Every year, thousands of Canadians buy their first home — and many make the same preventable mistakes. Here are 15 common ones, with example costs where they can be worked out.
Mistake 1: Not getting pre-approved before shopping
Cost: Weeks of wasted time + potential lost deposits
Shopping without a pre-approval means you do not know your actual budget. You might fall in love with a home you cannot finance, or waste months looking in the wrong price range.
| Pre-approval gives you | Without pre-approval |
|---|---|
| Confirmed budget based on your actual income, debts, and credit | Guessing based on online calculators |
| A rate hold (often 90 to 120 days) protecting you from rate increases | Exposed to rate changes until you apply |
| Stronger offer — sellers take pre-approved buyers more seriously | Sellers may prefer competing offers with pre-approval |
| Identifies credit or documentation issues early | Surprises surface during conditional period |
What to do: get pre-approved before you start looking seriously; a broker can compare many lenders at once, and your own bank can quote too.
Mistake 2: Buying at your maximum qualification
Lenders approve you based on the GDS (39%) and TDS (44%) ratios, calculated at the stress-test rate. But qualifying for a mortgage and comfortably affording it are not the same thing. Here is a mortgage at the top of a budget compared with one 15% smaller, at a 5% rate over 25 years (semi-annual compounding):
| $500,000 mortgage | $425,000 mortgage (15% less) | |
|---|---|---|
| Monthly payment | ~$2,908 | ~$2,472 |
| Difference | ~$436 a month (~$5,230 a year) | |
| At renewal after 5 years, if the rate is 1.5 points higher (6.5%) | ~$3,277 on the remaining ~$442,500 | ~$2,785 on the remaining ~$376,200 |
One approach: work out the payment you can carry while still saving and covering other costs, and shop within that range rather than at the lender’s maximum.
Mistake 3: Ignoring the FHSA
The First Home Savings Account gives you an RRSP-style tax deduction when you contribute and a tax-free withdrawal when you buy. Its room only starts to build the year you open it ($8,000 a year, up to $40,000 in total), so opening late can leave room unused by the time you buy.
| FHSA Scenario | Effect |
|---|---|
| Open 5 years before buying and contribute the maximum each year | Full $40,000 contributed; the deductions are worth about $12,000 at a 30% marginal rate |
| Open 3 years before buying | $16,000 of the lifetime limit still unused (if you buy in the third year); about $4,800 of deductions missed at 30% |
| Never open an FHSA | No FHSA deductions at all |
What to do: opening an FHSA early, even if buying is years away, starts its room building. If you never buy, the balance can be transferred to an RRSP or RRIF without using RRSP room.
Mistake 4: Only talking to your bank
Your bank offers one set of rates and products. A mortgage broker compares many lenders, including monolines with lower rates and better prepayment terms.
| Rate difference | Cost over 5-year term ($450,000 mortgage) |
|---|---|
| 0.10% higher | ~$2,200 extra in interest |
| 0.25% higher | ~$5,500 extra |
| 0.50% higher | ~$11,000 extra |
| 0.75% higher | ~$16,500 extra |
What to do: Get quotes from your bank AND an independent mortgage broker. Compare not just rates but also prepayment privileges, portability, and penalty calculations.
Mistake 5: Forgetting about closing costs
Cost: about $8,000–$14,500 on a $500,000 home in Ontario outside Toronto (see the table), more in higher-tax provinces and at higher prices
Many first-time buyers budget for the down payment but are blindsided by closing costs.
| Closing Cost | Estimated Amount ($500,000 home) |
|---|---|
| Land transfer tax (Ontario) | $6,475 (minus $4,000 first-time buyer rebate = $2,475) |
| Land transfer tax (Toronto — double) | $6,475 provincial + $6,475 municipal = $12,950 before rebates; $4,475 after $8,475 in combined rebates |
| Legal fees | $1,500–$2,500 |
| Title insurance | $300–$500 |
| Home inspection | $400–$600 |
| Appraisal (if required) | $300–$500 |
| Moving costs | $1,000–$3,000 |
| Immediate repairs / essentials | $2,000–$5,000 |
| Total (Ontario, outside Toronto) | ~$8,000–$14,500 |
| Total (Toronto) | ~$10,000–$16,500 |
What to do: Budget for closing costs on top of your down payment; they range from under 1.5% of the price in provinces with no land transfer tax to 4% or more in Toronto, where the tax is charged twice. The closing cost calculator works it out for your province.
