More than just a down payment: Understanding the real costs of home ownership

April 30, 2026

Sara Maginn Pacella

Home ownership is an important milestone and source of pride for many people. A home is the most expensive purchase most people make, so financial preparation is key to successfully saving for a home.

HCM Podcast

Produced with Google Notebook LM Using AI Narration

Understanding the cost of homeownership

The Government of Canada shares the following budgeting recommendation from the Canada Mortgage and Housing Corporation (CMHC) for affording a home and not falling into the trap of becoming “house poor” by purchasing more than your budget can handle: “Your monthly housing costs should not be more than about 39 per cent of your gross (before deductions) monthly income. These costs include your mortgage payments, property taxes and heat costs.” CMHC also recommends that the entire monthly debt load for a household not exceed 44 per cent of your gross monthly income. This includes mortgage payments, lines of credit, car leases, student loans and credit card debt.

Eileen Wylie is an accredited buyer representative and seniors real estate specialist at Bosley Real Estate Ltd. with over three decades of Canadian real estate experience. She sat down with HCM Dialogue to share her insights on helping families prepare to buy a home and tips for home budgeting and mortgage preparation.

Budgeting strategies for homeownership

Wylie emphasizes the importance of understanding where your money is going each month to build a workable budget. She recommends keeping track of everything you spend for at least 30 days, noting that no amount of money is too small to record. This means listing any drinks or snacks that you pick up during a workday – coffees, teas, everything. She reminds clients not to forget about other regular expenses, including rent, car payments, cell phone and internet bills, babysitting, etc.

There are helpful online tools you can use to help record this. Some popular pay app options include Pocketguard, You Need a Budget (YNAB) and Monarch Money. Alternatively, you can build your own budget in Excel or use free online tools, such as those offered by the Government of Canada, to help you get started.

” A home is the most expensive purchase most people make, so financial preparation is key to successfully saving for a home ”

Financial steps to take before purchasing a home

Wylie recommends contacting your bank and/or a mortgage broker to begin the preapproval process before you start formally looking for a home. She says, “It will streamline the search process, as you will be able to focus on properties that are within your budget.” She notes that a part of the qualification process is being aware of what the monthly mortgage payments will look like, as well as any other costs, such as taxes or, in condo properties, maintenance fees, which is something to consider as you determine what you can comfortably afford. She also warns renters to set aside room in their budgets for an increase in utility costs, which are often higher for homeowners.

Before you submit your mortgage application, it is also worth checking your credit score. There may be mistakes on record that can impact your score and affect the mortgage amount that you qualify for and the interest rate you are offered. Any errors can be reported, so they will no longer impact your credit score.

Mortgage preparation

One of the best reasons to get a mortgage preapproval in advance is that it helps you understand what you can afford in a home and place an offer quickly and efficiently when you find a home you want to purchase. This means you will have more time to focus on finding homes within your price range. Mortgage preapproval letters in Canada are generally valid for 60 to 120 days, and then you will need to reapply.

Documents that you’ll need to collect to apply for your mortgage can include the following.

Social Insurance Number
At least one valid national photo identification card
Proof of current address (utility bill, tax notice of assessment, etc.)
Work permit or residency certificate
Proof of income (pay slips, employment contracts; for freelancers: business numbers and the previous two years’ tax returns)
Source of downpayment (account statement, letter indicating a monetary gift, etc.)
Information on any car or school loans or other outstanding debts and liabilities
Bank statements for the past three to six months
Tenancy agreements
Details of the property you intend to purchase to obtain your finalized mortgage

Home budgeting

A critical part of successful budgeting is establishing an emergency fund. Wylie says, “It’s a good idea to have savings set aside for any unexpected expenses.” She also says having a home inspection prior to making an offer on a home will help you prepare for some of the bigger-ticket items you may need to repair and replace after you buy your home and allow you to create a timeline that will work with your budget, prioritizing the most important items first. She also suggests earmarking some money in your budget for after you close on the property, as there are often little purchases you’ll want to make to make the home your own, like painting, new furniture, gardening tools and more. People don’t always anticipate the everyday items that add up, like shovels, rakes, lawnmowers or patio furniture.

The Government of Canada recommends being prepared to spend anywhere from 1.5 to four per cent of the price of the home on costs related to purchasing a home, including home inspection fees, legal costs, property tax adjustments and title insurance.

Conclusion

There is a lot to consider regarding the financial realities of purchasing a home. Like anything else, there is a learning curve. By enforcing and tracking a budget before you buy, you’ll be better prepared for the unexpected when you purchase a home.

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