Having trouble affording your first home? You're not alone.

If you’re an aspiring first-time buyer getting frustrated by how hot—and expensive—your market is, you’re not alone. Many young people are in your exact position. In fact, this professor at UBC actually did research on the plight first-time buyers face, and determined that they’re by far worse off than their parents were.

That being said, there are ways to land a new home if you really want it. You may just have to employ creative measures, such as:

Buy with friends

You’d obviously have to be very careful which friends you choose—and make sure you employ the help of a good real estate lawyer when devising the contract—but this strategy has worked for some people. In one case I’m familiar with, a group of three roommates decided to just buy the home they were living in. It came up for sale and, after doing the math, they realized today’s low interest rates (coupled with a good down payment) made their mortgage payments cheaper than their rent payments. In another situation, a married couple and their friend bought a home together with a basement apartment. The bachelor lived downstairs and the couple—and eventually their kids—took the upstairs.

Be resilient

In a hot market, it’s easy to get discouraged—but it’s important not to let the endless bidding wars get you down. One buyer I know looked at every house that came up in her price range—regardless of what the photos in the real estate listing looked like. She eventually came across a gem—a recently-renovated home with a basement apartment in a decent neighbourhood. Not a single soul put an offer on the place because the agent hadn’t updated the listing photos—and the ones posted were pre-reno (and quite scary).

When necessary, settle.

Sometimes you just can’t get what you want. Sure, a three-bedroom three-bath detached home would be ideal, but sometimes a smaller townhouse is all you can afford (and find). If you can find a place that will make do for the next five years (that doesn’t overextend you), you may have to settle—and buy your dream home after you’ve built up some equity.

If you or anyone you know is trying to break into the housing market, please don’t hesitate to send them my way. Referrals are always appreciated!

How to quickly find your ideal mortgage payment

When shopping for a new home (and a new mortgage), it's best to work backwards-figure out how much you can afford to spend on your monthly mortgage payment and use that number to determine your ideal housing price point. How do you come up with that monthly number? Well, one way is to go through your last three months' worth of bank statements, figure out what your spending habits are decide how much you could comfortably spend on housing. The other (quicker) option? Try the 40X rule . The 40X rule is simple-and a calculation that's been used by New York City landlords for quite some time. Divide your annual salary by 40, and you'll end up with the approximate monthly payment you should be spending on your mortgage. Fiddling around with a mortgage calculator will help you translate that monthly number into a total mortgage amount-and, combined with your down payment, your housing price point. While this isn't a foolproof method, it will give you a starting point to look for houses in your price range (and avoid disappointment when you find out that the multi-million dollar mansion you had your eye on is actually not in your budget).

The New Mortgage Rules Effective February 15th. 2016

Breaking News:

Today Bill Morneau, Finance Minister, announced some significant changes to mortgages.  Effective Feb 15, 2016 the minimum down payment for house purchases over $500,000 will require a bigger down payment.

Here's how that works:

A purchase price of $800.000 until Feb 15th, 2016 would require a down payment of $40,000.  After Feb 15th the down payment changes to 5% on $500,000 ($25,000) and 10% on the amount over $500,00 (10% x $400,000 = $40,000).  Your new down payment required is $65,000.

This is a dramatic change and deserves to be read between the lines.  The Minister today said he was ensuring  credit worthy borrowers maintained enough equity to protect them. There is also a lot of talk of the US raising borrowing rates next month.   There appears to be a lot of pressure on the government to cool the housing market before it corrects itself.

A market that shuts out first time buyers is not a good thing.  First time buyers are shut out more by the price of housing than down payments.  At this time first time buyers have little hope of getting into the market because of the price and not because of their inability to save money.  They are also affected by the interest rates.

Lets take a look back to the early 1990's.  First time buyers were shut out of the market.  Prices were out of reach and buyers were flocking to the suburbs and small towns in big numbers.  Those lucky people that managed to get into the market soon found they owed more money than their houses were worth.  It would appear the government has not forgotten the lessons of that time.  While they won't out right say there is a correction on the horizons its getting ever more apparent.  The changes today will ensure those buying will have a cushion.


More to come on this for sure.

Is home buying about to become more difficult?

Just when you thought mortgage rules couldn't be tightened any more, the Office of the Superintendent of Financial Institutions Canada (OSFI) said it's "looking into" doing just that, by potentially eliminating amortizations over 25 years.

Thanks to last year's mortgage rule changes, amortizations over 25 years are no longer available to high ratio buyers - or those with less than 20% down. But individuals with larger down payments can still access 30- and 35-year amortizations.

That's what OSFI is looking to potentially stop. It's currently consulting with financial institutions on the matter to see if this solution is something that makes sense, and if it could potentially help stabilize the housing market (and its ever-rising prices), curb consumer debt levels and reduce the risk of exposure to rising rates.

It's a shame that the government is looking to eliminate this mortgage tool as a means of curbing household debt. Individuals already have to qualify for the five-year posted rate at a 25-year amortization - you'd think that would be enough.

That being said, interest rates have been extremely low for quite a while, and the housing market seems to have resisted previous attempts to cool it down. Finance Minister Jim Flaherty - along with the Bank of Canada - have repeatedly expressed concern over the housing market. They'd rather see a soft landing than a bust - and really, who can blame them?

If you're in the market for a new home or refinance, and were hoping for an amortization longer than 25 years, you may want to give us a call sooner rather than later. You never know when the rules are going to change again!