Mistake 6: Waiving the home inspection
In competitive markets, buyers sometimes waive the inspection condition to make their offer more attractive. This is one of the riskiest decisions you can make.
| Hidden Issue | Typical Repair Cost |
|---|---|
| Foundation crack / structural issue | $15,000–$80,000 |
| Roof replacement | $8,000–$25,000 |
| Knob-and-tube wiring replacement | $10,000–$20,000 |
| Mould remediation | $5,000–$30,000 |
| Plumbing (galvanized pipe replacement) | $8,000–$15,000 |
| HVAC replacement | $5,000–$12,000 |
What to do: Waiving the inspection on a resale home carries real risk. If you must compete aggressively, a pre-offer inspection (done before submitting your offer) is a common alternative to skipping it entirely.
Mistake 7: Draining your entire savings for the down payment
Cost: Financial vulnerability when you need it most
New homeowners face unexpected costs — appliance failures, emergency repairs, property tax adjustments. Spending every dollar on the down payment leaves you one emergency away from credit card debt.
Minimum reserves to keep after closing:
| Reserve | Amount |
|---|---|
| Emergency fund (3 months of housing costs) | $7,000–$12,000 |
| Immediate home purchases (furniture, tools, curtains) | $2,000–$5,000 |
| First property tax installment (if not escrowed) | $1,500–$3,000 |
| Total reserves beyond down payment + closing costs | $10,500–$20,000 |
What to do: Weigh a smaller down payment (and a larger insurance premium) against keeping a cash cushion; running out of cash can force expensive borrowing.
Mistake 8: Not understanding your mortgage penalty
Life changes — job relocation, divorce, wanting to upsize. If you need to break your mortgage before the term ends, the penalty can be substantial, especially with a fixed rate at a Big Five bank.
| Lender Type | Penalty method (5-year term broken 3 years in) | Example on a $400,000 mortgage |
|---|---|---|
| Big Five bank (posted-rate IRD) | Interest Rate Differential | $12,000–$25,000 |
| Monoline lender (discounted-rate IRD) | Interest Rate Differential | $4,000–$8,000 |
| Variable rate (any lender) | 3 months’ interest | $3,000–$5,000 |
What to do: Ask your lender exactly how they calculate the penalty BEFORE you sign. If you might need to break the mortgage early, the penalty method matters as much as the rate; a variable rate usually carries a three-month-interest penalty.
Mistake 9: Making major financial changes before closing
Cost: Mortgage denial or reduced approval amount
Between pre-approval and closing day, lenders re-verify your financial situation. Major changes can derail your approval.
| What NOT to do before closing | Why it kills your mortgage |
|---|---|
| Change jobs | Lenders want stable employment history |
| Take on new debt (car loan, furniture financing) | Increases your TDS ratio, may push you over the limit |
| Open new credit accounts | Triggers credit inquiry, may lower score |
| Make large unexplained deposits | Anti-money laundering rules require sourcing all funds |
| Co-sign someone else’s loan | Adds their debt to your ratios |
What to do: Freeze your financial life between pre-approval and closing. No new debt, no job changes, no large unexplained transfers.
Mistake 10: Ignoring the neighbourhood
Cost: Reduced quality of life + potential resale difficulty
The home is only half the purchase — the location determines your commute, safety, school quality, and future resale value.
Research checklist before buying:
- Drive the commute during rush hour (not just on a Saturday)
- Visit the neighbourhood at night
- Check flood plain maps (affects insurance costs and resale)
- Review the municipal development plan for nearby construction
- Look up school rankings if relevant
- Check walkability scores and transit access
- Ask neighbours about the street
Mistake 11: Choosing the wrong mortgage term
The 5-year fixed rate is the default, but it is not always the best choice.
| Situation | Better Term Choice | Why |
|---|---|---|
| You may move in 2–3 years | Variable or 3-year fixed | Lower penalty if you break early |
| You expect rates to fall and can handle payment changes | Variable rate | Benefits if rates fall; costs more if they rise |
| You want payment certainty above all else | 5-year fixed | Locked-in peace of mind |
| You are buying your “forever home” | 5-year fixed (or 7-year if rate is close) | Maximum stability |
What to do: Match your term to your life plan, not just the rate. A slightly higher rate with lower break penalties can save thousands if your plans change.
