Ottawa Mortgage Blog

First-Time Homebuyer Mistakes to Avoid

April 9, 2026 | Posted by: Jamie Small - Ottawa Mortgage Broker

Buying your first home is an exciting step, but it’s also where small missteps can lead to costly consequences.

With today’s stricter lending standards and changing interest rates, careful preparation is more important than ever. A successful, low-stress purchase begins long before you start house hunting.

Here are some of the most common mistakes we see from First Time Homebuyers, and how to avoid them.

1. Credit Mistakes Can Be Costly

Your credit is one of the biggest drivers of your mortgage approval and your mortgage terms, yet many first-time buyers underestimate how sensitive mortage approvals are to even small credit issues.
It is not just about having “good credit', but It is also about how you manage little details of your credit leading up to your application.

Common mistakes we see:

• Missing a payment, even once, can significantly impact your score. 
• High credit utilization (over 30% of your available credit)
can signal risk to lenders
• Applying for too much credit - Many credit inquiries in a short period can lower your score 
• Closing older credit accounts and shortening credit history

To avoid these issues:
• Pay everything on time, setting up automatic payments if needed
• Keep balances low (ideally under 30%) • Limit opening new credit accounts before applying
• Keep long-standing accounts open
• Check your credit report regularly for errors

You do not need perfect credit, but stronger credit gives you more options, and often better ones. In Canada, a credit score of 680+ generally gives you access to better mortgage options, though approvals are still possible below that with the right lender and structure.

2. Down Payment Missteps

Understanding the down payment requirements is important to planning your first home purchase.

First, it's important to understand the minimum down payment requirements. 

Minimum requirements in Canada:
• 5% for homes up to $500,000
• 10% on the portion up between $500,000-$1,500,000
• 20%+ for homes above $1.5M (required)

Saving for a down payment can be one of the biggest hurdles when purchasing a new home. Luckily, there are tools to help you save more efficiently, and taking advantage of these can help you get there faster.

Programs available:

FHSA: First Home Savings Account

Allows you to contribute up to $8,000 per year, up to $40,000 lifetime, for a purchase of a first home. Contributions are tax-deductible (providing a tax refund), and growth in the account is tax-free.

HBP: Home Buyers Plan

Allows first-time homebuyers to withdraw up to $60,000 per person ($120,000 per couple) from an RRSP tax-free, to be used towards a down payment. Funds must be repaid over a 15-year period, starting on the second year after you made the first withdrawal.

Documenting Down Payment

Lenders in Canada are required to collect a full 90-day history of all down payment funds.
Any large deposits in accounts will require explanation and further documentation. If deposits cannot be explained or documented to the satisfaction fo the lender, it can cause last minute problems.  

To avoid these issues:
• Keep funds in one place for at least 90 days prior to closing
• Avoid moving money around last minute
• Document all deposits clearly
• Talk through any large transactions with your Mortgage Broker in advance

3. Not Securing a Pre-Approval Early

In today’s Canadian housing market, getting a reliable mortgage pre-approval early is critical It is one of the most important steps a first-time homebuyer can take to protect themselves, move confidently, and compete effectively.

With interest rates still volatile and lending guidelines remaining strict in 2026, pre-approval is vital to putting yourself in the best position for success with your home purchase.

The Benefits of Getting Pre-Approved Early
• Locks in your rate
. If rates rise, you are protected.
If they drop, you can still access better options.
• Defines your real budget
, not just what you qualify for, but what accurate payments to help you budget, and provides insight on closing costs and cash requirements. 
• Strengthens your offer
. Sellers value certainty. A solid pre-approval shows you are a serious and qualified buyer. It reduces the liklihood of financing falling through, and makes your offer more attractive. It may also allow you to submit cleaner offers with fewer conditions. 
• Catches problems early
. Credit, income, documentation, or down payment issues can be fixed ahead of time.
• Speeds up approval
. When you find the right home, you are in a better position to obtain approval quickly. 

4. Making Changes Before Closing

Even after doing everything right, last-minute changes can jeopardize your mortgage approval. Even after approval, your mortgage is not final until closing. Changes during this window can create problems.

Common mistakes:
• Changing jobs - Switching jobs, even for higher pay, can sometimes cause problems 
• Taking on new debt - Increasing debt before closing can sometimes create a issues 
• Financing furniture or a vehicle - Financing a car or buying furniture on credit can increase your debt ratios, and reduce approval amounts • Increasing credit balances

To avoid problems:
• Keep employment stable - avoid any major changes in your employment. If considering changes, discuss with your Mortgage Broker before making a change
• Avoid new credit - delay new credit until after your closing
• Hold off on major purchases (on credit) - until after your closing

Financial Planning Support

Buying your first home is an exciting milestone. With the right preparation, what may seem overwhelming at first can become a clear, manageable, and far less stressful process.

If you are planning a move this year, start early. A simple conversation can help you avoid the mistakes that cost time, money, and unnecessary stress.

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