Realizing Home Ownership by New Canadians

The Dream of Home Ownership

Ever since Maria and Robert Sanchez immigrated to Canada, they dreamed of owning their own home. To that end they scrimped and saved their money so they could have a downpayment. Their REALTOR® now set them up with a mortgage broker to see what they qualified for.

From Maximum Price to Making an Offer

On reviewing their income, credit and savings, the mortgage agent informed them they could purchase a home up to a maximum of $160,000.

So they reviewed, eliminated and inspected homes between $145,000 and $160,000. After a second showing of Maria’s 3 best picks, they decided on the 3-bedroom bungalow listed at $159,900. Their REALTOR® drafted an offer for $155,000 that was presented that same day. That evening, the REALTOR® informed them the seller countered the offer at $158,500.

Now Apprehension Sets In  

Maria wanted the house and wanted to accept the seller’s price, but fear was stopping her. She decided to discuss the mortgage payment with the mortgage agent.

She was told that the mortgage payment was less than their current rent, yet she now had a close look at her budget.

Was it Buyer Remorse or Compromise?

Maria decided to pass on the bungalow. Sure she had second thoughts, also known as buyer’s remorse. But it was more than that. Their lives had been focused on hard work, saving and sacrifice. They now saw an opportunity to save more money, own a home of their own and relieve some stress from expenses, all at the same time.


They decided to go back to a home they had seen listed for $149,900. They ended up buying it for $145,000. The payment was about $80 less per month but it gave Maria and Robert a little breathing room, and neither minded the compromise—the overall benefits were greater.

What can we take away from this?

To qualify a buyer for the maximum monthly payment on a mortgage, a lender first uses a formula of 32% of the buyer’s gross income before taxes. Though approved, for some this maximum may not create the kind of comfort a buyer needs and wants, based on their budget.

So What Would You Feel Comfortable With?

Once a buyer knows his or her maximum, two good questions to ask are,

  1. “How much of a monthly payment would I feel comfortable with?” and
  2. “With the lower monthly payment I prefer, am I okay compromising somewhat on the home purchase?

In Maria and Robert’s case, the lower payment gave them some breathing room for which they were willing to forego the higher priced home with a few more amenities--a smart move.

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