Illustration by Diana Bolton
Toronto couple Darius and Sophia knew they’d struggle to secure a competitive mortgage rate for their first home.
That’s because Darius, a physiotherapist with an early-career annual income of $100,000, was self-employed, so lenders would want to see two years of steady income to prove he could make the mortgage payments.
Luckily Sophia, a registered nurse earning $80,000 a year, was a salaried employee. The couple, both 28, spent years saving and investing to buy their first home.
Mortgage lenders assess risk by looking for stable and easily verifiable income. Self-employed borrowers, by contrast, often have fluctuating income, making it harder for banks to assess repayment capacity.
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As a self-employed borrower, Darius was asked for additional documentation, including bank statements, T4s and multiple notices of assessment to demonstrate stable income.
The process wasn’t surprising, but Darius admitted that he was “definitely annoyed.”
Long before they made an offer, the couple realized that increasing their down payment could make them more attractive to lenders by cutting down the amount they would need to borrow. Darius first came across the idea through his own research. Then his aunt, a retired mortgage specialist, reinforced it, as did several mortgage brokers he spoke with.
Darius admitted to being “a little bit nervous” about the lending process. “We were trying to get a higher down payment so that there was more collateral for the bank to accept us and give us a good rate.”
That insight shaped their buying strategy. In early 2024, the couple purchased their $675,000 one-plus-one condo in Scarborough, a suburb in the east end of Toronto, putting down $290,000 – 43 per cent of the purchase price.
The large down payment stemmed from eight years of disciplined saving, favourable market returns and a $190,000 family loan they are actively repaying.
Both started saving soon after finishing school, long before they knew when they’d buy. “I always had the intention of trying to purchase something as soon as possible,” said Darius.
The couple, who are also saving for a wedding, invested in both a tax-free savings account and a first home savings account, buying primarily in exchange-traded funds through their Wealthsimple accounts.
“It’s internationally diversified,” said Darius, adding that he likes the simplicity of the process.
He estimates those investments generated annual returns of between 7 per cent and 13 per cent. When it came time to withdraw money for their down payment, the couple didn’t drain their accounts entirely. Instead, they worked backward, keeping three to six months of expenses for an emergency fund.
“We put that aside as untouchable money,” Darius said.
They also borrowed money from Darius’s parents, which helped them reduce how much they needed to borrow from the bank. “His parents had money that wasn’t being used,” Sophia said. “They gave it [to us] to lower our loan, and we’re just paying them back the same way we pay the bank.”
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The loan also came with clear conditions: It had to be used for buying a home, not for discretionary spending.
Sophia and Darius chose Scarborough as a middle ground between work, family and affordability, close to highways, transit and a mall. To make their offer competitive, they agreed to close within three weeks, a faster timeline than usual.
Turning around the financials and legalities that quickly was stressful, the couple added.
Darius and Sophia initially got a five-year fixed-rate mortgage at 4.519 per cent with one of the big Canadian banks. At the time, in early 2025, variable rates were more than a percentage point higher.
A year and a half later, after a string of interest rates cuts, they ran the numbers again and decided to switch. Breaking their mortgage cost them roughly $9,000 but the math still worked.
“We realized that even with the penalty, we’d make the money back,” Sophia said.
They moved to a five-year variable mortgage priced at prime plus 1.25 per cent and negotiated incentives to stay with the same lender. They now pay about $2,600 a month to the bank, using an accelerated weekly payment schedule that directs more money toward principal and could shorten the 25-year amortization.
“If I could have foreseen the future, we’d have gone with the variable,” said Darius.
The costs
- Purchase price: $675,000
- Down payment: $290,000 (43%)
Closing costs:
- Home inspection: $0
- Legal fees: $950
- Moving: $500
- Renovations: $500
- Furniture: $1,200
- Mortgage switch: $9,000
Monthly ongoing costs:
- Mortgage: Approximately $2,600
- Home insurance: $50
- Utilities: $100
- Condo fees: $600
Darius’s advice: “You need to set the goal and the intention. You don’t magically buy a home one day. You have to shove in everything you can.”
Some details may be changed to protect the privacy of the people profiled. Are you a first-time homeowner who would like to share their story? Send us an e-mail.
