What Can You Afford?
Before you start shopping for your dream home, it's very important to know what you can afford. Find out what your price range is and go from there. There is no point in shopping and researching homes only to find out that it's not possible for you to buy the ones you've been looking at. Keep in mind that it's not only the down payment and mortgage you need to be able to afford. Also consider all of the related expenses that come along with owning your own home. Whether it be utilities, property taxes or routine house-related maintenance or insurance, it can add up and you want to make sure you're prepared.
What is Important to You?
You want your first home-buying experience to be a positive one, so make sure you know what is important to you and prioritize those wants and needs. Maybe you can't live without a garage, or a big deck. Maybe you want to live in a community that has lots of outdoor amenities. Whatever it may be, make a list and decide what is necessary for you to be happy with your home. Buying your first home is a big deal, so make sure it's something that is right for you, and something you will be proud of.
Do some research and see if you qualify for any first-time homebuyer programs in your area. For example, Canada's Homebuyer Plan allows for people to withdraw up to $25,000 from their RRSP to go towards the building or buying of a home. The only catch is that you can not have owned a home in the last 5 years and must repay the amount taken out within 15 years. If the amount is not repaid within that time period you will have to pay tax on the amount as if it were income.
Reduce Your Debt
One of the smartest things you can do when you're preparing to purchase your first home, is to minimize or eliminate your current debts. If you have large balances on your credit cards and you're paying interest every month, work on paying that down. It's hard to save any substantial amount of money for a down payment, or be sure that you'll have enough each month for a mortgage payment, if you're consistently paying down multiple other debts as well.
Once you've taken the steps to buy your first home, make sure you continue to save money. Each month put away a small amount in a fund for emergencies, home improvements, or any other unexpected costs. The first home is a big milestone in anyone's life and you want to be able to take care of it and continue to enjoy it for years to come.