Buying a first home remains a difficult task for many Quebec residents due to high real estate prices. However, financial professionals believe the main question is not only whether you can get a mortgage, but whether a person is ready for the long-term financial commitments that come with owning a home.
In brief
- Financial experts advise assessing not only income, but overall financial readiness to buy a home.
- Regular saving is considered one of the main signs of readiness.
- It is preferable to have a down payment larger than the minimum 5%.
- Before buying, it is recommended to pay off credit card debt.
- It is important to have a reserve for unexpected expenses after the purchase.
- A home should not turn into a source of constant financial stress.
What do financial experts advise?
Wealth management advisor Nicolas Karaoglanian believes that the decision to buy real estate should be based not only on the ability to obtain a mortgage loan.
In his view, there are several signs that a person is truly ready to become a homeowner.
Why is it important to be able to save money regularly?
The first step toward buying a home should be the habit of saving regularly.
The expert recommends:
- keeping a personal budget;
- planning the size of the down payment in advance;
- setting aside a certain amount each month.
He advises paying special attention to the FHSA program (a first home savings account), which allows you to save money while also receiving tax benefits.
The HBP program also remains a useful tool, allowing you to use part of your savings from an RRSP retirement plan to finance the purchase of a home.
What down payment is considered optimal?
Although legislation allows you to purchase property with a 5% down payment, specialists recommend aiming for a higher amount.
Considered optimal are:
- at least 10% of the home’s price;
- preferably 20% or more.
With a down payment of less than 20%, the buyer must obtain mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC), which increases the cost of the loan.
According to Karaoglanian, if even saving the minimum 5% proved extremely difficult, this may be a signal of insufficient financial readiness to buy.
Why do you need to get rid of credit card debt?
The expert considers having credit card debt one of the main warning signs.
The reason is simple:
- interest on such debts often reaches 19–20% per year;
- debt servicing reduces a family’s financial stability;
- getting a mortgage may become more difficult.
Ideally, credit card balances should be paid off in full every month.
Why is it important to calculate your budget in advance?
Before buying a home, specialists recommend analyzing your expenses in detail.
You should take into account:
- utility bills;
- transportation;
- food;
- leisure and travel;
- savings;
- future housing costs.
Banks usually follow a rule that housing costs should not exceed 30–35% of a family’s gross income.
However, the expert emphasizes that this is only a guideline, not a mandatory target.
What additional expenses are often forgotten?
After buying a home, costs appear that many buyers underestimate.
Among them:
- property transfer tax (“welcome tax”);
- home insurance;
- moving;
- buying furniture;
- home repairs and maintenance;
- unexpected breakdowns.
That’s why it’s important to have a financial safety cushion even before signing the deal.
Why you shouldn’t buy a home at the limit of your means
Even if the bank is ready to issue the maximum possible mortgage, that doesn’t mean you should use the entire available limit.
According to Karaoglanian, a future owner should ask themselves:
- will there be money left for travel;
- will the usual lifestyle be maintained;
- will there be an opportunity to rest and do the things you enjoy.
The main goal is not to become someone who works solely to pay the mortgage.
Supportive context
In recent years, real estate prices in Quebec have risen significantly, and buyers have to plan their finances much more carefully. At the same time, many government programs continue to help young families and those entering the housing market for the first time. Experts note that sound preparation often turns out to be more important than buying quickly.
What to do before buying your first home?
Financial advisors recommend:
- Create a detailed budget.
- Build an emergency fund for unexpected expenses.
- Pay off expensive consumer debt.
- Make the most of the FHSA and other support programs.
- Save a down payment above the minimum level.
- Make sure the mortgage won’t limit the family’s quality of life.
Frequently asked questions
Is a 5% down payment enough?
The law allows you to buy a home with 5%, but many specialists recommend saving more.
Do you need to close credit cards before buying a home?
Yes, it is advisable to pay off credit card debt in full.
What is an FHSA?
It is a special savings account for buying a first home with tax advantages.
Do you need to have a reserve after the purchase?
Yes. Homeownership involves regular and unexpected expenses.
Can you take the maximum mortgage amount the bank offers?
Experts recommend focusing not on the maximum, but on a payment level that is comfortable for the family.
Commentary
Against the backdrop of high housing prices, buying a first home is increasingly becoming not only a matter of income, but also of financial discipline. Today’s buyers must take into account far more factors than the size of the mortgage payment. Ultimately, a successful real estate purchase is determined not by how much the bank is willing to lend, but by how comfortably the family will be able to live after receiving the keys to their new home.
