Even though Canadian home buyers do their homework, the majority say there are some things they would have done differently. According to the 2012 TD Canada Trust First Time Home Buyers Report, the top three lessons learned from new home buyers are:

  1. Be more thorough when budgeting and accounting for all of the costs of home ownership (60%)
  2. Make a bigger down payment (60%)
  3. Buy a home sooner (55%)

"From being more thorough in their budget to exploring their mortgage options carefully, many first time buyers think they could have prepared better for their house-hunt," says Farhaneh Haque, Director of Mortgage Advice, TD Canada Trust. "Prospective buyers can learn from other buyers' mistakes. If you think you're ready for homeownership, do your research and make sure you know as much as you can about the process and on-going commitment."

Haque offers advice for first time home buyers to consider before house-hunting:

Budget for the hidden costs of home ownership

Home ownership takes a major financial commitment beyond the down payment and monthly mortgage payment. Many first time buyers admit they overlooked some of the additional costs: 29% say they didn't budget for on-going costs such as maintenance and utilities, 13% overlooked some of the one-time fees associated with buying a home, such as inspection fees and land transfer costs, and 6% didn't budget for anything beyond the down payment and monthly mortgage payment.

"When setting a budget for home ownership, you not only need to consider all the upfront costs involved in the purchase but the on-going costs that will become a part of your monthly expenses. Having a realistic picture of your new monthly expenses will give you a clear understanding of what you can afford and help you decide on the mortgage term and repayment plan that you'll be comfortable with. Online calculators are a great way to help you estimate these costs," Haque says.

More than half of first time home buyers with a mortgage (55%) said they were worried about affording their home if interest rates increase. If you're on a tight budget and worried that a rate increase could put too much pressure on your cash flow, Haque recommends considering a fixed interest rate mortgage. "If you do decide to go with a variable interest rate mortgage, factor the potential for a rate increase into your budget and make sure there's a clause that lets you lock in at a fixed rate if market volatility makes you nervous down the road."

Buy now or save for a larger down payment?

The top reasons home buyers give for deciding when to buy their first home is that they get sick of paying rent (48%), get a full time job (31%) or want to start a family and need more space (31%). Many first time buyers say if they could do it again, they would have bought sooner (55%), however 60% also say they wish they would have made a bigger down payment (likely requiring more time to save).

According to first time home buyers, saving for a bigger down payment might not take as long as you may think:

  1. A down payment of 5% or less takes 2 years or less to save (71%)
  2. A down payment of 10% to 20% takes 1 to 4 years to save (66%)
  3. A down payment of 25% or more takes 3 years or more to save (61%)

"Becoming a homeowner is a big decision. I'm not surprised that even after becoming homeowners, people are split about whether their timing was right," says Haque. "If you want to buy a home, learn as much as you can about the home buying process and start to prepare your finances. This research will help you determine whether you're ready or if you should hold off and continue to save."

What kind of homes do first time home buyers want?

The majority of first time buyers say they're looking for a detached home (54%). Condos were a distant second (18%). The top five most important features first time home buyers considered when shopping for a home were price (97%), the layout of the home (96%), number of bedrooms (95%), features of the home (92%) and size of backyard/garden (86%).

But, realizing that their dream home may not exist, the report found first time home buyers are willing to make some compromises. Encouragingly, the majority say they will stick within their budget and aren't willing to compromise on price (52%).

Before they were home buyers

Before buying their first home, home buyers are most likely to be renting with their significant other (38%) or on their own (20%). One-quarter go from living somewhere they don't pay rent (25%) to their first home purchase.

"Buying a home is the biggest investment most people will ever make, so it's important to save a sizable down payment and prove to yourself that you are ready to take on the responsibility of a mortgage," says Haque. "Start by comparing what it costs you to rent monthly to what it would cost if you owned your home. Remember, as a homeowner there are housing expenses such as property tax, insurance, repairs and utilities that should be factored in, in addition to your monthly mortgage payments."

The biggest purchase most Canadians have made before buying their first home is buying a car (58%). One-in-five say their biggest previous purchase was their education (19%), followed by a vacation (7%), wedding (6%) or electronic gadget (6%).