The Money.

You’ve made the decision.  You want to buy a house.  Through your initial estimates of your finances, you conclude that you have approximately zero dollars for this.

Hopefully, dear reader, you are a smarter person than I am and you have some savings set aside, because you imagined that someday this might be your goal, so you could be prepared for that.  If not, you’ve now gotta figure out a way to find that money – maybe you need to ditch some discretionary expenses, or maybe you need to take on a roommate, or maybe you need to move back in with your family – who will let you live with them rent free so that you can get back the hell out of their house as soon as you can.  That’s what I did.  It was drastic, it was not an easy decision, but it was absolutely the right one.  Thanks, mom.

But how much do you need to save?  When you have the coin for a house, how much house can you afford?  My thought process around finances went something like this:


How much can I borrow?

What is the bank willing to lend me?  I started figuring this out by googling mortgage affordability calculators and trying a few of them to see what they said.  A few you might want to consider:

You’ll need to enter your gross income, a downpayment amount, any debt information you have, an estimate of what your property tax might be, and an estimate of what your heating costs might be, in addition to a mortgage rate and an amortization period.

After trying these calculators, you’ll have a rough idea of what a lender might be willing to give you.  But, as they say, the banks will loan you just enough rope to hang yourself.

How much can I afford?

How much does “what a lender is willing to give me” line up with “how much should I actually consider borrowing”? To figure that out, you’ll need to figure out what your debt service ratios are.

First, there’s your Gross Debt Service ratio – your monthly housing costs (including mortgage principal and interest, property taxes and heating) should not be in excess of 32% of your gross monthly income.

Then, there’s your Total Debt Service ratio – your entire debt load (so, the above things plus any other debt you might be carrying, like credit cards, student loans, your car, etc.) should not be in excess of 40% of your gross monthly income.

You can learn more about calculating your GDS and TDS on the CMHC website.

Now you know how much you can borrow and how much you can afford to borrow, according to what “they” say.

But how much am I comfortable borrowing?

Me? I wanted to be more conservative.  These calculations above are all about where you max out – they really don’t consider what your spending habits are like on other things (discretionary expenses like, oh, I dunno – food, entertainment, Apple products, handbags… ok, so maybe some of those are just my problem).  My point is that they’re not necessarily calculations as to what you should do; they’re not necessarily what you’re comfortable doing, not what makes the most sense for you based on other things like ‘if you take on your max affordability, are you actually pretty terrible at sticking to your budget, and will you run out of money for wine?’ I don’t want that happening to you, and I absolutely cannot have that happen to me.

So now that you know your maxed-out ceiling, you should sit down and write out a budget.  You should include paying off your debts, as well as your spending habits on food, entertainment, medical expenses, travel, gifts, etc.  You should think about cash savings for short term goals and emergencies, and how you’re going to approach longer-term savings and investing.  When I did this, I started whittling down my desired mortgage payment.

For help with budgeting, check out this list of Best Budgeting Apps – I’ve tried YNAB and Spendee, but always find myself just creating my own spreadsheet in the end.

Let’s just get to looking at houses already, amirite??

Okay.  So now you have a pretty solid idea about your money situation.  At this point, I started looking at what houses in my affordable range looked like – and you know what? I wasn’t exactly thrilled.  So I had to take some time to think about what I really wanted (more on that in the next post) and reconcile that with what I could actually afford and be comfortable with.  I now had an idea of the kind of downpayment I was going to be shooting for – I had a goal.

With that goal in mind, I set up a plan – save a certain amount, every month – and I had to remind myself that I needed to actually put in the effort to stick to that plan and reach that goal, while also not beating myself up about it if I didn’t rigidly stick to that plan – off I went.


Dream House

Well, I’ve done it.  I’ve gone off and become a real grown-ass person. I’ve bought a house.

I remember when I first started renting, I had all these grand ideas about how – well – renting was going to be so much cheaper than home ownership could possibly be, so clearly I’d have lots of flexibility to do all these wonderful and amazing things.  Why would I want to be tied down with a house, when I could be all cool and commitment-free in my apartment?

Then, you know what happened?  I didn’t wind up having heaps of money to live just exactly how I wanted, and there were still all kinds of annoying adult-y things I had to worry about in my apartment, and how come I’m giving some other chump all my frigging money with no end in sight?

So, a few years ago, a number of people (my folks included) suggested that I consider moving back home so that I could save enough coin to buy a house and stop renting.  I came to the realization that, for me, owning was actually going to make more sense; so that’s what I did.

