Dear Renters: Here’s What You Should Know Before Buying a Home
Let’s be honest, renting in Canada these days doesn’t come cheap and if you’ve been thinking about buying your first home, you’re not alone. Regardless if the reason to buy is to build equity, settle down or just stop paying someone else’s mortgage, the idea of homeownership is tempting. But the most common questions that I am getting from my clients right now remains to be “is now the right time for you to make that leap?”
I thought of putting this article together, to somehow talk to those renters who’s been browsing listings on weekends, calculating down payments and wondering if homeownership is possible for them NOW. I will try to break down what’s happening in the market right now and more importantly, help you figure out if you’re financially ready.
What’s Happening in Canada’s Housing Market Right Now?
Over the past year, housing affordability in Canada has slightly improved. Thanks to easing mortgage rates and slower price growth in some markets, owning a home is a little more within reach than it was during the peak of rate hikes. However, affordability is still a major challenge, especially in big cities like Vancouver, Toronto and increasingly Calgary.
The Bank of Canada has also started to ease interest rates, which might sound like great news if you’re mortgage-hunting. Lower rates can reduce your monthly payments, but if you’re a first-time buyer, you still need to consider that you still need to qualify under the current stress test, the mortgage stress test remains in place—which means you’ll still have to qualify as if your rate was about 2% higher than what you’d actually pay.
On a positive note for first-time buyers, the landscape is shifting in your favour, but cautiously. Some recent updates include:
The insured mortgage limit has increased to $1.5 million in select high-priced markets, allowing you to buy with as little as 5% down.
30-year amortization is now available for first-time buyers purchasing new builds, which can ease monthly payments.
These changes and programs might make homeownership more accessible, but don’t mistake them for shortcuts. Buying a home is still a big commitment, you still need to understand the long-term financial responsibility that comes with buying. And my reminder - it pays to be prepared.
Rent vs. Buy: It’s Not Just About the Math
In some cities, like Winnipeg, for example, the difference between renting and owning is minimal. But in other places, rent might still be significantly cheaper than a mortgage payment, especially when you factor in property taxes, maintenance and insurance.
What matters most is your situation, not just the numbers on paper. Here are a few questions to help you assess whether you’re ready:
How stable is your income? Lenders want to see consistent income. If your job is new, contract-based, or inconsistent, you may face more hurdles during the mortgage approval process.
How much have you saved for a down payment? The minimum down payment is 5% for homes under $500,000—but the more you can put down, the better. A 20% down payment can help you avoid CMHC insurance costs.
Can you afford closing costs? Closing costs can run anywhere from 1.5% to 4% of the home price. That includes legal fees, land transfer taxes, home inspections and more.
What’s your credit score? A good credit score not only boosts your chances of getting approved—it can also get you better interest rates. A score of 680+ is often considered strong for mortgage approval.
Do you have an emergency fund? Life happens. If buying a home wipes out your savings, you could end up “house poor” and stressed. Ideally, you should have at least 3–6 months' worth of expenses saved after closing.
Are you carrying a lot of debt? Your debt-to-income ratio plays a big role in what you qualify for. If you’re juggling credit cards, car payments, or student loans, now might be the time to tackle those first.
Are you mentally ready? Homeownership isn’t just a financial commitment, it is also a lifestyle shift. Are you ready to stay in one place for a few years? To take on maintenance, repairs, and possibly renovations?
So, what am I really trying to say? Should you buy or wait? Like what I always tell to my clients - there’s no one-size-fits-all answer here. For some renters, now might be the perfect time to buy—especially if you’ve saved up, have stable income and found the right opportunity. For others, waiting a little longer to strengthen your finances might be the smarter move. It boils down in determining your current financial situation.
The key is being honest about where you stand today. Owning a home can be empowering, but only if it doesn’t leave you financially stretched too thin.
Homeownership is still possible in Canada, but it’s not something to rush into because of FOMO or pressure from others. Take your time. Do the math. Check in with your goals.
I hope this helped you feel a little more informed and a little less overwhelmed. Remember, homeownership is a journey, not a race. And if you’re unsure? That’s totally okay. That is why licensed financial advisors/mortgage brokers like me are here, I can be your financial bestie, I’d love to help you sort through the numbers, emotions and decisions that come with this big step. I’d be happy to be a part of your financial planning and your homeownership journey.
Cristina
Disclaimer: This article is intended for informational purposes only and does not constitute professional financial advice. Always consult with a licensed mortgage broker or financial advisor to evaluate your unique situation.
Resources:
Housing Market Outlook 2025 – CMHC
Canada Mortgage and Housing Corporation (CMHC): Buying a Home
Financial Consumer Agency of Canada: Buying a Home
