1. Save for a Down Payment (and More)
In Canada, the minimum down payment is 5% for homes under $500,000, but homes priced above that require higher percentages. Aim for at least 20% to avoid mortgage insurance (CMHC fees), and budget for closing costs like legal fees, inspections, and taxes.
2. Check First-Time Home Buyer Incentives
Canada offers several programs for first-time buyers, like the First-Time Home Buyer Incentive (shared-equity mortgage with the government) and the Home Buyers’ Plan (HBP) that allows you to withdraw from your RRSP for a down payment.
3. Get Pre-Approved for a Mortgage
A mortgage pre-approval gives you a clear budget and often comes with an interest rate hold, which can be a safeguard against rising rates. It also shows sellers you’re serious and prepared to buy, which is important in competitive markets.
4. Understand Your Credit Score
Your credit score affects your mortgage eligibility and interest rate. A score of 650+ is ideal, but anything over 600 should be acceptable. If your score is low, consider working on it before applying by paying down debt and avoiding major credit purchases.
5. Research Local Markets
Real estate prices vary widely across Canada. What’s affordable in one city could be out of reach in another, so it’s key to research and understand market conditions in your desired area. Knowing the market also helps you set realistic expectations and avoid overpaying.
6. Budget Beyond the Mortgage Payment
Homeownership comes with added costs like property taxes, utilities, maintenance, and insurance. Estimate these monthly expenses to get a realistic picture of what you can afford, as they can vary by region and property type.
7. Work with a Real Estate Agent
A knowledgeable agent can provide insight into the local market, guide you through the buying process, and help you find homes that meet your needs and budget. Choose someone experienced with first-time buyers and well-versed in your preferred area.
8. Consider Future Resale Value
Buying with resale potential in mind is wise even if you plan to stay long-term. Factors like location, nearby schools, public transit, and community amenities can influence how well the property retains or gains value.
9. Get a Home Inspection
A home inspection is crucial, especially for older homes. This step can reveal issues that may not be visible during showings, like structural damage or outdated systems, saving you potential headaches and unexpected expenses down the line.
10. Be Ready for Possible Bidding Wars
In popular markets, you may face competition and multiple-offer situations. Set a strict budget, decide on your “walk-away” price, and consider flexibility with conditions like closing dates to make your offer more attractive while staying within your financial limits.
These tips should help you start strong as a first-time buyer in Canada. Let me know if you want more info on any specific point!
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