account is designed just for your first home. You can contribute up to $8,000 per year (up to a lifetime maximum of $40,000). Contributions are tax-deductible (like an RRSP), and withdrawals for a home purchase are tax-free (like a TFSA).

Frontline Worker & Essential Service Programs

Because teachers provide essential community services, many national lenders and credit unions offer special programs aimed at Frontline Workers or Essential Service Professionals.

While these programs do not change the core qualification rules (like the Stress Test), they can provide valuable benefits:

• Cashback: Some lenders offer up to $1,000 or $2,000 in cashback on closing.
• Rate Reductions: You may qualify for a minor rate discount compared to standard rates.
• Fee Waivers: Some application or appraisal fees might be waived.

A mortgage agent knows which lenders currently recognize teachers under these categories and can ensure you get every possible benefit.

Don’t Forget About Closing Costs

Saving your down payment is a major win, but many first-time buyers forget about the “extra” money needed on closing day. We recommend budgeting between 1.5% and 4% of the purchase price for closing costs.

Understanding the Land Transfer Tax (LTT) Rebate

One of the largest closing costs in Ontario is the Land Transfer Tax (LTT). This provincial tax is based on the value of the home you buy.

The good news? The province of Ontario offers a significant first-time home buyer LTT rebate.

• Provincial Rebate: If you are a qualified buyer, you are eligible for a rebate of up to $4,000 on the provincial LTT. This means for homes priced around $368,000 or less, you may not pay any provincial LTT at all!
• Toronto Tax: If you are buying a house in the City of Toronto, you will also pay a second, municipal LTT. Toronto offers its own separate rebate of up to $4,475 for first-time home buyers.

Other Key Closing Costs to Budget For

• CMHC Mortgage Insurance: If you put down less than 20%, you must pay for default mortgage insurance (like CMHC mortgage insurance). This cost is usually added to your mortgage amount, but the provincial sales tax (PST) on the premium must be paid in cash on closing.
• Lawyer Fees: You need a lawyer to handle the title transfer and mortgage documents. Budget at least $2,500.
• Home Inspection: A crucial expense (typically $400 to $700) to ensure the house is in good shape before you commit.
• Appraisal: In some circumstances, lenders will require an appraisal of the house. This is an out of pocket cost, ranging from $450 to $700.

Ready to Go from the Staff Room to Your Own Living Room?

Buying a house as an Ontario teacher is an attainable goal. Your reliable salary and strong employment record put you in a great position. The key is to address the specific challenges that come with your pay structure and to use all the government and lender programs available to you.

Let’s start with a conversation. Book a free call now, no strings attached. We’ll review your unique situation and build a home-buying plan designed just for you.