10 Tips for First Time Home Buyers in Edmonton

Maple Crest Community is a wonderful place for families to buy their first home! Our community offers duplexes, detached garage single family homes, as well as attached garage single family homes to fit any budget! If you’re looking to buy your first home, we have a few tips and tricks to get you started! Here are Maple Crest Community’s top 10 tips for first time home buyers in Edmonton!

1. Understand Your Debt to Income Ratio

The first tip for buying a new home is to assess and understand any debt you might have. This ranges from unpaid credit cards to financing on cars or other large purchases. It’s important to work on paying these debts off before approaching a mortgage broker, as having debts before a mortgage will give you a higher interest rate as having debts is considered higher risk.

When talking to a mortgage broker, they will use two primary ratios to determine whether you are a viable candidate for a mortgage. The first, Gross Debt Service (GDS) calculates how much of your annual household’s income goes towards your housing costs – this can’t be over 39%. What this means is if your household’s income is $100,000 per year, your housing costs (principle, interest, taxes, and heat) could not exceed $39,000.

The other formula, Total Debt Service (TDS) calculates the percentage of your housing costs and other debts compared to your household income – this number can’t be over 44%. So if your household income is that same $100,000, the cost for your housing plus other debts cannot exceed $44,000. 

Tips for first time home buyers

2. Start Saving Your Down Payment

There are minimum down payment requirements in Canada. You will need to have a 5% down payment for your home for the first $500,000, 10% for any part of the purchase price over $500,000 up to $999,999, and if you are purchasing a home over $1 million in Canada, you will need to have a down payment of 20%. If you have a down payment less than 20% you will also be required to have a mortgage loan insurance premium. 

The idea of saving for a down payment can be intimidating, but as a first time home buyer you may be eligible for Canada’s first-time home buyer incentive. The program offers a shared equity mortgage with the Government of Canada, and it offers the home buyer 5 or 10% of the home’s purchase price to put towards a down payment. This incentive needs to be paid back after 25 years or after selling the home, but it does offer a leg up chance for getting your dream home!

3. Decide On Your Must-Haves 

Before you meet with home builders, sit down and create a list of the most important features your new home should include. This will help you stay focused when choosing a floorplan and ensure you stay within your set budget.  If hardwood flooring is important, you may not want to upgrade your countertops or appliances. On the other hand, if you want a larger sized house you may need to keep your flooring and other finishing touches at the introductory level.

4. Figure Out Your Buying Power

When you’re getting ready to buy a home it’s important to know your budget first before you start meeting with builders and looking at homes. It’s a wise choice to meet with a financial planner to discuss the best budget that won’t be a financial burden. Having a clear budget will ensure you can find a home that both meets your needs and is affordable. Your budget should not simply include your mortgage, but also include cars, utilities, property taxes, food, and any extras that you are not willing to give up. It’s important to consider everything when creating a budget, as you don’t want to end up mortgage poor. 

5. Ensure You Have All the Costs Accounted For

There are more costs to consider when buying a home than just the mortgage payments. Ensure you have the funds saved for moving fees, utilities set up, insurance, legal fees and taxes, as well as the other costs as an owner compared to a renter. As a homeowner you will be responsible for maintenance and all home renovation costs – however, if you’re buying a new construction home there will be little to no maintenance needed for the first few years!

6. Shop Around For Your Mortgage

You can request loan estimates from multiple mortgage lenders to find the best possible rates. Talk to multiple lenders and ensure you get the best possible costs, interest rates, and any other fee reductions. Once you’re sure who you want to work with for your home purchase, get a pre-approval letter. This will help you both stay on budget and show you’re a motivated home buyer when working with your builder team. 

7. Don’t Obsess Over Interest Rates

The right time to buy a house isn’t necessarily when interest rates are at their lowest. If you are looking at a 30 year mortgage, the interest rate is likely to fluctuate a lot throughout your time in the home. It’s more important to focus on other factors and make a careful decision about when the best time to buy a home is for you. The best time to purchase a new home is when you are emotionally and financially ready to start investing in your future. Buying a new home is one of the biggest decisions of your life, but once you qualify for a home that meets your needs it will be a fantastic investment for you and your family. 

8. Visit Show Homes

Even if you’re sure of who you want to work with for your brand new home, it’s a good idea to visit a variety of that builder’s show homes. This will give you a chance to see the different features that you would love to include in your home. If the home builder doesn’t have a show home that’s currently open in your preferred community, you can ask to tour a spec home or see photos of their previous builds.

9. Tour Your Home Step by Step

Your builder will likely give you a chance to tour your lot and construction site at different stages of the development process. Be sure to accept those offers and see your home every step of the way. This will ensure you’re involved in the process and can catch anything you’d like changed or updated. 

10. Get to Know the Neighbourhood

A final tip for buying a new home is to get to know your new neighbourhood! While your home is under construction, take tours of your new community, go for walks in the area, spend some time in the commercial spaces, and really get acquainted with the neighbourhood! Here are a few other Tips for Moving to a New Community we’ve put together.

Maple Crest Community is a wonderful community for first-time home buyers and established homeowners alike! If you’re looking to buy your first home, we highly recommend you take a tour of our wonderful show homes!