Buying your first home when you live in BC’s Lower Mainland is a uniquely challenging real-estate scenario. When my partner and I bought our first place in 2010, we were newlyweds with stars in our eyes and our sights set on a cute townhouse with a decent-sized yard. After one reality check – a sobering mortgage pre-approval meeting – we were scoping out condos instead. But this isn’t a sad story! Buying that first condo was the best move we could have made.     

Every generation of first time home buyers faces challenges getting into the real estate market, but this moment in time might be the trickiest we’ve seen in decades. The Vancouver Sun did not mince words when it reported that housing affordability is at its worst in more than three decades across Canada, and the Vancouver market is among the hardest hit. So, if you’re feeling like the odds are stacked against you, you’re not exactly wrong. 

Of course, Boomers will claim they had it hard too: back in the 1980s they were faced with interest rates that pushed past 20%. But detached homes were also priced well within the average income – which is not the case today. So no, it’s not the millennial proclivity for avocado toast and fancy coffees that is keeping us out of the market. Nowadays, first time homebuyers buyers aren’t asking themselves what they can afford, they’re questioning whether they’ll qualify for a mortgage at all.

Vancity mortgage development manager Jan-Michael Campen has been working with mortgages for more than 15 years, and has seen the market fluctuate and reach record highs. Through it all, he has coached first time homebuyers through the emotional rollercoaster of securing a mortgage and purchasing their first home. Here are his four tips on navigating the process – and getting the right rate, and home, for you.

1. First, be realistic with what you can afford

When home prices and mortgage rates were lower, Campen says, “people could launch into a fair-sized home.” That’s not the case today, but Campen says his clients are adapting. “They’re more open to starting small, like a one-bedroom condo, and working their way up.”

When my partner and I worked with Vancity to secure a mortgage, it was our first step toward getting grounded in reality. Every home-buying journey will have ups and downs, but staying positive isn’t tough if you begin with realistic expectations, Campen says. Starting with a smaller home, a realistic down payment, and manageable monthly mortgage payments is a great way to get your foot in the door without overextending yourself. If you want to get a better mortgage rate, start by getting pre-approved with a mortgage specialist. You cannot DIY this process. This step is key because it helps you figure out what you can afford and sets you up for success. “Setting expectations upfront helps with the emotional rollercoaster,” Campen says. “Getting pre-approved gives you a clear idea of your budget and makes the whole process way less stressful.”

“Every home buying journey will have ups and downs, but staying positive isn’t tough if you begin with realistic expectations.” Jan-Michael Campen, Vancity mortgage development manager

2. Get yourself pre-approved for a mortgage

Before you hit the pavement on your search for a home, know your financial limits. This will help you to be realistic about how much debt you can carry with a mortgage, and feel confident about what those monthly payments will look like. It could be a tough pill to swallow if you’ve been looking at $800,000 townhomes when you should be checking out $600,000 condos. I’ve been there, and I do not recommend it.

A mortgage specialist will review all of your financials and work to get you pre-approved for a mortgage so that your search is aligned with your budget. For Campen, “putting numbers on paper” with a mortgage specialist is the first step in the process. “Next, we’re going to collect your income, check your credit score, and actually put numbers together. Then we’re going to pre-approve you.”

Depending on how much research you’ve done on the amount you’re able to qualify for, and the time you’ll spend paying it down — the numbers may come as a shock. “For a lot of people, it’s a bit of a wakeup call,” admits Campen. “But that’s why it’s so important to go through the pre-approval process first with a specialist.” In this case, ignorance is not bliss.  

3. Find an empathetic mortgage specialist

Using an online mortgage calculator is a quick way to get a rough estimate of your purchasing power and ability to make monthly payments, but it’s not a replacement for the thorough, holistic advice that a mortgage expert can provide. Plus, it can be fun to play around with different scenarios as an exercise in becoming more flexible. 

“First time home buyers have a lot of questions, which they should,” says Campen. “The biggest questions are: What can I afford? What’s the payment? And what’s the process?”

