Buying a home for the first time in Canada can be overwhelming. However, knowing what to do even before you start searching can help reduce stress. For first-time home buyers in Canada preparing to meet a mortgage broker for pre-approval is the first step even if you think your financial position is ok. Taking these proactive steps can streamline the process and improve outcomes. Below is list of prioritized steps with explanations, followed by common mistakes I have seen in the market for the last few years and how to avoid them.
1. Assess Financial Readiness
Honestly, evaluate your financial situation to understand your budget and affordability. Dreams and aspirations are good, but mortgage brokers deal with facts. Stick to the facts. Review income, expenses, savings, and debts to determine how much you can afford for a down payment and monthly mortgage payments.
A frequent common mistake is overestimating affordability by focusing only on income without considering existing debts, lifestyle expenses and potential additional cost to buying a new home of investment property.
To avoid this common mistake, create a detailed budget using tools like a spreadsheet or budgeting app. Include all monthly expenses (e.g., utilities, groceries, debt payments) and use an online mortgage affordability calculator to estimate a realistic home price range. Aim for a mortgage payment that does not exceed 30-35% of your gross monthly income. Importantly, talk to a financial advisor at your bank. It is free.
2. Check and Improve Credit Score
Your credit score (a value that determines the creditworthiness of an individual) significantly impacts mortgage approval and interest rates you will get. Obtain your credit report and ensure its accurate, aiming for a score of 680 or higher for better mortgage terms. Having a term-life insurance that covers the principle, and the term of the mortgage loan gives mortgage debt protection to the buyer and peace of mind to the lender.
Common mistakes are, changing jobs in the middle of a home buying transaction, ignoring credit issues or applying for new credit (e.g., credit cards, car loans, line of credit) before pre-approval, which can lower your score or signal financial instability.
To avoid this mistake request for a free credit report from Equifax or TransUnion via their Canadian websites. Some Canadian banks also freely provide this service directly on your bank account profile. Dispute any errors immediately. Pay down high credit card balances to keep credit utilization below 30%. Avoid changing jobs, opening new credit accounts or making large purchases until after closing on your home.
3. Save for a Down Payment and Closing Costs
To buy a home in 2025, a minimum down payment of 5% is required for 1st time home buyers buying homes under $500,000, with higher percentages for pricier homes. Closing costs (e.g., legal fees, land transfer tax) typically range from 1.5 to 4% of the home price. Underestimating total upfront costs or failing to save enough, lead to delays or reliance on high-interest loans is a common mistake.
To avoid making this costly mistake, save at least 5-10% of your target home price for the down payment, plus an additional 2-4% for closing costs. Set up a dedicated savings account (e.g., FHSA – first time home savings account) and automate monthly contributions. Explore government programs like the First-Time Home Buyer Incentive or Home Buyers’ Plan (HBP) to boost funds but confirm eligibility. If your savings is outside Canada, contact your mortgage broker or bank for guidance on how to quickly move funds to a Canadian bank.
4. Gather Necessary Documentation
Mortgage brokers require documents to verify income, employment, and financial stability. Preparing these in advance speeds up the pre-approval process. Contacting your financial adviser or mortgage broker early will greatly help you map out a clear strategy to reach your goal on time and to seize opportunities in the market
 Common mistake mistakes are submitting incomplete or outdated documents, causing delays or rejection. This can be avoided by compiling a checklist of required documents, including:
- Â Recent pay stubs (last 30 days)
- Â T4s and Notice of Assessment (NOA) for the past two years
- Â Proof of additional income (e.g., bonuses, side gigs)
- Â Bank statements (last 90 days)
- Â Photo ID
- Â Proof of down payment source (e.g., savings account statements)
Organize these in a digital folder or binder for easy access. Confirm with your broker if they need additional documents specific to self-employed or contract workers.
Be proactive. Ask questions. Approach your home buying as a project. By preparing early and having the right mind-set you may avoid making emotional decision. Always remember the mortgage broker is only carrying out a financial risk assessment on you household income and its never personal even when it may seem so.
5. Research Mortgage Options and Lenders
It is essential to understand different mortgage types (fixed vs. variable rates, open vs. closed) and compare lenders (banks, credit unions, brokers) to find the best fit for your needs. Typical mistake could be focusing solely on the lowest interest rate without considering terms, penalties, or lender reliability.
To avoid this research mortgage types online through trusted Canadian sources like Ratehub.ca or Canada.ca. Discuss options with your realtor for insights on local lenders in New Brunswick. Ask brokers about pre-payment privileges, portability, and penalties to ensure flexibility. Compare at least three lenders to balance rate and terms.
Take advantage of session with your financial adviser or Mortgage broker to ask questions but also do research online at your own pace before you go for your first mortgage meeting. Yes, if you have never heard some of these financial terms of assume you know them you may be nodding your head but making a big mistake. So, knowledge is key.
6. Avoid Major Financial Changes
Maintain financial stability during the pre-approval process to avoid jeopardizing your application. Lenders reassess your finances before final approval.
The common mistakes are change jobs, taking on new debt, or making large purchases (e.g., furniture, vehicles), which can alter your debt-to-income ratio or credit profile.
How to Avoid this? Keep your financial situation stable from pre-approval to closing. Inform your employer of your home-buying plans to avoid job changes. Delay major purchases or new credit applications until after closing. If a change is unavoidable (e.g., job offer), consult your broker immediately.
7. Schedule a Meeting with a Mortgage Broker
Book an appointment with your financial adviser at the bank or a reputable mortgage broker to discuss your financial profile, get pre-approved, and lock in a rate (typically for 90-120 days) or leave it floating if you think rates may come in your favor.
Common mistakes some people make is choosing a broker without vetting or not preparing questions, leading to confusion or missed opportunities.
How to avoid this? Ask your REALTOR® for broker recommendations or check reviews on platforms like Google or Ratehub.ca. Prepare a list of questions, such as:
- Â What mortgage terms suit my situation?
- Â Are there government incentives I qualify for?
- Â What are the total costs, including fees?
- Â Arrive with all documents and a clear idea of your budget and home preferences.
By following these steps in order, first-time home buyers can approach their mortgage broker with confidence, increasing their chances of a smooth pre-approval process.
 Need help with this? Subscribe to my mailing list and receive more tips like this and know about our next free or paid webinar
Click here to join mailing list >> MAILING LIST
If you found this helpful, follow, like and share for more regular updates.