The time has come. You’ve started considering the possibility of buying a home and are eager to begin the process. Making a home purchase is one of the most important and biggest investments you’ll ever make – and it comes with some key considerations too. To help you along the way, we’ve listed some good indications that you’re ready to take the leap.
1. You have a secure job with steady income
If you’re serious about buying, it's important to have a stable job with a steady income. This means having a reliable and consistent stream of money coming in, whether you work full-time, on commission, or you're self-employed. Your income, job stability, and credit score are all factors that lenders will look at when deciding if you qualify for a mortgage and how much you can afford to borrow.
2. You have enough saved up to make a down payment
Since buying a home is a major financial decision, you have to assess whether you're financially ready. If you can make a down payment of at least 5% of the purchase price of a home, then you’re likely ready to continue the process. In Canada, the minimum down payment requirement is between 5% and 19.99% of the purchase price, and if your down payment falls within this range, you'll need to get CMHC insurance. This insurance option allows more people to enter the housing market with less money down, which can be a great opportunity for first-time buyers.
It's also essential to budget ahead for additional expenses like closing costs, property taxes, and maintenance. The more financially-prepared you are, and the more you can put down for a down payment, the lower your monthly mortgage payments will be. Calculate your monthly mortgage payments and discover what you can afford using our mortgage calculator.
3. You have little to no debt
Clearing your credit card debt and paying down any outstanding loans is one more step you can take to ensure you’re ready to make a home purchase. Your debt-to-income ratio is a major indicator that lenders consider when reviewing your mortgage application. Eliminating your debt will also give you the financial stability to take on the additional expenses of buying a home such as property taxes, closing costs, insurance and furnishing.
4. You’re able to afford the home you actually want
You don’t want to rush into a home purchase simply because you can afford the down payment and want to enter the market. Before making a purchase, it’s important to set realistic expectations of the kind of home you want and the kind of home that’s within your budget. Getting pre-approved for a mortgage will help you make an informed decision by giving you a clear view of your affordability with the down payment you’re able to make. This insight will also inform your home search and make it easier for you to visit homes that are well within your budget and personal preferences.
If you can answer “yes” to all of these signs, then a great next step is learning what you can afford and getting pre-approved for a mortgage. At Homewise, you can apply online in just five minutes and one of our expert Mortgage Advisors will get in touch and get you started on your home buying journey.