First time buyers often require more hands-on support, and that’s completely understandable! I couldn’t tell you how many townhouses and condos we viewed before finding the right one. Having an experienced, understanding mortgage advisor, and a patient, trustworthy realtor on your side can make it easier to gather information and explore options, as well as to sign the contract and make your first monthly payment.

You’ll want to find a mortgage specialist who can communicate openly and clearly, and who is able to empathize with the first time home buyer process and go beyond just crunching numbers by actually listening to your concerns. They should actively listen to your concerns, provide personalized advice, and guide you through each step of the process to ensure you feel confident and well-supported. Sound like a dream? Rest assured it’s an achievable one! “Being with Vancity, I see it day in and day out: you do have more of a connection with the people that work here,” says Campen. “You carry more weight; you’re not just a number.”

One crucial thing your mortgage provider should level with you about is the difference between “could” and “should.” They will help you understand the difference between what you could afford in mortgage payments each month versus what you actually feel comfortable being responsible for paying each month. Back in 2010 we had a lot of conversations about what we could technically afford and how that would change our lifestyle. We ended up picking a lovely condo that still gave us wiggle room each month to enjoy the things we love to do. Plus, it had just enough space for our plans to grow our family.

4. Negotiate your mortgage rate

So how do you get the right mortgage – and the best mortgage rate? First, it’s important to understand all the factors involved in the rate you qualify for. Depending on your financial institution, the following can all factor into your mortgage rate: credit score; percentage of down payment; length of amortization; term of the mortgage; how much banking you hold with that bank and whether you’re willing to move more of your business to that financial institution; and whether you are purchasing a revenue property or a primary residence. Your mortgage advisor can also review the differences – including the pros and cons – between a fixed rate and a variable rate, and then you can decide which is best for your situation.  

“It’s important to understand the difference between having a 20% down payment and not having one, and what that means,” stresses Campen. “Those are two different rate categories right off the bat.” For example, if you have less than a 20% down payment, your mortgage will be an insured mortgage that will have different available rates, but also a mortgage loan insurance fee that you will have to pay for out of pocket.

Campen says people can be misled by seeing these mortgage rates online without understanding the context in which they’re provided and why. An old adage is fitting here: if it seems too good to be true, then it probably is.

Your mortgage specialist can help you run purchasing scenarios, for example: What kind of rate and terms could you get if you put down 20% on a smaller condo, versus stretching for the pricier townhouse with a 10% down payment and an insured mortgage.

It also doesn’t hurt to ask: What can I do to get a better rate? “Is it bringing the rest of my banking here? Is it taking a shorter amortization period? Is it a bigger down payment? Some of those things can play into your rate,” says Campen.

He warns that shopping around and going with whoever can provide the absolute lowest rate can cost you down the line. “The fees can be hidden in the background if you want to change your payment, for example.” Plus, when it comes time to renew your mortgage and renegotiate your rate, you want to deal with someone you know, who’s on your side. Think about something you’ve ordered online at a questionable retailer for a slightly cheaper price that then needs servicing or a return. We all know what comes next: it’s not fun and it involves a lot of phone hold music.

Campen also cautions against letting every mortgage provider run a credit check while you’re doing your research, which can knock points off your credit score each time. “I’m not saying don’t let anybody check your credit. But maybe just one or two that you’ve homed in on that you would want to go forward with.” We already had all of our banking with Vancity and were accustomed to a certain level of service and knowledge, so it was a no-brainer when it came to securing a mortgage.

Get the process started, with confidence

Purchasing your first home is a thrilling milestone that can be made easier with the right resources and support. Our first 2010 condo purchase ended up being a great way to get into the market, and after years of manageable monthly payments we were able to sell and upgrade into a townhouse (and it even had a cute little yard). I’m still grateful that we didn’t wait for prices to go down – spoiler alert: they did not – and that we started small. Three kids and three moves later and I wouldn’t change a thing about how we got here.

More people are understanding that purchasing their first home is possible, as long as they’re willing to adjust their expectations, rely on professional advice, and factor in their long-term goals rather than chasing an immediate dream home.  

“Surround yourself with positive people who have been through the process,” Campen says. And if you’re thinking about purchasing your first home, contact a Vancity mortgage specialist for personalized advice on getting approved for a mortgage that fits your finances.