Mistake 12: Overlooking first-time buyer programs
Canada has multiple programs specifically for first-time buyers. Using all of them together maximizes your purchasing power.
| Program | Benefit | Who Misses It |
|---|---|---|
| FHSA | Tax deduction + tax-free growth + tax-free withdrawal | Buyers who do not open it early enough |
| HBP | Up to $60,000 from your RRSPs for a down payment | Buyers who do not have RRSP savings |
| Home buyers’ amount | A $10,000 credit claim | Buyers who forget to claim it on their tax return |
| Land transfer tax relief (provincial) | Depends on the province (see the province guides) | Buyers who don’t claim it at closing or on their return |
| GST/HST new housing rebates | Relief on the GST/HST on a new home | New-build buyers who miss the application |
Mistake 13: Skipping the status certificate review (condos)
If you are buying a condo, the status certificate reveals the financial health of the condo corporation — reserve fund status, upcoming special assessments, lawsuits, insurance claims, and rule violations.
Red flags in a status certificate:
- Reserve fund study shows significant underfunding (below 50% funded)
- Upcoming special assessment of $5,000+ per unit
- Active lawsuits against the corporation
- A high share of units rented out (some lenders are cautious about these buildings)
- Recent insurance claim denials
What to do: Have your lawyer review the status certificate before your offer goes firm. In Ontario: The corporation can charge up to $100, including taxes and materials, and must offer delivery within 10 days at that price. See the status certificate.
Mistake 14: Underestimating ongoing homeownership costs
Cost: Budget stress from month one
Your mortgage payment is only part of the monthly cost of owning a home.
| Monthly Cost | Typical Range |
|---|---|
| Mortgage payment | $1,800–$3,200 (on $400K–$600K mortgage) |
| Property tax | $250–$500 |
| Home insurance | $100–$200 |
| Utilities (hydro, gas, water) | $200–$400 |
| Maintenance reserve (1% of home value ÷ 12) | $330–$500 |
| Condo fees (if applicable) | $300–$800 |
| Total (freehold) | $2,680–$4,800/month |
| Total (condo) | $2,980–$5,600/month |
What to do: add up the full monthly cost, not just the mortgage payment. CMHC considers housing affordable when it costs less than 30% of before-tax household income, counting the rent (or mortgage payments, property tax and condo fees) plus electricity, heat, water and other municipal services. Lenders allow more: a gross debt service ratio of up to 39% for an insured mortgage.
Mistake 15: Rushing the process
Cost: Buyer’s remorse + potential financial strain
The pressure of a competitive market can push buyers to make hasty decisions. But buying a home is a 5–25 year financial commitment.
Healthy buying timeline:
| Step | Recommended Time |
|---|---|
| Open FHSA and start saving | 1–5 years before buying |
| Get pre-approved | 60–90 days before active search |
| Active searching | 2–6 months |
| Offer to closing | 30–90 days |
| Total (from serious planning to keys) | 6–18 months |
What to do: Start your preparation early, but do not rush the actual purchase. Walking away from a home that does not feel right is often easier to live with than regretting a purchase for years.
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and October 2, 2026. How we check facts.
- Canada Revenue Agency: FHSA: Participating in your FHSAs
- Canada Revenue Agency: RRSP: The Home Buyers' Plan
- Canada Revenue Agency: RRSP: How to participate in the Home Buyers' Plan
- Canada Revenue Agency: RRSP: Home Buyers' Plan & Lifelong Learning Plan withdrawals
- CMHC: Calculating GDS / TDS
- CMHC: Identifying core housing need
- Condominium Authority of Ontario: What is a status certificate and how much does it cost - Condominium Authority of Ontario
- Gouvernement du Québec: Québec vient en aide aux acheteurs d'une première habitation Gouvernement du Québec
- Gouvernement du Québec: Information Bulletin 2026-2
- Government of Ontario: Land Transfer Tax Refunds for First-Time Homebuyers | Land Transfer Tax
- Statistics Canada: P3Var.pl