How to Buy a House in Nova Scotia in 2024?
On April 7th, 2022, the federal budget plan introduced a new anti-flipping tax. This levy may apply to individuals who own a property for less than a year. If you acquire a primary residence and sell this property for non-exempt reasons, you may lose your Principal Residence Exclusion.
The proposal also plans to increase taxes on investment property if you sell them within one year. You will no longer be eligible for the 50% capital gains discount and must pay taxes on 100% of the profits.
What You Should Know
- Make sure to have a good financial foundation before buying a home.
- Pre-qualify for a mortgage before finding a real estate agent.
- Make sure you have a list of must-have and good-to-have criteria for your home.
- In competitive housing markets, you may need to waive certain conditional offers.
How to Buy a House in Nova Scotia in 2022
There are a few things you will need to do before you can shop for homes in Nova Scotia. Many people don't realize you need to lay a financial foundation before the process starts. This can take years to save up for a down payment and build your credit score. However, once you've established a good foundation, you can finalize the process in a matter of weeks. Our step-by-step guide will take you from start to finish. Continue reading to learn what you need to know before buying a house in Nova Scotia.
Step One: Save For a Down Payment & Closing Costs
Your home down payment is a sum of money that you must contribute towards buying a home. It's the percentage of the total home purchase price and can be as low as 5%-10%. The remaining amount required to buy a home is typically financed through your mortgage lender in Nova Scotia. However, you'll also need to factor in closing costs in your home purchase expense. These are mentioned more in step five. To understand the total amount of savings required to buy a home in Nova Scotia, we've created a table based on the median home prices in each region.
| City | Average Price (2021) | Estimated Down Payment | Total Savings Required (Including Closing Costs) |
|---|---|---|---|
| Halifax | $560,237 | $31,023 | $47,620 |
| Sydney | $227,718 | $11,386 | $18,217 |
| Truro | $200,000 | $10,000 | $16,000 |
Programs to buy a house in Nova Scotia
There are many first-time home buyer incentives in Nova Scotia. These programs provide you with additional loans or rebates to help fund your down payment. The most popular program is the down payment assistance program. This provides eligible applicants with an interest-free loan up to 5% of your home purchase price. Additional federal programs to finance your down payment include the RRSP Home Buyers' Plan or your TFSA investments (within your TFSA contribution limit).
Step Two: Build Credit Score & Income Stability
Next, mortgage lenders want to predict your ability to make monthly mortgage payments. They assess this based on your credit score and income stability. Having a good credit score shows you have healthy financial habits and can handle debt payments. Although a minimum credit score of 600 is required to get a mortgage in Canada, you'll get the best interest rates with a score over 850. You can use a free tool to check your credit score.
Buying a house in Nova Scotia with bad credit
If your credit score is below 600, you may still be able to get a mortgage from a B- Lender in Nova Scotia. However, you'll likely have to pay a higher interest rate and put down a larger down payment. Lenders may also require you to purchase mortgage insurance, which protects the lender if you can't make your mortgage payments. You can do a few things to improve your credit score before applying for a mortgage. First, make sure you pay your bills on time and have no late payments on your credit report.
Aside from your credit score, lenders also look at your income stability. They compare your income with housing-related expenses such as a mortgage, home insurance, and property tax payments. This comparison is known as the debt service ratio, which shows the percentage of your income that goes towards these payments. Mortgage lenders require no more than 35% of your income making mortgage payments. However, if your monthly income fluctuates, the ratio might be lower. If you're a business owner or freelancer, you may need a self-employed mortgage.
