Posted on: June 25, 2025|By: Monica Orosz

Buying your first home is exciting, but it can feel overwhelming at times. There are many things to think about when you’re considering buying your first home. It is one of the most significant financial decisions you will ever make, which makes it one of the most stressful times as well. If you are considering homeownership but aren’t sure you’re ready to take the plunge, here’s our guide to determining if you’re prepared to be a homeowner.

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Buying Your First Home: Learn The Lingo

Save Your Down Payment

Buying Your First Home: Getting Pre-Approved

Before Buying Your First Home, Find Out How Much You Can Afford

Set Realistic Home Goals

Government Programs: Credits and Rebates

Buying Your First Home: Learn The Lingo

Before you make an appointment with your bank or mortgage broker, it’s a good idea to know some of the vocabulary you will hear during your meeting. Here’s a quick glossary of home-buying terms you should be familiar with:

Mortgage: A mortgage is a loan that you secure with real estate/property, which you pay off over time. You’ll be paying back the money you borrowed, plus interest, and eventually you’ll be mortgage-free. For a more detailed look at the types of mortgages available out there, check out our article on Mortgage Renewals in Canada!
Mortgage term: This is the length of time you’re committed to a mortgage rate, lender, and associated conditions. A mortgage can typically range from 10 to 30 years in length. Short-term mortgages are considered mortgages with terms of 10 or 15 years, while long-term mortgages usually last 30 years.
Down payment: A down payment is the amount of money you put towards the price of a home. Whatever you don’t put down is the amount you are borrowing. The amount that you have saved for your down payment will affect the type of mortgage you can qualify for:
- If you’re putting down 20% or more, that’s a conventional mortgage.
- If you’re putting down less than 20%, that’s a high ratio mortgage.
Amortization period: The amortization period refers to the length of time required to repay a mortgage in full. The amortization is an estimate based on the interest rate for your current term. If your down payment is less than 20% of the price of your home, the longest amortization you’re allowed is 25 years. Most first-time homebuyers typically choose the longest amortization period available.

Save Your Down Payment

The biggest hurdle for first-time home buyers is saving up for a down payment. The purchase price of your home determines the minimum down payment required. The absolute minimum down payment in Canada is 5% for homes that cost $500,000 or less. This is why a savings plan is essential, as it will help you set a target down payment goal. This is important because a larger down payment will decrease the amount you need to borrow for the home. Once you’ve figured out the down payment amount you can afford, a mortgage payment calculator can estimate what your monthly payment will be.

A mortgage calculator uses your input and a standard formula to calculate your monthly payment. The key factors that determine the monthly payment and interest payment are the mortgage amount, the term of the mortgage, and the interest rate. Online mortgage calculators are generally accurate; however, you’ll receive a more personalized result by consulting with your mortgage lender and obtaining pre-approval based on your specific income and credit.

Buying Your First Home: Getting Pre-Approved

Once you’ve saved up enough for your target down payment amount, the first thing you should do is get a mortgage pre-approval. Pre-approval gives you an idea of how much mortgage you may get. Contact your mortgage broker or your bank’s mortgage specialist first, before consulting a realtor.

Some online mortgage calculators can provide you with a rough estimate of your mortgage range. However, they provide only part of the bigger picture. A true mortgage pre-approval is a sophisticated process that depends on your credit score, a thorough analysis of your income, and the nature of your down payment, among other factors.

While you may be approved to buy the house, you want to buy it. Your mortgage lender should have a detailed look at your numbers because if they don’t feel the property you want is worth the price you’re willing to pay, they may decline to advance the funds you need.

Before Buying Your First Home, Find Out How Much You Can Afford

First-time home buyers are the most likely to have small down payments. Although the idea of extra costs makes homeownership sound unreachable, you should never skip a home inspection.

Buying a house without having it properly appraised is never a good idea. A home inspection will identify any current issues and pinpoint necessary repairs to be addressed in the future. Houses also develop problems over time, so you need to have savings to handle unforeseen maintenance. Those resources might be in the form of additional savings that you’ve set aside. Alternatively, you may set aside some of your monthly income to cover both routine and unexpected extra costs, such as property taxes, maintenance, and repairs.

Set Realistic Home Goals

While you may dream of buying a home, you also need to be realistic about what kind of properties you can afford. Your household income and personal monthly expenses will all play a significant part. On top of this, home costs like property taxes, condo fees, and heating and electricity bills will factor into the total amount you can borrow.

It’s essential to determine where you’ll be comfortable today and for the next five years. Consider whether or not you’ll be doing the following:

Marriage: Future engagement and wedding costs may be on your horizon.
Starting a family: Paying for daycare or staying at home to raise your kids.
Career: Possible change in positions or careers, starting a business.

Government Programs: Credits and Rebates

As a first-time home buyer, you’ll also want to be familiar with various programs that apply to your situation. Whether it’s a rebate you may qualify for or a tax-efficient way of funding your down payment, there are several government programs below that can help you potentially save some money:

The Home Buyers’ Tax Credit currently works out to a rebate of $750 for all eligible first-time home buyers.
The Canadian government’s Home Buyers’ Plan (HBP) allows first-time home buyers to borrow up to $35,000 from their RRSP for a down payment, tax-free.
If you qualify, land transfer tax rebates are available to first-time home buyers in the provinces of Ontario, British Columbia, and Prince Edward Island. There is also a land transfer tax rebate available for first-time home buyers in the city of Toronto.
If you buy your home before it’s built or if you substantially renovate an existing home, you may qualify for a rebate for a portion of the sales tax. The GST/HST new housing rebate amount for which you may be eligible depends on the purchase price of the home. You can only claim this if the net purchase price is $450,000 or less.

Buying your first home is one of the greatest accomplishments a person can achieve. It is the reward of careful planning and smart money management. When in the market, remember to go over your expectations and understand your limitations before signing on the dotted line. When you’re ready to take the plunge, talk to one of our isure representatives about home insurance options that suit your needs. Contact us today!