The Millennial’s Guide to First-Time Home Buying (It’s Possible!!)

What to know about embarking on home ownership, from navigating mortgage rules to finding a real estate representative

Home ownership. Two words that many millennials have been told are out of their reach. Mortgage rules designed to protect Canadians from becoming house poor make the process seem both expensive (it is) and overwhelming (it doesn’t have to be). But there is hope: 39% of adults aged 18–34 say they plan to purchase a property within the next two years—that’s more than other age groups. And while, yes, the process towards finally calling a home your own may take you longer to achieve than previous generations, it’s not impossible.

Go from long-time renter to first-time homeowner.

Step 1: Save those pennies

Saving for a down payment is the first step, and there are several ways to do it (without shaming your beloved avo toast!). First, talk to your bank about setting up a high-interest savings account or Tax-Free Savings Account (TFSA) with automatic deposits every paycheque—even a small amount adds up. If you come into an inheritance, your bank can help you navigate investments to grow that windfall. And, if available, there’s parental or partner help: While one third of adults aged 18–34 own a home, two thirds of them had financial help from their family. In Toronto, 47% of adults aged 20–34 live with at least one parent, another huge money-saver.

Step 2: Determine a mortgage plan

The next step is figuring out what exactly are you saving for, and how much you need to save. While the minimum down payment required in Canada on a property under $500,000 is 5%, those buyers are required to pay a mortgage insurance fee to the Canadian Housing and Mortgage Corporation (CHMC), since the down payment is less than 20 per cent of the purchase price. All buyers must also take a mortgage “stress test,” where the bank determines your financial stability against the Bank of Canada’s five-year interest rate forecast, to be sure you can still afford payments if rates suddenly skyrocket. Twenty percent down means no CHMC fees, but keep in mind that there are more costs beyond the down payment. Be prepared to have an additional $10,000–$15,000 on hand for lawyer fees, moving costs and more.

Step 3: Start looking

Once you’re financially prepared, the thrill of the house hunt begins—and that means it’s time to find a real estate representative to guide you through the process. They’ll seek out properties in your budget that fit your wish list, help you discover new neighbourhoods, explain the paperwork and real estate jargon and, eventually, put in the offer on the property of your dreams.

Step 4: Be patient

The real estate market fluctuates from city to city; how long it will take to find a home, put in an offer and have it accepted depends on supply, demand and timing. Buying a home is a complicated process and there’s plenty of lingo, people and paperwork to understand, such as closing costs, mortgage brokers and the aforementioned CHMC. Your real estate representative is there to explain everything—but buyers aren’t without responsibilities. The onus is on you to make sure you understand every step and signature. If you do run into issues with a real estate representative, know your rights.