Home Ownership5 min readFebruary 3, 2021

Q&A: Facts to Know Before Purchasing Your First Home

If you are in the position to purchase a home, it is imperative that you be realistic about what you can afford and understand what you are getting into. As my niece, Tekla, prepares to purchase her first home, I sat down and answered some questions for her on the basics of home ownership – knowledge and considerations that would be helpful to anyone looking to save for or purchase their first home.

My niece who will be turning 22 in November, is a very focused young person. She attends university and has a couple of part time jobs working as a teaching assistant and as a lab technician. In her spare time she likes to read, cross county ski and hang out with her friends.

From her late teens she has had her sights on launching out on her own earlier rather than later. She has been working hard at saving a down payment on a home and has chosen to forgo purchasing a car and oodles of fancy clothes to reach this goal. She is on track to make this purchase in late 2021 or early 2022.

The following are some Q & A that my niece and I have chatted about over the last few months as she prepares to make what will likely be the largest purchase of her life.

Q:          What is a down payment?

A:          The amount of money that a buyer has saved to put towards the purchase price of a house. If your down payment is less than 20% you will need mortgage loan insurance. You can pay it in a lump sum or add it to your mortgage and include it in your payments.

Q:          What is a mortgage?

A:          The amount of money that you will need to borrow to purchase a house.

Purchase price-down payment = mortgage

Q:          What does amortization mean?

A:          The amount of time that it will take you to pay off the mortgage, usually, 15, 20 or 25 years.

Q:          What does “term” refer to?

A:          The term is the period of time that you agree to be committed to paying either a fixed or variable interest rate on your mortgage (the money that you have borrowed). For example you may have a mortgage amortized over 25 years on a five year term. At the end of the five years you and the lender will renegotiate the interest rate that you will pay for the next term. Terms usually run 1, 3 or five years.

Q:          What are closing costs?

A:           When you buy a house you will have to pay certain one time expenses such as legal fees, home inspection fees, land transfer fees etc. When determining how much these fees will be, it is recommended that you factor 1.5% – 4% of the purchase price of the house to cover these costs. For example, if you are buying a house for $250,000 you should expect to pay between $3,750 and $10,000 in closing costs.


This basic information is important to understand for anyone looking to purchase their first home. It is also important to recognize that home ownership is not for everyone. Not only do you have to consider the cost of buying a home, but you also have to consider the costs of running a home. Some of these cost include, utilities, insurance, maintenance, furnishing…and food to name a few.

It makes me happy to be a resource for Tekla as she finds her financial independence. This Auntie can say one thing for sure:  while encouraging financial literacy is one way to show my support, I am also ready to pass down that family floral heirloom couch and provide a free meal or two to lend a hand.

On a serious note, I find it extremely gratifying to help young people on their financial journey. Arming them with facts, good planning and moral support can go a long way.

– Ainsley Cunningham
Founder and Project Coordinator, MoneySmart Manitoba
Manager, Education & Communications, Manitoba Financial Services Agency


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  1. Jd says:

    Good & great sound factual advice

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