This is a question first-time buyers ask themselves when they find the perfect starter home in the Cowichan Valley. It’s in the right neighbourhood, at the right price, and it shows pride of ownership. All the things a first-time buyer wants in a house or a condo. They can afford the payments but haven’t been able to save a down payment. Luckily, Canadian homeowners have a number of options available to them.

Did you know that the minimum down payment is only 5% of the purchase price? That means a $350,000 home requires only $17,500 to qualify for an insured mortgage. Based on the Realtor.ca affordability calculator, you would need an income of $55,000 to afford the mortgage on this example.

The Government of Canada offers an incentive for first-time buyers. A buyer can receive 5% of the purchase price for a resale property or 10% of the price for a new home. This can significantly reduce payments by reducing the mortgage needed to purchase. The incentive is an equity-sharing arrangement, which means the government has an interest in the property and the loan must be repaid when it is sold.

Through the Home Buyer Plan, regular deposits to an RRSP are a terrific way to save money and taxes, too. Your contributions are deductible from your taxable income so you’re able to save and receive a refund at the end of the year. Saving $300 per month for three years and depositing the tax refund to the RRSP at the end of each year would add up to a down payment for a $350,000 home.

Gifts from parents or relatives can be a helpful way to get started. It’s also possible to borrow the down payment from sources other than the mortgage provider. A personal line of credit can be useful in these types of circumstances if the overall debt service ratio is within allowed limits.

If you’re thinking of buying a home, it’s a good idea to defer large purchases that will affect your credit and debt servicing ratios. For example, buying a car before a purchase – even if you’re in escrow – can affect your debt ratio and cause the lender to withdraw the mortgage offer. The best approach is to wait until you have moved into your new home before shopping for big ticket items or using your credit cards for travel, etc.

With some planning and foresight, a new home might be within your reach already!

Are you a first time buyer? Want to talk about your next real estate transaction? Contact Lorne Gait and Morgan Fisher today.