Step Three: Check your Affordability
Lenders will then use the above factors to calculate how large a mortgage you can be trusted with. The best way to determine this yourself is to use a mortgage affordability calculator. If you want to afford a more expensive home, there are three levers to pull:
- Increase your income
- Decrease your mortgage interest rate
- Buy a home in a region with lower property tax rates
Step Four: Determine Where to Buy
Now the exciting part begins! You can start to decide the high-level picture of where you want to buy a home in Nova Scotia. Below, we have created a table to help compare different cities in Nova Scotia.
| Halifax | Sydney | |
|---|---|---|
| Description | The province's capital, Halifax, is located in the middle of Nova Scotia's east coast and is a major seaport that overlooks one of the world's largest natural harbours. | Sydney is located on the easternmost tip of Cape Breton Island. It is Nova Scotia's second-largest urban center and is known for the beautiful harbour, known as Spanish Bay. |
| Population (5-year growth) | 439,819 (26.1%) | 30,960 (2.6%) |
| Walkability Score | Somewhat Walkable (63%) | N/A |
| Recommended Neighbourhoods |
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Afterwards, you can begin to narrow down on a neighbourhood within your city selection. Some things you'll want to keep in mind when selecting a neighbourhood include:
- Amenities in the area
- The size of the neighbourhood
- Cost of living in the area
- Proximity to work or schools
Step Five: Estimate Closing Costs
When you buy a home in Nova Scotia, you'll need to pay closing costs. This is the cost of finalizing the purchase of your home. Closing costs include legal fees, title insurance, and property taxes. The average closing costs in Nova Scotia are about 1–2% of the purchase price of your home. You can estimate your closing costs by using a closing costs calculator. This will give you an idea of how much you'll need to save before buying a home.
Step Six: Get Pre-Approved for a Mortgage
The final step before buying a home is to get pre-approved for a mortgage. This means that the lender has assessed your financial situation and agrees to give you a mortgage up to a certain amount. This process usually takes a few weeks, so starting early is a good idea.
To get pre-approved, you'll need to provide the lender with:
- Your credit score
- Your income and employment information
- Your assets and debts
- Information about your housing situation
Once you have all this information, the lender will give you a pre-approval letter. This letter shows that you're a serious buyer and that the lender is willing to provide you with a mortgage.
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Step Seven: Find a Good Real Estate Agent
Once you've found the right mortgage, it's time to find an excellent real estate agent. Real estate agents are experts in the housing market and can help you navigate the buying process.
When looking for a real estate agent, ask for referrals or read online reviews. You should also meet with multiple agents and ask them questions about their experience and how they work. Although we have a complete guide on finding the best real estate agent, some things to ask include:
- How many houses have you sold in the past year?
- What is your commission rate?
- Do you have any preferred lenders?
- What kind of support do you offer buyers?
Step Eight: Determine your Purchasing Criteria
Before you start looking at houses, you'll need to inform your real estate agent of your criteria. The more specific you are, the better they will show you homes that interest you. We recommend having sections of must to have and nice to have criteria. Some things to consider include:
- The size of the house
- The number of bedrooms and bathrooms
- The type of neighbourhood
- The age of the house
- The price range of the house
- The size of renovations required
Step Nine: Make Offers
With the criteria from above, your agent will take you to multiple home showings. Once you've found the perfect house, it's time to make an offer. This is a negotiation between the buyer and seller and can be stressful to navigate, especially in Nova Scotia housing markets where the average home sells after 28 days on market.
To make your offer more competitive, you can:
- Be prepared to offer a higher purchase amount
- Waive the inspection or mortgage contingency
- Agree to close sooner
How to buy a house privately in Nova Scotia
If you're looking to buy a house privately in Nova Scotia, there are a few things you need to keep in mind. First, you'll need to find a seller willing to sell their home without using a real estate agent. This can be difficult, as most sellers want the help of an agent to get the best price for their home.
Additionally, be prepared for a lot of paperwork. Buying a house privately means that you'll have to handle all the negotiations and paperwork yourself. If you're comfortable with all of this, buying a home privately can be a great way to save money on commissions and fees.
Step Ten: Finalize the Purchase
Once the seller accepts the offer, it's time to finalize the purchase. This includes signing all the paperwork, getting a home inspection, and arranging for the moving truck. The closing process usually takes about 30 days. You'll need to make sure all the paperwork is in order during this time. Congratulations! You've now bought a house in Nova Scotia.
The Bottom Line
Buying a house is a big decision, but with the right information and planning, it can be a smooth process. We hope this article has given you all the information you need to buy a house in Nova Scotia in 2022.