How to Know You’re Financially Ready to Buy a Home
By the Team
Updated June 01, 2025
Buying your first home is a huge life moment — one that’s both exciting and, let’s be honest, a little nerve-wracking. For many people, this is the first time they’re making a major financial investment and maybe even taking the first steps toward building or expanding a family. We get it — and we’re here to help you feel secure and confident as you plan for this big move.
Table of Contents
Assess your Credit Profile
Your credit profile is key to getting approved for a mortgage — and landing a good interest rate.
👉 Check your credit score: Most lenders like to see at least 680 for the best mortgage deals. Don’t know your Credit Score? Get it for free at Credit Karma or Borrowell.
👉 Tackle high-interest debt: If you’re juggling credit card balances or personal loans, it might be worth focusing on paying those down first. Reducing debt improves your debt-to-income ratio, making you a more attractive borrower. Always compare rates and switch accounts if it helps you pay less.
👉 Build a positive credit history: If you’re just starting out and don’t have much credit history, no worries. Consider things like a secured credit card or small credit-builder loans. Some lenders also consider alternative credit sources — like your rent payment history — to show your reliability.
👉 Review your credit report: Get a free report from Equifax or TransUnion and check for any errors. Fixing mistakes could give your score a quick boost.
Reevaluate your Budget
Let’s be real: buying a home isn’t just about the down payment and the monthly mortgage.
There are a bunch of other costs to factor in:
Closing costs: These can range from 1.5% to 4% of the home’s purchase price and include legal fees, inspections, and land transfer taxes.
Home maintenance + repairs: From fixing a leaky faucet to replacing a roof — homeownership comes with surprises.
Utilities + property taxes + insurance: These ongoing costs need a place in your budget, too.
👉 Pro tip: A general rule of thumb is to keep all your housing costs under 35% of your gross monthly income. If you make $5,000/month, aim to keep housing costs (mortgage, utilities, taxes) under $1,750.
Take Advantage of Incentives
Good news! As a first-time homebuyer in Canada, you’ve got several programs designed to make things easier:
- Home Buyers’ Plan (HBP): Withdraw up to $60,000 from your RRSP tax-free for your down payment (just remember, you need to pay it back over 15 years).
- First Home Savings Account (FHSA): Contribute up to $8,000 per year (max $40,000) and grow it tax-free to use toward your first home.
- First-Time Home Buyers’ Tax Credit: Claim up to $750 to help with closing costs — every bit helps!
- GST/HST New Housing Rebate: As of early 2025, you can get a 100% rebate on the federal portion of GST/HST for new homes under $1 million.
- Land Transfer Tax Rebates: Depending on your province:
Ontario: Up to $4,000 rebate
Toronto: Additional $4,475 rebate
BC: Full exemption on homes up to $500,000
PEI: Full rebate on homes up to $200,000
👉 Helpful tip: Check your local province’s site — some regions offer additional rebates or first-time buyer incentives!
Plan for Next Steps
Let’s take the mystery out of the homebuying process:
Get pre-approved. This tells you (and sellers) what you can afford.
Start house-hunting. Work with a trusted real estate agent who understands your needs and your budget.
Make an offer. Once you find “the one,” your agent will help you negotiate terms.
Do a home inspection. You want to know exactly what you’re buying — no surprises!
Close the deal. Finalize the paperwork, pay closing costs, and get ready to move in.
Final Thoughts
Buying your first home is a big, emotional, exciting step — and yes, it can feel overwhelming. But here’s the truth: you don’t have to do it perfectly.
What matters most is that you prepare wisely, stay honest with yourself about your finances, and use the tools and resources available to you.
At Finally, we’re here to help you stay on top of your money, track your spending, and save smartly — so when you unlock that front door for the first time, you can feel confident, not stressed.
👉 Ready to take control of your financial future? Sign up for Finally for free and start planning your homeownership journey today.
Your future self will thank you. 💙