Are You Financially Ready To Buy A Home?

Before you scroll listings in Blackfalds or Red Deer, it helps to know what a lender will actually look at. The good news is it's only a few things.

Down payment first. In Canada you need at least 5% on the first $500,000 of the price and 10% on the portion between $500,000 and $1.5 million. Homes at $1.5 million and up need 20%. Put down less than 20% and you'll pay for mortgage default insurance, which gets added to your loan.

Next is the stress test. Lenders check you could still afford payments at the higher of 5.25% or your actual rate plus 2%. That's why the pre-approval number is often lower than people expect.

Lenders also look at how much of your income goes to housing and debts. A common guideline is about 39% of gross income for housing costs and 44% once you add car loans, cards and other debts. Our affordability tool runs those numbers for you.

One perk of buying here: Alberta has no land transfer tax, just small land titles registration fees. You'll still want to budget for legal fees, an inspection and moving costs.