For all you new homebuyers out there, if you are ever thinking of buying a home with less than 20% saved for your down payment, here’s my advice to you:

DON’T BUY THE HOUSE IF YOU CAN’T AFFORD IT.

I know it’s hard to resist HGTV (Home and Garden Television) and all their awesome shows where the show you all the cool projects you can do to make your place looks so impeccable and chic, but you are forgetting one major thing.. and that is that you couldn’t even save 20% for your down payment on a home.

I know, I know, you’re outraged right now because houses are $500,000 in Toronto and a down payment of 20% means you need to have socked away $100,000 in cash just to afford it.

I mean, who can really and comfortably afford a $500,000 home in your 30s (the time when most people get really hot for buying a house so that they can stop renting)?

…but consider this:

With less than 20% saved for a home, you aren’t just paying for the mortgage insurance because you don’t have the right amount saved, but… YOU COULDN’T EVEN SAVE 20% OF YOUR HOME’S PRICE!

That 20% down payment to me, is the ultimate sign that you simply can’t afford that house no matter what the banks say, and what HGTV shows tell you about how you can rent out your basement for $1000 a month which would take a load off you for meeting your mortgage.

Interest rates rise and fall, and are you really going to make a bet that your interest rates will stay the same for your entire mortgage, and never, ever rise?

Or how about making another bet that you can meet your mortgage because you’ve already counted on having a tenant living in your basement paying half of your mortgage?

Maybe the fact that you have probably already stretched to the limit on your budget because the mortgage is eating 50% of your net income, and any little disaster could burst your bubble?

Want more?

There are plenty of other real-life horror stories out there that you think don’t apply to you, but happen more often than you think.

I repeat: If you don’t have 20% saved for your home, you simply need to find a cheaper home or not buy a home at all until you have 20% down on it.

Wait until you have the money, even if it takes you another 10 – 20 years. At least you won’t be screwed if anything happens, because it’s better to be cautious now than to be regretful later.