As a Realtor, I may have some bias, but I’ve also seen a lot of first-time buyers in situations just like yours. The decision to buy now or wait really depends on your unique goals and financial comfort level, so let’s break down some of the key factors involved.

Understanding the Financial Differences

With a 5% down payment, you’ll face two main differences compared to a 20% down payment:

1. CMHC Insurance Costs
   If you buy with less than 20% down, the Canada Mortgage and Housing Corporation (CMHC) requires mortgage insurance. For example, on a $500,000 home with a 5% down payment, this insurance could add about $19,000 to your total cost, which is rolled into the mortgage. While significant, this cost spreads out over the life of the loan, so it’s unlikely to be financially crippling.

2. Monthly Mortgage Payments
   With a lower down payment, your mortgage will cover more of the home’s purchase price, resulting in higher monthly payments. However, insured mortgages sometimes offer slightly better interest rates, as lenders view these as lower risk.

Considerations Beyond the Financials

There are also non-financial considerations that may influence your decision. Let’s look at a few of these.

• Market Timing is Tricky
  Trying to time the real estate market perfectly is extremely difficult, and it can involve unexpected delays. Right now, multiple factors are at play across the Canadian market, some pushing prices up (like a housing shortage and generational wealth transfers) and others potentially bringing them down (like slowed immigration). Local factors will affect Ottawa differently than other cities, and waiting for a “perfect” market could mean missing a good opportunity.

• Personal Goals and Stability
  Evaluate your personal financial and lifestyle factors:

  • Can you afford a home that you’d be happy with today? A home should be one that you’ll enjoy, not one that will stretch your budget thin.
  • How stable is your income? Could you still afford to buy if home prices go up by 10-20% over the next five years? Your budget’s sensitivity to price changes can help you assess whether buying now or waiting might be better.
  • Long-Term Goals – If home ownership is important to your long-term plans, it may be worth considering buying sooner, especially if renting isn’t helping you reach your goals.

Final Thought: If You’re Ready, Stay Active

If home ownership aligns with your long-term goals, and you find homes in your budget that you’d be happy living in, then it makes sense to keep an eye on the market. Being prepared means you can move quickly if the right property becomes available, even if you don’t have the full 20% saved up yet.

Buying a home is a significant decision, so consider both financial and personal factors to find the right balance for your circumstances.