Buying your first home is an exciting milestone but can also be overwhelming as a first-time homebuyer mistakes. With so many factors to consider—finances, location, mortgage terms, and home inspections—it’s easy to make mistakes that could cost you thousands of dollars or lead to regret.

To help you navigate the process smoothly, here are ten of the most common mistakes first-time homebuyers make and how to avoid them.

1. First-Time Homebuyer Mistake: Not Knowing Your Budget.

The Mistake:

Many first-time buyers start house hunting without a clear understanding of what they can actually afford. They fall in love with homes beyond their budget, leading to financial strain, rejected loan applications, or excessive debt.

How to Avoid It:

• Get Pre-Approved for a Mortgage – Before looking at homes, visit a lender to get pre-approved. This important step gives you a clear budget and makes your offer more competitive.
• Follow the 28/36 Rule – Your monthly housing expenses (including mortgage, insurance, and taxes) should not exceed 28% of your gross income, and your total debt payments should stay under 36%.
• Consider Hidden Costs – Property taxes, homeowners insurance, HOA or condo fees, maintenance, and repairs add up. Factor these into your budget.

2. Not Checking Your Credit Score or Improving It First

The Mistake:

Your credit score plays a huge role in determining your mortgage interest rate. Many first-time buyers don’t check their credit score in advance or take steps to improve it before applying for a loan.

How to Avoid It:

• Check Your Credit Score Early – Request a free report from a safe credit check website and review it for errors.
• Improve Your Score Before Applying – Pay down credit card balances, avoid taking on new debt, and make all payments on time.
• Avoid Opening New Credit Accounts – Large purchases or new credit inquiries can lower your score and impact mortgage approval.

3. Skipping Mortgage Shopping and Loan Comparisons as First-Time Homebuyer Mistakes

The Mistake:

Many buyers go with the first mortgage offer they receive, not realizing they could save thousands by comparing rates and loan terms from multiple lenders.

How to Avoid It:

• Get Quotes from Multiple Lenders – Banks, credit unions, and online lenders offer different rates and terms. Comparing them can save you money.
• Understand the Loan Terms – Look beyond interest rates. Consider loan types (fixed vs. adjustable), fees, and penalties.
• Work with a Mortgage Broker – A broker can help you find the best loan for your situation, especially if your credit or employment situation is complicated.

4. Draining Your Savings for the Down Payment

The Mistake:

Some buyers empty their savings to make a large down payment, leaving nothing for emergencies, moving costs, or home repairs as common mistakes.

How to Avoid It:

• Keep an Emergency Fund – Aim to have 3-6 months’ worth of expenses saved even after your down payment.
• Consider Low Down Payment Options – CMHC-insure mortgages and some conventional loans allow for smaller down payments (as low as 3-5%).
• Budget for Closing Costs – These can range from 2-5% of the home’s price and are often overlooked.

5. Not Getting a Home Inspection as First-Time Homebuyer Mistakes

The Mistake:

Some buyers skip a home inspection to save money or make their offer more attractive in a competitive market. This mistake can lead to costly surprises after moving in.

How to Avoid It:

• Always Get a Professional Home Inspection – A licensed inspector can identify foundation cracks, plumbing leaks, or roof damage.
• Attend the Inspection – Attend the inspection in person to ask questions and better understand the home’s condition.
• Negotiate Repairs or Walk Away – If the inspector finds major issues, negotiate with the seller for repairs or a lower price, or be prepared to walk away.

6. Ignoring Additional Homeownership Costs

The Mistake:

Many first-time buyers focus only on the mortgage payment and forget maintenance, property taxes, utilities, and homeowners insurance.

How to Avoid It:

• Budget for Ongoing Costs – Estimate yearly maintenance at 1-3% of your home’s value.
• Research Property Taxes and Insurance – These vary by location and can be significant expenses.
• Plan for Utilities and HOA Fees – Call utility providers and HOA/condo offices to get estimates before buying.

7. Letting Emotions Drive the Decision

The Mistake:

Buying a home is an emotional experience, but letting emotions take over can lead to overpaying, ignoring red flags, or rushing into a purchase.

How to Avoid It:

• Stick to Your Budget – Don’t let bidding wars or a dream home push you beyond your financial comfort zone.
• Make Decisions Logically – Compare homes based on needs vs. wants, conditions, and long-term value.
• Have a Trusted Advisor – Work with an experienced real estate agent who can keep you grounded.

8. Overlooking the Neighbourhood as Common Mistakes

The Mistake:

A home might be perfect, but you may regret your purchase if the neighbourhood isn’t safe, convenient, or a good fit for your lifestyle.

How to Avoid It:

• Visit at Different Times – Check the neighbourhood during the day, night, and weekends to assess noise, traffic, and safety.
• Research Schools and Amenities – Good schools boost property values even if you don’t have kids.
• Talk to Neighbours – They can provide insights into the community and any potential issues.

9. Not Understanding the Homebuying Process

The Mistake:

First-time buyers often rush into the process without fully understanding each step, leading to costly mistakes.

How to Avoid It:

• Educate Yourself – Read about the homebuying process, attend workshops, or take a first-time homebuyer course.
• Work with a Reputable Agent – A good real estate agent will guide you through negotiations, paperwork, and closing.
• Be Patient – The process takes time. Don’t rush into a decision due to pressure or excitement.

10. Making Big Financial Changes Before Closing as Common Mistakes

The Mistake:

Some buyers make large purchases (like furniture or a car) or change jobs before closing, which can affect mortgage approval.

How to Avoid It:

• Don’t Open New Credit Lines – Avoid taking out loans, financing appliances, or making large purchases on credit before closing.
• Keep Your Employment Stable – Changing jobs can impact your loan approval. If possible, wait until after closing.
• Avoid Large Bank Deposits – Sudden cash deposits can raise red flags with lenders and delay the process.

Buying your first home is a significant step, and while mistakes can happen, being informed helps you avoid costly errors. Take your time, do your research, and work with trusted professionals.

Plan, understand the process, stay financially disciplined, and you’ll set yourself up for a successful and stress-free homebuying experience.

Happy house hunting!