Nov 7, 2026
Only 18% of Canadians aged 18 to 34 feel confident navigating every financial aspect of buying a home. This is according to a recent Zown realty survey, conducted by Angus Reid. Younger respondents were particularly uncertain about saving for a down payment and ongoing ownership costs, with 19% identifying each as an area of low confidence.
The survey also found that 18% lacked confidence in determining how much home they could afford, while 14% were unsure which homebuyer incentives they qualified for. Closing costs were another knowledge gap, cited by 10%.
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Ryan Gubic, a certified financial planner (CFP) at MRG Wealth Management, told Money.ca that prospective buyers need to distinguish between what a lender will approve and what they can comfortably afford.
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“A mortgage preapproval tells you what amount a lender will offer you; your household budget tells you what you can comfortably afford, which is often a different number,” said Gubic.
Why buying a home remains financially challenging
Looking at the Zown survey and the broader economic picture, planning is complicated. On October 28, the Bank of Canada raised its overnight policy rate by 0.25 percentage points to 2.5%. It expects inflation to remain above 3% through much of 2027, partly because of higher energy and import costs.
Statistics Canada’s latest Consumer Price Index data showed prices were 3.1% higher in September than a year earlier. Shelter costs rose 1.8%, while transportation costs increased 8.4%.
Meanwhile, Canada Mortgage and Housing Corporation (CMHC) expects housing demand to remain subdued in 2026, citing high borrowing costs, modest income growth and economic uncertainty. It anticipates gradual improvement in 2027 and 2028.
For buyers, affordability depends on more than home prices or mortgage rates. Income, existing debts and the costs of owning a particular property all matter.
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1. Know what you can actually afford
Start with your monthly take-home pay and work backwards, accounting for living expenses, debt payments and savings goals.
“When determining your housing budget, it’s important to include all ownership costs, not just the mortgage, so items like property tax, utilities, insurance, repairs, etc,” Gubic advised.
Federally regulated lenders must apply a mortgage stress test. You must qualify at the higher of 5.25% or your contracted mortgage rate plus two percentage points.
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Lenders also generally use two affordability ratios:
- Gross debt service (GDS): Housing costs, including mortgage payments, property taxes, heating and 50% of condo fees, should generally stay within 39% of gross household income.
- Total debt service (TDS): Housing costs plus other debt payments, such as car loans and credit cards, should generally stay within 44% of gross income.
These are lending guidelines, not personal spending targets. Budget for what you can comfortably afford after everyday expenses and savings.
Gubic also recommends considering whether your budget could handle higher mortgage payments at renewal as interest rates change.
2. Understand the full cost of buying
For eligible buyers, the minimum down payment is generally 5% on the first $500,000 of a home’s purchase price and 10% on the portion above $500,000 up to $1.5 million. Homes priced at $1.5 million or more require at least 20% down.
Putting down less than 20% generally means paying mortgage default insurance, adding to your borrowing costs.
You’ll also need to budget for closing costs. The Financial Consumer Agency of Canada estimates these can amount to 1.5% to 4% of the purchase price. Expenses may include legal fees, land transfer tax, inspection and appraisal fees, title insurance and property tax or utility adjustments.
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First-time buyers may be able to reduce some costs through federal programs:
- First Home Savings Account (FHSA): Eligible buyers can contribute up to $8,000 annually, to a lifetime maximum of $40,000. Contributions are generally tax-deductible, and qualifying withdrawals are tax-free.
- Home Buyers’ Plan (HBP): Eligible buyers can withdraw up to $60,000 from their RRSPs towards a qualifying purchase. Withdrawals generally need to be repaid over 15 years.
If eligible, you can use both programs for the same qualifying purchase. Some buyers may also qualify for the federal first-time home buyers’ GST/HST rebate or provincial and municipal land transfer tax rebates.
3. Prepare for the costs after closing
Your mortgage payment is only one part of your monthly expenses. You also need to add property taxes, home insurance, utilities and maintenance to your budget. Condo buyers should account for strata fees, increases and potential special assessments.
Gubic recommends saving separately for the down payment, closing costs, moving expenses and items you’ll need after moving in. He advises keeping an emergency reserve fund rather than using every available dollar to complete the purchase.
Before buying, ask for recent utility bills and review the property’s maintenance history. For a condo, examine the corporation’s financial statements and reserve fund study to understand its financial position and potential repair costs.
Close the confidence gap before making an offer
Calculate your down payment, closing costs and expected monthly ownership expenses before viewing properties. Check which programs you qualify for and keep an emergency fund rather than putting every available dollar into the purchase.
A mortgage pre-approval tells you how much a lender may be willing to lend. It doesn’t tell you whether you’ll comfortably afford the home once the other bills arrive. Understanding both sides of the equation can help you find a realistic path toward homeownership.
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Steven Brennan is a freelance finance writer based in Vancouver, BC. He holds a BA and an MA from Maynooth University, Ireland. His work regularly appears at Canadian Mortgage Trends, Lowest Rates, Loans Canada and other Canadian and U.S. brands.
