First-time homebuyers: should you buy a condo or a house?
Learn about what to consider, what to watch for, and how to go about making the wisest decision when getting into the real estate market.
In today’s housing market, there is a lot of pressure to just buy something. We’re often told it doesn’t matter what you get, just as long as you get on the property ladder. However, this can rush you through the process of taking time to carefully decide what you need, where you should buy, and the type of home that’s right for you.
Understanding what it costs to buy and own a home in Canada is critical to making the right choice. If you’re a first-time homebuyer, one of the first questions you should ask is “condo or house?”
First time homebuyers: condo or house?
Choosing between buying a condo or house as a first-time homebuyer can be tough. To help you make a decision, try making a list of the pros and cons of buying a condo vs a house. But first, it is important to understand some of the key differences between these types of properties.
What is the difference between a condominium and a house?
A condominium is a single unit in a multi-unit building or community. Condominiums can be townhouse or apartment-style, and occasionally even completely detached. However, condominium owners share common areas and contribute to various shared expenses, including the upkeep of the common areas like hallways, courtyards, or even gyms and pools by paying monthly maintenance fees.
A condominium is governed by a board of directors for the condominium corporation. Unlike owners of freehold, non-condominium homes, owners of condominiums must abide by the rules and regulations of the condo corporation. This means if you want to renovate your home or even paint the colour of your front door, you need to get approval from the condo board.
Condo vs house: Could a house be right for you?
When you’re looking to buy your first home, the question of whether to buy a house or a condo really depends on what you’re looking for in a property, as well as what’s available in your area. And of course, price is likely one of the most important factors.
If you’re looking for a home to accommodate a growing family, pets who need outdoor time, one or two vehicles, and you like the idea of having a spacious garden and/or a yard, a house could be the best option.
However, owning a home also means you’ll have to take care of the cost and completion of maintenance issues such as fixing a leaky roof or plumbing, or hire somebody else to do it for you. In a condo, those headaches are all managed for you.
Houses in cities such as Toronto or Vancouver can be expensive for first-time homebuyers, yet they might not appreciate in value as much as a condo would. On the other hand, if you are in a suburban or rural area, a house could give you the lifestyle you want.
A house is also a good choice if you’re looking for some freedom to make changes to the exterior and landscaping, because condominiums often have strict rules about altering the outside appearance of units.
Condo vs house: Could a condo be right for you?
Finding the money to buy your first home in one of Canada’s urban centres can be challenging, especially as prices have continued to rise each year. Yet if you love the urban amenities and fast-paced lifestyle and are determined to become a homeowner in the downtown area of a major city, the cash you need upfront to purchase a condominium will usually be less than what you’d need to buy a house.
Condominiums can be a good choice for first time homebuyers who want to avoid the worries of upkeep on a property and who don’t mind renovation/exterior improvement restrictions that come with condos. They are also a good choice for homebuyers with a busy lifestyle, and those who are comfortable with a smaller living space, close neighbours, and either a small patio, balcony, or no private outdoor space at all.
Note: while you’ll also find condominium projects in suburban areas, consider the resale opportunities of these condos. Unless you’re planning to live in your first home for the long-term, you’ll be putting your condo on the market in a few years. Ask local real estate agents about the market for these condos.
It’s also important to be aware that maintenance fees are factored into the qualification calculations for your mortgage, and they could reduce the mortgage amount you qualify for.
Homebuying guide: mortgage and rebate info you should know
Canadian first-time homebuyers can take advantage of several different mortgage and rebate programs to help get into the real estate market. However, depending on the price and location of your home purchase, you might not get to take maximum advantage of these programs, which are only available once to each homebuyer.
For example, you can use up to $35,000 from your RRSP with the Home Buyers Plan, the First-Time Home Buyers Tax Credit is $750, and you could get some (or all!) of your Land Transfer Tax rebated, depending on your province and city. Plus, the federal government launched the First-Time Home Buyer Incentive to help cover a portion of the down payment for qualified buyers. Talk to your realtor about your situation to make the most of these first-time buyer incentives as part of your condo vs house decision.
If you’re thinking of buying your first home – whether it’s a condo or a house – check out our affordability calculator to see how much home you can afford, and get in touch to learn more about our different mortgage options and the first-time buyer programs.
Getting into your first home is exciting. Research your options and consider your priorities before setting your heart on a specific condo or house.