So, you’re looking into buying your first home — congratulations! This is a huge milestone, and we’re so excited to help you embark on this journey.

Your first home is often the place where you grow your family, start new traditions, and make memories that last a lifetime. It can be an incredibly exciting chapter of your life but also overwhelming when you don’t know where to start.

Fortunately, you’re in the right place. In this article, we cover all the essential tips and insights on what to know as a first-time homebuyer in Calgary. We believe that buying your first home shouldn’t be stressful. Let us walk you through everything you need to know so you can enjoy the exciting new experience.

Deciding Whether You’re Ready to Buy a Home

Before we get started, let’s figure out whether now is the right time for you to start your homeownership journey. There are a few variables you might want to consider to ensure that you’re setting yourself up for financial success.

If you meet all of these recommendations, you’re in great shape for your first home purchase. If not, don’t worry! Homeownership is not necessarily out of reach. For example, you might just need a bit more time to pay off your current debts or you might decide to move ahead with becoming a homeowner anyways. In this case, there are a few benefits for first-time home buyers that can help. We’ll discuss these later in the article.

Your Income

When looking to purchase a house, there is no set income requirement. However, it is important to consider whether your income sources are steady and reliable. 

Another consideration is deciding how much you can afford based on your income. Even if you get pre-approved for a large mortgage, you may choose to purchase a home for a lower home purchase price. The Canada Mortgage and Housing Corporation (CMHC) recommends your monthly housing costs be less than 35% of your gross monthly income. Housing costs include your monthly mortgage payments and other monthly expenses of homeownership, like property tax and utilities. Keep reading to find out more about homeownership costs.

Your Current Debts

Although it is often possible to get a mortgage with current debts, this depends on your total debt service (TDS) ratio. This number represents your mortgage lender or bank’s assessment of your ability to make monthly mortgage payments on your debts. If your mortgage broker or bank determines that you cannot make monthly payments, you might be out of luck when it comes to getting a mortgage right now.

According to Investopedia, here is the formula for calculating your total debt service ratio: TDS = (annual mortgage payments + property taxes + other debt payments) divided by your gross family income.

If your TDS ratio exceeds 43%, you may have trouble finding a lender who will give you a qualified mortgage (Investopedia). 

Your Credit Score

When buying a home, lenders often use your credit score to determine your ability to handle financial responsibility. Although lenders will have varying requirements for your credit score, most lenders will not approve you for a mortgage if you have a credit score under 650. 

Your Savings

Recommendations on how much money you should save before buying a house can vary greatly. Some people recommend you save at least 5% of the cost of your house, while others recommend you save enough money to cover two months of mortgage payments. Note that these savings are in addition to the amount you save for your down payment! 

Deciding on the Type of Home You Want

Once you’ve decided you’re financially ready to buy a home, deciding on the type of home you want to buy is a pivotal next step in the house-hunting process. Whether you’re drawn to the charm of a cozy bungalow, the spaciousness of a detached single-family home, or the modern conveniences of a condominium in the heart of the city, understanding what aligns with your lifestyle, budget, and future goals is crucial.

Choosing Your Community

Embarking on your home search as a first-time buyer involves more than just finding the right house—it’s about choosing the community that aligns with your lifestyle and aspirations. Think about the proximity to work, schools, amenities, and recreational opportunities. Remember, your home search is not just about the physical property but finding a place where you can thrive and create lasting memories. Work with your real estate agent to find a home in a community that meets your practical needs and resonates with your personal preferences and future goals.

Northwest Calgary

The northwest quadrant of Calgary is renowned for its scenic beauty, encompassing a blend of well-established and newly developed communities, such as Glacier Ridge and Ambleton, that cater to a diverse range of homebuyers. Being closest to the mountains, the NW appeals to those seeking a harmonious balance between urban convenience and access to nature and adventure. Residents will also have easy access to downtown via public transport, including the LRT, and major freeways, including Stoney Trail and our new Ring Road. 

