Buying your first home is a major life milestone—and likely one of the biggest financial decisions you’ll ever make. From saving
for a down payment to protecting your investment, a little planning can go a long way. Here are five smart steps to help you navigate the homebuying journey with confidence.
1. Save for your down payment.
For many first-time buyers, the down payment is the biggest hurdle. While aiming for 20% helps you avoid mortgage loan insurance, even a slightly larger down payment can reduce your long-term costs. That said, don’t drain your savings completely – keeping an emergency fund is just as important.
Consider where to grow your savings – an investment account such as an FHSA, TFSA, or RRSP is often the best choice. Your financial advisor can help you create a savings strategy that balances your short-term needs with your long-term goals, including how much to save each month.
2. Understand how much you can afford.
Before you start browsing listings, take a close look at your budget. The true cost of homeownership goes beyond your monthly mortgage. You’ll also need to factor in:
- Property taxes
- Homeowners association (HOA) fees (if applicable)
- Home insurance
- Utilities and maintenance
- One-time costs like land transfer taxes, legal fees, a home inspection, and moving expenses
Your financial advisor can help you get a clear picture of what you can comfortably afford, without stretching your budget too thin.
3. Leverage grants and first-time homebuyer programs.
There are several government programs designed to make homeownership more accessible:
- Home Buyers’ Plan (HBP)1: Withdraw up to $35,000 from your RRSP (or $70,000 as a couple) to put toward your down payment. The amount isn’t taxed as income if repaid within 15 years.
- First Home Savings Account (FHSA)2: Contribute up to $8,000 per year (to a $40,000 lifetime max). Contributions are tax-deductible, and withdrawals – including investment growth – are tax-free when used to buy your first home.
- Provincial and municipal programs: Depending on where you live, you may qualify for additional support, such as land transfer tax rebates, energy-efficiency grants, or first-time homebuyer tax credits.
A mortgage pre-approval gives you a clear idea of how much you can borrow and locks in your interest rate for a set period. It also shows sellers that you’re serious—an advantage in competitive markets.
With pre-approval in hand, you’ll be able to shop with more confidence and avoid surprises when it’s time to make an offer.
5. Protect your investment with the right insurance.
Buying a home is one of the most significant investments many Canadians will make – but it’s only one piece of a broader financial picture. Protecting that investment means safeguarding not just your home, but the savings and investments that make it possible.
- Income protection – Disability or critical illness coverage can help maintain contributions to your TFSA, RRSP, or other investments if your ability to work is affected.
- Safeguarding savings and investments – Maintaining an emergency fund and keeping a diversified investment plan that ensures that your down payment, retirement savings, and other long-term investments continue to grow no matter what.
- Retirement planning – A home is a key part of financial security, but it shouldn’t derail retirement goals. Regular contributions to retirement accounts, alongside your home savings, help ensure a comfortable financial future.
Did you know?
Canadians who plan for both short-term goals like homeownership and long-term goals like retirement are more likely to stay financially resilient, even during uncertain times.
The bottom line?
Buying your first home is an exciting step toward building your future. With the right preparation, financial guidance, and protection in place, you can turn that first house key into the foundation of lasting financial security.
Sources:
- The Home Buyers' Plan - Canada.ca
- First Home Savings Account (FHSA) - Canada.ca
