28 | First Home, No Idea Where to Start? A Calgary First-Time Buyer’s Roadmap

So I kind of want to talk about like that or acknowledge the first part of, are you actually ready to buy? Starting off, you know, before the mortgage broker, before the realtor, before, and definitely before you start like booking showings, that's, that's not the first place that we start.

Don't start looking at houses

first.

No.

The first question is, isn't what can I get approved for? It actually is what can I comfortably afford? Not necessarily the same numbers.

Like a lender's job is to assess whether you're capable of servicing a mortgage based on the qualification criterias.

But your job as the potential buyer is to determine whether or not that payment actually fits the life you want to live.

And I think that goes back to when people say, I don't want to be house poor.

Yeah.

What kind of life do you want to live? Because if, let's say, 60% of your income goes towards paying the mortgage, there's a whole lot of freedom to do much else outside of paying a mortgage.

That

sounds incredibly stressful.

And I also think a lender wouldn't approve you at 60%.

Like I think right now, right, the total debt service ratio, you have to be, it's like a maximum of like 44%, I think, of your income.

I believe you're right.

Goes to debt repayment and that includes your mortgage,

right? But a very important distinction to have, you know, you might technically qualify for like a $600,000 property, but that also means you can't travel, you can't golf, you can't save for retirement, you don't have savings, you can't go out for dinner, you know, you don't have any financial breathing room.

So is $600,000 actually the right purchase for you?

Yeah.

And so this is where, so I want to make two points here, right? The first point is like, this is where first time homebuyers start thinking about the whole financial picture.

And so that's really important to understand month over month, like where your money is actually, what's coming in and what's going out, right? So that's, to consider your income, your existing debts, your down payment, your monthly expenses, your emergency savings, what property taxes will approximately cost, what condo fees would potentially cost if applicable, utilities, home insurance, maintenance and repairs, right? So you look at all the incoming versus outgoing.

And you see kind of what that leftover money is.

And I would say be like generous in those numbers.

So you're like your estimates end up being really like conservative, like overestimate versus underestimate if you are estimating.

The other important thing that I want to say about it is like when you work with a mortgage professional, you can tell them, hey, this is what I want to pay in a mortgage payment monthly.

So I kind of want to talk about like that or acknowledge the first part of, are you actually ready to buy? Starting off, you know, before the mortgage broker, before the realtor, before, and definitely before you start like booking showings, that's, that's not the first place that we start.

Don't start looking at houses

first.

No.

The first question is, isn't what can I get approved for? It actually is what can I comfortably afford? Not necessarily the same numbers.

Like a lender's job is to assess whether you're capable of servicing a mortgage based on the qualification criterias.

But your job as the potential buyer is to determine whether or not that payment actually fits the life you want to live.

And I think that goes back to when people say, I don't want to be house poor.

Yeah.

What kind of life do you want to live? Because if, let's say, 60% of your income goes towards paying the mortgage, there's a whole lot of freedom to do much else outside of paying a mortgage.

That

sounds incredibly stressful.

And I also think a lender wouldn't approve you at 60%.

Like I think right now, right, the total debt service ratio, you have to be, it's like a maximum of like 44%, I think, of your income.

I believe you're right.

Goes to debt repayment and that includes your mortgage,

right? But a very important distinction to have, you know, you might technically qualify for like a $600,000 property, but that also means you can't travel, you can't golf, you can't save for retirement, you don't have savings, you can't go out for dinner, you know, you don't have any financial breathing room.

So is $600,000 actually the right purchase for you?

Yeah.

And so this is where, so I want to make two points here, right? The first point is like, this is where first time homebuyers start thinking about the whole financial picture.

And so that's really important to understand month over month, like where your money is actually, what's coming in and what's going out, right? So that's, to consider your income, your existing debts, your down payment, your monthly expenses, your emergency savings, what property taxes will approximately cost, what condo fees would potentially cost if applicable, utilities, home insurance, maintenance and repairs, right? So you look at all the incoming versus outgoing.

And you see kind of what that leftover money is.

And I would say be like generous in those numbers.

So you're like your estimates end up being really like conservative, like overestimate versus underestimate if you are estimating.

The other important thing that I want to say about it is like when you work with a mortgage professional, you can tell them, hey, this is what I want to pay in a mortgage payment monthly.