10 Mistakes First-Time Home Buyers Make in Canada (And How to Avoid Them)

Written By Abigail Adu

Buying your first home can feel like a dream come true. All that saving, house hunting, and negotiating finally pays off, and you can at last relax in the comfort of your property. However, while buying your first home can be an exciting and goal-fulfilling journey, there may be some bumps along the road.

Over the years of my property investing and helping clients with their first-time home-buying experiences, I’ve grown accustomed to spotting pitfalls in hindsight. Unfortunately, the home buying process is seldom smooth, and there are a few common first-time home buyer mistakes that can occur and create long-term problems or incur unexpected costs.

For all my first-time home buyers in Canada who want the best out of their experience, here are ten things to avoid throughout your homebuying journey.

1. Skipping your mortgage pre-approval

The biggest mistake I’ve seen first-time buyers make is buying outside of their purchasing power without a mortgage pre-approval.

A pre-approval highlights how much you can afford to spend on a mortgage based on the lender’s analysis of your financial portfolio. When you apply for a mortgage pre-approval, your lender accounts for your financial capabilities by analyzing factors such as your income and job history, credit report, liabilities, and assets.

In some cases, buyers put in offers for homes they think they can afford, and upon moving through the approval process, the bank asserts that they technically cannot afford that property.

For example, let’s say your income and savings provide $2,000 towards your monthly mortgage payments. But when the bank assesses your financial profile, they factor in things such as your outstanding student loan debt, credit card balances, car payments, and the mandatory mortgage stress test.

After calculating your debt ratios, the bank may determine that your maximum affordable payment is closer to $1,600 per month, not $2,000. That difference can reduce your approved purchase price by tens of thousands of dollars, meaning the home you thought you could afford is no longer eligible under your lender’s guidelines.

Getting pre-approved gives you your official mortgage price, showing sellers that you are a serious buyer who knows your limits. In a city like Toronto, a pre-approval can give you a leg-up in bidding wars, making your buying process more efficient.

2. Falling for home staging tricks

POV: You walk into your first property showing, and the place looks fresh out of a Martha Stewart home catalogue. They have flowers on the counter, tons of open space, quality brand-new furniture, and expensive art on the walls. It smells like fresh-baked cookies, and the lawn is cut like a golf course on a Saturday morning. Not to mention, the bathrooms are upgraded, and the basement is fully finished…. What's not to love?

POV Part 2: You decide this is the house for you, and cancel all other showings. You place an offer and begin the closing process. A week later, you return to the house, and the fresh flowers are gone along with the brand-new furniture, the expensive art, the smell of baked goods, and the lawn has grown out. The bathroom is (thankfully) still upgraded, and the basement is the same, but suddenly, the space doesn’t seem as great as it was at the first showing.

Sourced from fixthephoto.com

Falling for home staging is common. Sellers remove most of their belongings, and a place can seem next to perfect if the right company stages it. But in reality, your home will look nothing like it did as a staged home—there will be clutter, extra furniture, and maybe kids or animals running around and creating messes.

It’s up to you and your purchasing partner to examine each home without staging bias to ensure that you are buying a home for what it is, rather than what it looks like staged.

3. Ignoring closing costs in Ontario

Don’t let your down payment overshadow your closing costs. Closing costs can amount to thousands of dollars, making them a prime site for budgeting.

Here’s an overview of the average closing costs in Ontario:

  • Land Transfer Tax

  • Legal Fees & Disbursements (lawyer review, title search, registrations, courier fees)

  • Title Insurance (protects against title defects, liens, fraud)

  • Appraisal Fee (sometimes covered by lender, sometimes not)

  • Property Tax Adjustments (if seller prepaid taxes for part of the year)

  • Utility Adjustments (hydro, water, gas—depending on what seller prepaid)

  • Mortgage Default Insurance (if down payment is less than 20%; usually added to mortgage, but buyers should still treat it as a cost)

  • Home Inspection Fee (optional, but you should include it)

  • Status Certificate (for condos)

Moreover, don’t forget moving costs, home maintenance costs, and money aside for any necessary upgrades.

Best practice: Consider these expenses before you begin your home search to ensure you have enough money saved for your down payment and all additional fees.

4. Making risky financial moves before closing

Financing a new car, taking out a loan for a business venture, or racking up your credit card bill to buy new furniture for your future home could result in your lender rescinding your purchasing approval.

If you are serious about buying property, your bank expects you to prove so by avoiding financially risky behaviours that create liabilities. Changing your employment status, purchasing a new car, or spending too much on a line of credit can indicate riskiness and affect your ability to afford a mortgage on paper.

Lenders like to see consistency and stability in your financial history, especially in the months and years leading up to your purchase. Any risky financial actions within the months prior to your purchase can create issues that may prevent you from buying.

