What you need to know before buying a home: Key trends that may impact your decision

Whether you’re dreaming of your first condo or considering a move to a townhouse or detached home, recent trends can help you decide if it's the right time — but only if you’re prepared. 

The past few years have brought significant shifts in Canadian real estate, with changes in mortgage rates, home prices, inventory levels and overall affordability.

Homebuyers, in particular, have faced a lot of challenges. Ultra-low interest rates early in the pandemic¹ made borrowing more affordable, but there weren’t enough properties on the market to satisfy demand — and prices soared. When homeowners were ready to sell (in part to cash in on those higher prices), interest rates had gone up, leaving many first-time buyers priced out of the market.²  But with the potential smoother market conditions ahead of us, we expect interest rates, prices, supply and demand to stabilize.³ This could be an opportunity for buyers.

Intrest rates are approaching the range they were pre-pandemic — currently sitting about a half-percentage point above the rate in January 2020. ⁴ Scotiabank predicts that the Bank of Canada will hold interest rates at this level for most of the year, with a small (half-percentage-point) increase at the end of 2026. And while forecasts vary, most experts seem to agree that rates are unlikely to suddenly skyrocket this year.⁵

For buyers, that stability matters. More predictable interest rates make it easier to understand how much you may qualify for, which determines the price range you can afford. It also helps you budget for monthly payments, compare mortgage options and decide between fixed-rate and variable-rate products with greater certainty.

Experts expect housing prices to remain relatively stable — with any increases generally in line with inflation and well below the double-digit gains earlier in the decade. For example, the Canadian Real Estate Association (CREA) forecasts the national average home price to increase by 2.8% on an annual basis (with smaller rises in B.C., Alberta, Ontario and Nova Scotia),⁶ while Scotiabank predicts an increase of less than 2%. Other forecasts suggest prices may remain flat or even decline in certain regions, especially in condo-heavy or already high-priced markets.⁵

Slower price growth often gives buyers more time to evaluate without the pressure to act quickly.

In a healthy real estate market, the number of homes for sale and the number of prospective buyers moves closer together — and that’s what we’re seeing now in many regions of Canada. That alignment will drive residential property sales up by 5.1% nationally in 2026 as compared to 2025, CREA predicts — with an even bigger boost in activity (8%) in Ontario and British Columbia.⁶

In practical terms, buyers can still expect some competition, but fewer bidding wars means more time, choice and flexibility to purchase a home with confidence.

Another factor to keep in mind is pent-up demand. CREA reports that many first-time buyers who paused their search between 2021 to 2025 while waiting for lower rates may feel ready to return to the market. If they do, expect a more competitive spring and early summer season, especially for entry-level homes and well-priced listings.⁶ Planning ahead and being prepared can give you an advantage.

Regardless of whether it ends up being a buyer’s market or seller’s market this year, it’s important to get your personal finances in order if you plan to make a purchase. That means saving enough for a down payment and closing costs, and improving or maintaining your credit score to get more favourable mortgage rates. Let’s break down the steps you need to consider when buying a home.

In Canada, the minimum down payment is usually:

• 5% of the first $500,000 of the home price and
• 10% on any amount over $500,000 (up to $1.5 million) or
• 20% on homes of $1.5 million or more

Saving more than the minimum means a smaller mortgage and lower monthly payments. If you put down 20% or more, you’ll avoid mortgage default insurance, which also lowers your total costs.

Lenders look at your credit score to decide your mortgage rate. A higher score often means better rates and more mortgage options. To improve your credit score before you apply, make sure you’re practicing good credit habits like:

• Paying bills on time
• Reviewing your credit report to spot and correct any errors
• Keeping your account balances below 30% of your available credit

Aside from your down payment, there are other expenses you need to save up for before you’re ready to buy. These include closing costs — like legal fees, title insurance and land transfer taxes — that must be paid before the closing date of your home purchase. 

Closing costs vary depending on the type of property you buy and where you buy it. As a rough rule, budget 1.5% to 4% of a home’s purchase price for closing costs.⁷

Once you own your home, your mortgage payment isn't the only new ongoing expense you’ll face. Don’t forget to budget for property taxes, utilities, insurance and maintenance.

Governments are under growing pressure to help make home ownership more affordable to Canadians, especially first-time buyers. In response, they’ve enacted or proposed a number of changes in recent years that buyers should be aware of.

The federal government’s First-Time Home Buyers’ GST Rebate received final approval in March 2026.^8,9 That means first-time buyers who purchase a new or substantially renovated home are now eligible for a full rebate of the 5% GST on new homes up to $1 million, providing a savings of up to $50,000. (There’s also a partial rebate for homes between $1 million and $1.5 million.)

In partnership with the federal government, the Ontario government announced a temporary HST rebate on new homes for first-time buyers in Ontario in its 2026 budget.¹⁰ Once passed into law, it would offer a full rebate of 13% on new homes in Ontario up to $1 million, for a total savings of up to $130,000. (The maximum rebate of $130,000 would also apply to new homes valued up to $1.5 million, and there will be partial rebates for new homes valued greater than $1.5 million.) The rebate would apply to eligible purchase agreements signed between April 1, 2026, and March 31, 2027.

If you’re not a first-time buyer but are purchasing a new build, you may still be eligible for a partial sales tax refund under the existing GST/HST new housing rebate.¹¹

If you’re planning to buy your first home sometime soon, there are other incentives to take note of:

• First Home Savings Account (FHSA): This relatively new registered account is a great savings vehicle for your homebuying goals because you never pay a tax bill on these savings. There’s no minimum contribution to open an FSHA, and it can hold a variety of savings and investment products such as cash, GICs, mutual funds and even stocks and bonds. The total contribution limit is $40,000 with an $8,000 annual limit.¹²
• Home Buyers’ Plan (HBP): Withdraw up to $60,000 tax-free from your Registered Retirement Savings Plans (RRSPs) to buy or build your first home, with 15 years to repay.
• Home Buyers’ Tax Credit: Eligible Canadians can claim a non-refundable tax credit of up to $1,500 on the purchase of your first home.
• Land transfer tax rebates: First-time buyers in Ontario, British Columbia and Prince Edward Island can get exemptions or refunds on land transfer taxes worth thousands of dollars.^13,14,15

Trying to time the market perfectly isn’t usually a good strategy, as no one can predict the market with certainty. Current indications suggest a calmer Canadian housing market this year; one that’s neither overheating nor falling apart. Having said that, it’s best to focus on your personal circumstances to determine if it’s the right time for you to buy.

• You’re financially ready (stable income, manageable debt, solid down payment and a healthy savings account balance).
• You understand what you can afford and have been pre-approved for a mortgage.
• You find a home that fits your goals and price range.

• You need more time to save for your down payment and closing costs.
• You want to improve your credit or reduce debt.
• You’re unsure about your employment or long-term plans.

Buying a home is one of the biggest financial decisions most Canadians will ever make, so taking time to prepare can make the process smoother and less stressful. Here's how you can get ready:

Buying a home isn’t about outsmarting the housing market — it’s about understanding it well enough to move with confidence.
And explore mortgage options with the mortgage calculator tool to see what makes sense for your budget.