Northeast Calgary

The northeast Calgary communities present the most dynamic and multicultural area of Calgary. The NE quadrant boasts an array of neighbourhoods that cater to various lifestyles and budgets, from affordable family homes in established areas to modern residences in newly developed communities such as Cornerstone and Cornerhaven. The quadrant is celebrated for its accessibility, being close to the Calgary International Airport with excellent public transit options and proximity to major roadways like Stoney Trail and Deerfoot Trail.

Southwest Calgary

The southwest quadrant of Calgary, home to emerging communities like Vermilion Hill, Belmont, Sirocco, Creekview, and Pinecreek, offers a fresh and exciting opportunity for homebuyers. These neighbourhoods are quickly becoming known for their blend of comfortable living, modern amenities, and access to Calgary’s stunning natural landscapes, including Fish Creek Park, one of the largest urban parks in Canada. Residents also have easy access to downtown via the LRT, making this area a prime location for professionals who work in the city centre but seek a peaceful retreat at the end of the day.

Southeast Calgary

Calgary’s southeast quadrant is the newest quadrant of the city, featuring vibrant communities like Wolf Willow and Legacy. Offering an appealing mix of affordable modern living and natural charm, the area is popular with young families and professionals alike. With convenient shopping, quality schools, and easy city access via the Stoney and Deerfoot trails, the SE quadrant is perfect for those seeking a balanced lifestyle in a dynamic, growing part of Calgary.

Saving Up to Buy a Home

Once you’ve reviewed your finances, and decided on the type of home you want and in which neighbourhood, you may have determined that you need to save a bit more money before you’re ready to buy a home. If so, don’t fret! There are a few ways you can approach this, which we have outlined below. You can also check out our previous blog post for more tips on saving money for your first home purchase. 

Tax-Free Savings Account (TFSA)

A TFSA is a savings account that allows you to save money and withdraw money tax-free. The money you contribute to your TFSA or money earned in the account is not tax deductible for income tax purposes.

Registered Retirement Savings Plan (RRSP)

A Registered Retirement Savings Plan is another type of savings account in which you can deposit money to save in the long term. Contrary to its name, the account can be used to save money for more than just retirement! With this account, you’ll only be taxed when you withdraw money from the account.

The Home Buyer’s Plan (HBP)

Although you typically have to pay taxes when withdrawing money from your RRSP, there is a caveat. If you’re a first-time homebuyer, the Home Buyer’s Plan allows you to withdraw up to $35,000 tax-free from your RRSP to purchase your first home.

Understanding & Planning for Expenses 

As we’ve already discussed, your monthly mortgage payments and down payment aren’t the only costs associated with buying a home. Here are a few costs, fees, and expenses you must consider when saving for your first home.

Closing Costs

Closing costs are the costs that you will need to pay to close the purchase of your home. You can typically expect to spend between 1.5% to 4% of the home’s purchase price of a resale home on closing costs. Here are some of the closing costs that you can expect when buying a home:

• Land transfer tax: There is currently no land transfer tax in Alberta. There is a fee of $50 plus an additional $2 per $5,000 of the property’s purchase price for the title transfer.
• Legal fees: These are the fees you will pay your lawyers to facilitate the transfer of the property title.
• Title insurance: The insurance policy that protects homeowners and lenders against potential losses related to the property’s title or ownership.
• GST on a new home purchase: GST in Alberta is 5% of the purchase price, and it is typically included in the purchase price.

Insurance

In Canada, you need home insurance to get a mortgage. There are two types of insurance you will likely need when purchasing your first home.

Mortgage Default Insurance

If you buy your home with a down payment that is less than 20% of the cost of your home (which most first-time home buyers do), you must purchase the Canada Mortgage and Housing Corporation (CMHC) mortgage insurance. This insurance protects lenders in case you default on your loan.

Property Insurance

Unless you purchase your home in full (which is extremely rare for first-time buyers), you will need property insurance when owning a home in Canada. The cost of home insurance will vary depending on the location of your home, your house type, and other risks. However, most homeowners in Canada can expect to pay around $960 per year on home insurance (Ratehub). 