Maintain trust with your lender by avoiding job switches and any high costs or debts on your line of credit.

5. Saving only the minimum amount for a down payment

Saving up for your first home can seem like a long and tedious process, which may encourage you to act on the market as soon as you have enough saved for a down payment and closing costs. But what many people view as “I can” tends to fall short as these clients end up spending their entire savings on their down payment and closing costs, leaving them with very little to move forward.

Pro tip: Don't spend your entire savings on your down payment. Budgeting for closing costs is a good start, but having a few extra thousand dollars is the best way to ensure that you have enough to settle in with maintenance costs and monthly payments.

The last thing you want is to rush into a purchase that runs you dry and leaves you struggling to make ends meet.

6. Assuming you need 20% down

In Toronto, we tend to assume that all down payments must be 20% of the purchase price. While there are benefits to putting 20% down, such a large down payment is only necessary for homes over $1.5 million.

In many cases, buyers cannot afford to put 20% down, much less 20% of a million. Thankfully, the payment structures for down payments vary based on the total purchase price.

  • Under $500,000: Only requires 5% of the purchase price.

  • Between $500,001 and $1,500,000: Requires 5% of the first $500,000 plus 10% of the remaining portion between $500,001 - $1,500,000

  • $1,500,000 or more: Requires 20%

In cases where your down payment is less than 20% of the total mortgage, you will be required to purchase mortgage default insurance. Buyers with mortgage default insurance may receive lower interest rates since insurance creates more trust with the lender, but it will also incur an extra charge that can be avoided by paying 20% down.

Overall, do not stress yourself with the toll of saving $200,000 for a down payment if you intend on buying a home below $1.5 million. Instead, assess the market for property types that match your budget and plan for an appropriate down payment.

7. Skipping the home inspection

Home inspections protect buyers from purchasing homes that may have severe issues in their structures or systems. A home inspection can uncover problems that are otherwise invisible to the eye, saving you thousands of dollars in repairs or fixes.

Unfortunately, many buyers choose to forego home inspections as they incur an extra cost that many deem “unnecessary”. In the heat of a seller’s market earlier this decade, many Torontonians avoided home inspections as they may have stood in the way of winning bidding wars. In today’s buyer’s market, home inspections can provide buyers with the foundation to negotiate lower purchase prices or repair costs.

A home inspection can be the deciding factor between buying a home that will last versus purchasing a home that will cost you in the future. Do not avoid a home inspection to save a couple of hundred dollars—it will go a long way and provide you with peace of mind about your investment.

8. ​​Overlooking first-time buyer programs

There are numerous first-time buyer programs available for Ontarians and Canadians. These programs are federally and provincially funded to lighten the load of investing in the property as a first-timer.

Here are the key first-time home buyer incentives, updated for 2026:

9. Rushing the process—or waiting too long

Avoid rushing into an offer on a home you're unsure about just because you're eager to buy a property in general. When you make an offer on a home, you are committing to follow through with the deal if the seller accepts it. This means that you must be 100% on board with that purchase and ready to proceed with closing if the offer is accepted.

It’s best to take your time with the decision and review the bounds of your real estate contract before proceeding with an offer.

However, you don’t want to take too long when deciding on a property. Even in slower markets, waiting days or even hours can result in an accepted offer from another buyer and the continuation of your home search. If you see a property you like with 100% certainty, act as soon as possible to avoid losing out on a good deal.

10. Getting Advice From the Wrong People

Lastly, one of the most common mistakes I see first-time buyers make is talking to the wrong people about real estate. Many people speak on the topic of property investing out of fear. They attempt to explain the market from a perspective that constantly assumes the worst and fundamentally builds on fear of buying. They may claim that the market is set to crash, that buyers are at an all-time disadvantage, and that purchasing property will only create more problems for you.

The truth is, no one can time the market. Real estate trends are, to a certain point, unpredictable, and the market constantly goes up and down. The best way to buy with the most confidence is to speak with a real estate agent or mortgage agent who can provide you with an industry-relevant perspective.

Remember that working with a real estate agent can ease the burden of multiple steps throughout your buying process, but working with the wrong agent can do you more bad than good.

Going through the motions to find a dedicated agent who will educate you and maintain a good line of communication can result in a far smoother experience than working with the first agent you find.  

Your Next Steps as a First-Time Buyer

Your first home is one of the biggest investments you’ll ever make, and you deserve to go into the process feeling informed and supported every step of the way. When you understand the potential pitfalls ahead of time, you give yourself the power to make confident, strategic decisions that set you up for long-term success.

If you want help navigating the process, or you're feeling ready to talk through your next steps, send me a message on Instagram or book a call today. I’d love to walk with you through your first home purchase and help you make decisions that truly serve your future.

Book a Call
Abigail Adu
Next

What Is a Good Credit Score in Canada? Ranges, Factors, and Tips to Improve