Now that I am a couple of weeks away from actually getting the keys, at last, I thought that I would do what I like to do when I’m embarking on something new, I’m gonna blog about it.  In the coming weeks and months, I plan on blogging about the whole home-buying process, from decision through to purchase, and then hopefully will continue writing about my adventures in home ownership.80s Barbie Dream House

Livin’ the dream.


First thing’s first, though, and that is you’ve gotta make the decision to jump in.  There are a few things I considered, and I recommend you think about these things too.

Where do I see myself in five years?

Ask yourself about your intentions for the next five years – are they pretty stable, or is there a lot of uncertainty about where you’ll be?  Maybe you don’t have it all figured out, but this is really a straightforward question about geography.  Think you’re still going to live in the same city in the next five years? Or are you someone who moves around a lot?

If you’re likely to stay put, home ownership might be something that makes sense for you.  If you’re likely to move, then maybe now isn’t the right time to buy, even if it is something you want to do.  Real estate transactions cost a lot of money, they are very time consuming, and can be emotionally draining, so for most people we’re going to try to limit the number of those transactions.

What do I want?

Home ownership is time consuming, or so I’m told.  I’ll soon find out.  But I know that as much as there were adult-y pain-in-the-arse things about renting, all those things that you don’t have to do in your apartment become yours to do in your home; unless of course you go the condo route, in which case only many of the pain-in-the-arse things become yours to do.

On the other hand, maybe you’re someone who wants a big ol’ garden in your yard, or maybe you want to renovate a place and make it really ‘yours.’  When you own a property, you can pretty much do with it as you please.  As a tenant, you’ll find yourself very limited.  Take some time to think about what it is that you’ll be giving up, and weigh those things against the things that you’ll be gaining.

But seriously though, what’s my money situation?

Reality check.  Even if all things were equal – let’s say your monthly living expenses in a rental property were exactly the same as your monthly living expenses as a homeowner – there’s still the small matter of a downpayment.

The average home price in Ottawa is somewhere around $400,000 now.  Consider as well that if you’re putting anything less than 20% down on your home, you’re going to have to pay for CMHC Insurance.  Then you’ll have to close the deal, which involves all kinds of not-insignificant expenses, like land transfer tax, a home inspection, legal fees and other disbursements just to name a few.  The cost of the transaction can be anywhere from 1.5-4% of the price of the home.  And even once you figure out how to cross these hurdles, chances are your house is going to be more expensive than your rental; don’t assume that your rent will translate into a mortgage payment, because you’ll probably be paying for more utilities than you do in a rental, generally over a greater square footage, not to mention the costs associated with maintaining the house and of course your property taxes.  Are you really going to be able to come up with that kinda scratch every single month for the next 25 years, while also allowing yourself such luxuries as, oh, I dunno, eating food?


What about me?  Well, first, I see myself living in Ottawa for the foreseeable future.  Much as I had wanted to move to Toronto in my early 20s, it just didn’t work out that way and by the time my mid-to-late 20s rolled around it wasn’t something I wanted so badly.  I feel pretty settled in Ottawa, and the city – which, for the record, I’ve now lived in for over 20 years – has really grown on me in a way it hadn’t when I had just finished university (whoa, ten years ago).  So that was my first checkmark in my “not crazy to consider home ownership” column.

Then I thought about what I wanted.  Turns out, it was the stability and security of home ownership.  Sure, it is going to be more expensive than renting, but the place will be mine; and, more importantly, not every penny that I spend on putting a roof over my head is going to go into someone else’s pockets.  Some of it is going to be building equity and putting me in a better position in terms of long-term financial stability.  When I first started thinking about buying, I wasn’t saving a penny – I was renting, and living paycheque to paycheque.  Even if my income didn’t change, and if I assumed I’d have some way to get a downpayment together, once I was in, some of the money would be staying with me in terms of equity in my home.  I wanted to do something smart for my future.

Finally, shit got real.  Fact was, I had no money to buy a house.  Fortunately, my parents were encouraging me to move back home so that I could save, a position I’m very fortunate to have been in.  So, I said so-long to my beloved apartment – in it’s cool spot, in a great building with neat amenities, and from which I could walk to work – and I said hello to the ‘burbs, started spending lots of time in my car, and began squirrelling away every cent I could.  That was in April of 2013, and just over two years later I bought my very first place.

Stay tuned, and I’ll tell you a little more about it.