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Down payment still major challenge for 1st time home buyers

While a growing proportion of Canadians are more hopeful towards their prospects of buying homes, a considerable number are pointing at down payment costs as a significant roadblock.

According to a new survey conducted by Pollara Strategic Insights for Bank of Montreal, as much as 26% of first-time home buyers admitted that they will find raising funds for a 5% minimum down payment a “major” challenge, while 39% stated that it will be a “minor” struggle.

Moreover, just 14% of would-be buyers are already prepared to make down payments, while 55% are expecting to have their down payment funds within the next two years. Around 38% are confident that they will be debt-free prior to their first-time purchase.

“While first-time home buyers believe that market conditions are favourable for buyers, it’s important to make sure that carrying the costs are sustainable,” BMO head of personal lending and home financing products Hassan Pirnia said.

Roughly 13% of first-time buyers have stated that they are considering a home purchase valued at more than 30% of their incomes, while nearly 40% of these consumers expressed a willingness to sacrifice other expenses like travel, just so they can buy higher-priced homes.

The just-activated federal First-Time Home Buyers Incentive has also given consumers more reason to be optimistic: Among those in their 30s, as much as 50% held a strong belief that it will be very useful in their purchases. Across all demographics, fully 86% said that the incentive will help in fulfilling their home ownership dreams one way or another.