Is buying a home on your mind? 4 things to think about

by | Feb 25, 2024 | Finance and Business, Home and Living

Becoming a homeowner can be exciting, but is it the best decision for your circumstances? Here are four steps to help you decide if homeownership is right for you:

  1. Consider what you can afford
    According to the Canada Mortgage and Housing Corporation, your monthly housing costs should not be more than 39 per cent or so of your gross monthly income. These costs include your mortgage payments, property taxes and utility costs such as heating and cooling. Review your budget to assess whether you can realistically take on these extra costs.
  2. Get preapproved for a mortgage
    Getting preapproved for a mortgage with your bank will tell you what amount you qualify for. It provides a benchmark you can compare with your budget. Keep in mind that the amount you are approved for doesn’t necessarily fit in your budget.

    Once you’ve done that, you can start looking for homes that are right for you and your finances. You can also use the Financial Consumer Agency of Canada’s free mortgage qualifier tool to see if you can qualify for a mortgage to buy a home based on your income and expenses.

  1. Remember all the other costs
    When you buy a home, you must pay for upfront costs in addition to your mortgage. Referred to as closing costs, these are one-time fees you pay to complete the sale. Examples include home inspection fees, legal fees, property tax adjustments and title insurance. Be prepared to spend between one and a half and four per cent of the home’s purchase price on these costs at the time you close on the home. And don’t forget ongoing expenses such as maintenance costs and insurance.
  2. Explore government programs and incentives
    The Canadian government has home buying programs and incentives. If you’re eligible, these can help you purchase your home:

    • Home Buyers’ Plan: You may withdraw up to $35,000 from your registered retirement savings plan tax-free to buy your first home.
    • First-Time Home Buyer Incentive: You may receive five or 10 per cent of your home’s purchase price for a down payment.
    • Home buyers’ amount: You may be eligible to receive a non-refundable tax credit of up to $1,500.
    • GST/HST new housing rebates: You may be eligible for a rebate for some of the tax you pay when buying your home.

Find more information to help you decide if buying a home is right for you at canada.ca/money

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