Taxes

As discussed, some taxes such as land transfer tax and GST are included in your closing costs. You should also be prepared to pay property taxes when owning a home. Most municipalities have their own property tax calculators to help you understand the property taxes required based on the value of your home. For example, here is the City of Calgary’s property tax calculator. 

Homeowner Association Fees

When purchasing a home, it’s also a good idea to find out whether there is a homeowners association (HOA) in the community. Many of Calgary’s newer residential areas, master-planned, and lake communities have HOAs. These are designed from the outset to include various amenities like parks, recreational facilities, and community events, which are maintained through the HOA fees.

HOAs can set their own mandatory fees, which can vary greatly. If you don’t pay your homeowner association fees, you could face legal action.

Condo Fees

If purchasing a condo, you’ll need to factor in condo fees as a monthly expense. Look into the condo fees associated with your desired condo building before making your condo purchase to ensure you can afford these costs regularly.

Getting Mortgage Pre-Approval

Before you start house hunting, it’s a good idea to get pre-approved for a mortgage. That way you don’t get your hopes up for a house that you simply can’t afford.

If you’re looking to build a home, you’ll need pre-approval before you start the home-building process. A real estate agent may also require you to be pre-approved for a mortgage before they will spend time showing you houses.

Lenders will look at factors like your current debt and combined household income to decide the mortgage amount and the mortgage rate they are prepared to offer you.

When deciding on a lender, it’s always a good idea to use a mortgage calculator to compare interest rates and get a better idea of your monthly mortgage payment. However, your true mortgage calculation will come down to the lender’s decision.

Making a Down Payment 

Saving up for a down payment can be a real challenge for a first-time home buyer, especially when you realize you also need to save for a wide range of other costs.

Fortunately, you have a few options for making a down payment. Contrary to popular belief, you do not need to save for a minimum down payment of 20% to buy a home. In fact, most people don’t! Although there are benefits to putting down a larger down payment, such as reduced interest rates and lower monthly mortgage payments, you can purchase a house with a down payment as low as 5% of the purchase price.

Benefits for First-Time Home Buyers

If you’re getting a bit worried about all of the costs associated with buying your first home, there is light at the end of the tunnel. First-time homebuyers in Canada are fortunate to have several first-time home buyer programs in Calgary that can make home-buying more affordable. Here are several incentive programs that you should know about before buying your first home in Canada:

First Home Savings Account (FHSA)

The FHSA is a registered plan offered by the federal government that allows you to save for your first home by making contributions that can grow through investment and then withdraw these funds tax-free when you’re ready to purchase your home.

First-Time Home Buyer’s Tax Credit

With the First-Time Home Buyer’s Tax Credit, you may be eligible to claim up to $10,000 for purchasing a qualifying home, provided you meet two key conditions: the home must be acquired by you, your spouse, or your common-law partner and neither you nor your spouse or common-law partner should have lived in another home owned by you in Canada or elsewhere during the year of acquisition or any of the four preceding years.

GST/HST New Housing Rebate

If you’ve purchased a new home from a builder or significantly renovated your house or if you’ve bought shares in a co-operative housing corporation for a new or substantially renovated unit, you may be eligible for a GST/HST new housing rebate.

Buying vs. Building a Home

Finally, before you start the home-buying process, you need to decide whether you want to buy a home or build a home. For many first-time buyers, building a home is a dream that seems out of reach. At Shane Homes, we’re here to help you make that dream a reality.

With our new Build and Price tool, you can design the home of your dreams and find out exactly how much your dream home will cost. 

There are many benefits associated with building a home: 

• You don’t need to pay for any renovations
• New home builds in Alberta are covered by the New Home Buyer Protection Act
• You can often customize your home to make it exactly what you want
• You don’t have to worry about losing a bidding war
• You can often take advantage of better security measures and smart home features

Shane Homes Can Help You Build Your Dream Home

At Shane Homes, we take pride in being your partner through the home-buying journey. We’re honoured to help first-time home buyers throughout Calgary and Airdrie build houses that they’re proud to call home.

Let us help you make your first home-buying experience rewarding and stress-free. Take a look at our stunning home models and the fantastic communities where we’re currently building, or use our Build and Price tool to start pricing out your new home today.