Tips for first-time home buyers
Buying your first home is an exciting milestone. Whether you’re buying because you’re ready to put down roots or you’ve decided you need more space for a growing family, navigating the homebuying journey is far easier when you’re equipped with the essential knowledge of what the process entails. This guide provides tips and a step-by-step approach to help you navigate the homebuying process with confidence and ease.
CIBC
Feb. 19, 2025
4-minute read
Preparing for homeownership
Before you start your home search, it’s essential to have a solid understanding of your finances, mortgage options and the market you’re interested in. Begin by understanding your credit history, debt-to-income ratio, your savings and overall financial wellbeing. Understanding these key points can help guide you to an appropriate home that fits your needs while staying within your budget.
Understand your financial situation
Your comprehensive financial well-being is a key indicator of whether you’re ready to buy a home. It's essential to identify potential barriers, such as having too much debt compared to your income, which might suggest it's better to wait and improve your financial standing before making a purchase. A CIBC advisor can provide personalized insights and help you better understand your financial readiness, giving you the confidence to move forward when the time is right. They can help you evaluate the following financial indicators and guide you toward making informed decisions:
- Your current debt ratios: Are you juggling student loans, car payments, or credit card balances? Your debt-to-income ratio (DTI) is a helpful way to gauge how well you’re managing your financial obligations. To calculate your DTI, divide your total monthly debt payments by your gross monthly income.
- Your credit history: Are you staying on top of your bills or missing payments frequently? Lenders want to see a history of reliable payments when considering you for a mortgage, making a strong credit score essential for securing favorable loan terms. We recommend you aim for a credit bureau score of at least 650.
- Your current finances: A CIBC advisor can help you review your financial situation, considering your income, debts, and monthly expenses. They can help you understand how much you can comfortably afford to spend on a home without overextending your budget.
Understand first-time buyer incentives
There are several programs aimed at helping first-time home buyers get into a home. As you consider the financial impacts of homeownership, look into:
- Tax credits: The First-Time Home Buyers’ Tax Credit (HBTC) allows you and your spouse or common-law partner to claim a combined $10,000. At a 15% tax rate — the lowest income tax rate — the $10,000 claim equals a one-time $1,500 tax reduction. You can apply the whole $10,000 credit on your tax return, or share it with your spouse or common-law partner. This is a non-refundable credit and will reduce the amount of taxes you owe by $750. If you don’t owe income tax the year you buy the home, there’s no benefit to claiming the HBTC.1
- First home savings account (FHSA): The FHSA is a type of registered plan that’s designed to help you save for your first home, tax-free. Your contributions will be tax-deductible, like a registered retirement savings plan (RRSP). Your qualifying withdrawals will be non-taxable, like a tax-free savings account (TFSA)
- Federal programs: Federal programs like the Home Buyers’ Plan allow first-time home buyers to withdraw money from a registered retirement savings plan (RRSP) to put toward a home.2
Did you know? The Canadian government is deeply invested in helping younger Canadians buy their first home. To help support this dream, the government now allows 30-year amortization for first time-homebuyers and anyone purchasing a newly built home. The government has also increased the cap on insured mortgages from $1 million to $1.5 million, allowing more Canadians to buy homes with a down payment of less than 20%.
Get pre-qualified for a mortgage
Pre-qualification is an informal process that gives you an estimate of how much you can borrow from a lender based on your personal and basic financial information. You can use CIBC’s pre-qualification tool to get an estimate while you search for your home.
Keep in mind that pre-qualification is not a mortgage guarantee, so you will still need to complete the formal application process when you find the perfect home and are ready to buy.
Research and understand your market
Spend time researching the area where you want to buy. Look into average home prices, how long homes stay on the market, and what the neighbourhood offers in terms of schools, transportation, and amenities. A local real estate agent may have access to more listings using tools which can help you discover new listings as they hit the market in the areas you want.
Finding the right home
Once you’ve sorted out your finances, it’s time to find a home that fits your needs and lifestyle. As you consider the type of house you want, think about balancing your “must-haves” with “nice-to-haves” by creating a dream home wish list.
Create a wish list
When starting your home search, list what’s essential (e.g., number of bedrooms, proximity to work or schools) versus what would be nice to have but isn’t a deal-breaker (e.g., a large backyard, finished basement). This helps narrow your search and avoids wasting time visiting properties that don’t meet your requirements.
Once you have a comprehensive list, rank the features by importance. For example, if you have a growing family, more space might be a priority over a fancy kitchen. Keep your list handy when viewing homes so you can objectively evaluate each property based on your priorities.
Work with a real estate agent
A seasoned real estate agent can provide expert guidance and negotiate on your behalf. They have insider knowledge of the market, access to off-market listings, and can connect you to others who can help support you through different aspects of the journey (e.g. a real estate lawyer). Having an agent in your corner is especially critical if you’re moving to a different province. An agent can help you understand local regulations and market dynamics that might be difficult to navigate independently.
To find the right agent, read reviews, ask for recommendations from friends and family, and schedule interviews with prospective agents to ask questions before you agree to work with them. Like interviewing candidates for a job, you may need to speak with multiple agents before you find the right one to guide you on your homebuying journey.
Attend open houses and viewings
Open houses are a great way to get a feel for what you like and don’t like without the pressure of seeing a house alone with your agent. When attending open houses, look beyond the staging and focus on the home’s structure and layout. Examine the condition of the walls, floors, and ceilings, and note any potential issues such as water damage or outdated electrical systems.
Don’t hesitate to ask the listing agent about the home’s history, maintenance, and recent repairs or renovations. Inquire about the age of major systems like the roof, HVAC, and plumbing, as these can impact future expenses and may be leverage for you to negotiate with during the purchase process.
Resources
Ready to take the next step toward homeownership? Our comprehensive First-Time Home Buyer’s Guide provides detailed, actionable steps to navigate the process with ease—from assessing your finances to closing the deal. Download the guide today for valuable insights and a roadmap to make your dream home a reality.
Download the Homebuyer's Guide (PDF, 3.70MB) Opens in a new window.
