Buying in 3 to 5 Years? What to Do Now

By Jim Emilson · November 2, 2026

You want to buy a home in three, four, or five years. Not next month. Not next spring. Years from now.

Good. That is the best position in real estate. Time is the one advantage money cannot buy later, and most buyers waste it. They start thinking about a purchase six weeks before they want keys. Then everything is rushed: the savings, the paperwork, the neighbourhood choice, the compromises.

Starting now does not mean shopping now. It means setting up the pieces that take time, so that when you are ready, you buy once and buy right.

Here is the plan, in the order that matters.

1. Open the accounts before you need them

This is the single most time-sensitive move, and it costs nothing to do early.

The First Home Savings Account, the FHSA, lets each qualifying first-time buyer contribute up to $8,000 a year, to a lifetime maximum of $40,000. Contributions are tax-deductible. A qualifying withdrawal to buy a first home comes out tax-free, and unlike the RRSP Home Buyers’ Plan, nothing has to be repaid.

Here is the catch that makes timing matter. Your FHSA room only starts in the year you open the account. It does not build up retroactively. Open it in 2026 and you start with $8,000 of room. Wait until 2029 and those three years of room are gone for good. Unused room carries forward, but only up to $8,000, so the most you can put in during any one year is $16,000.

The RRSP Home Buyers’ Plan works alongside it. It lets each qualifying first-time buyer withdraw up to $60,000 from an RRSP, tax-free, to buy or build a qualifying home. That money is repaid to the RRSP over 15 years. For a first withdrawal made between January 1, 2026 and December 31, 2028, repayments do not start until the fifth year after the withdrawal. A couple who both qualify and max out both programs could put up to $200,000 toward a first home from the two accounts combined: $40,000 each from FHSAs and $60,000 each from RRSPs, plus any growth in the FHSAs.

Eligibility rules apply to both programs, including the first-time buyer tests. Check them with your accountant or on the CRA pages before you contribute. But the practical point is simple. If buying is on your horizon, open the FHSA now, even if the first contribution is small. The clock is the thing you cannot buy back.

2. Know your real number, early and loosely

Most people shop for a home with a price in their head and no idea what a lender will actually approve. Flip that around.

Go to a mortgage broker or your bank for a soft check. Not a full pre-approval. A conversation. Bring your income, your debts, your down payment target, and your timeline. Ask one question: what would we qualify for today, and what would have to change to qualify for more?

Two things to understand from that conversation.

First, the stress test. Federally regulated lenders must qualify you at the higher of your contract rate plus 2 percentage points, or a 5.25% floor. That is OSFI Guideline B-20, and it has not changed in 2026. In practice it cuts borrowing power by roughly 15 to 20 percent compared with qualifying at the rate you will actually pay. The number a lender gives you is smaller than the number an online calculator shows. That is normal. Plan to the lender’s number, not the calculator’s.

Second, your number is a range, not a promise. Incomes change. Rates change. Prices change. A household that can carry a $600,000 purchase today might carry more or less in three years. Revisit the soft check every 12 to 18 months. Each time, the picture gets sharper and the surprises get smaller.

3. Save the down payment, plus the rest of it

The down payment is the headline, but it is not the whole cheque.

On a $600,000 purchase with 20% down, that is $120,000. At 20% you also avoid mortgage default insurance, which is a real saving. Below 20%, insurance is required on most purchases, and the premium gets added to the mortgage. There is no shame in less than 20%. Plenty of first purchases are bought that way. Just know the trade-off before you choose it.

Then budget the costs that come with closing, in cash, on top of the down payment.

Land transfer tax. Buy inside the City of Toronto and you pay it twice: once to Ontario, once to the city, on the same price. Eligible first-time buyers can claim back up to $4,000 on the provincial tax and up to $4,475 on Toronto’s municipal tax, up to $8,475 combined. The rest is due on closing day, in cash. It cannot be rolled into the mortgage.

Legal fees, title insurance, and registration costs. Budget for all three. Your lawyer will confirm the numbers before closing.

A home inspection, even when you know construction. Especially when you know construction. A second set of eyes on structure, roof, foundation, and electrical is cheap insurance.

Moving costs, utility hookups, and the first repairs every home needs in month one. Every home needs something in month one. Budget for it now and it will not feel like a surprise.

Then keep an emergency fund separate from all of it. Three to six months of expenses, untouched by the purchase. A home with no cushion behind it is a home that owns you.

If you are planning renovations, add a contingency on top of the renovation budget. Ten to twenty percent is the honest range. Old homes hide things, and the things they hide are never the cheap ones.

4. Keep your credit boring

Lenders love boring. Pay every bill on time. Keep credit card balances low relative to their limits. Do not open new credit you do not need. Do not close your oldest card.

The big one: do not take on a large new debt in the final year before you buy. A financed vehicle, a consolidated loan, a line of credit drawn up to buy furniture. Every monthly payment counts against what you can borrow, and it counts at the stress-tested rate. If a car is coming, buy the car early in the plan, or after the house.

Self-employed income and variable income get extra scrutiny from lenders, who typically want to see a history of it, not one good year. If either of you is self-employed, a contractor, or paid on commission, talk to the broker about what documentation they will want, and start keeping it clean now. Two years of tidy records beats a scramble later.

5. Decide what the home has to do for ten years, not two

This is where a five-year runway pays for itself, because the cheapest home you will ever buy is the one you do not have to sell in three years.

Moving is expensive. Land transfer tax on the way in, agent commission and legal costs on the way out, moving twice, and the risk of selling into a soft market. Buying small with a plan to upsize in two years sounds sensible. In practice it often costs more than buying the right size once.

So think ten years ahead, honestly.

How many children, and how old will they be? A toddler needs a bedroom. A teenager needs a bedroom and a door that closes.

Will a parent live with you? If so, what does that actually require? A bedroom and bathroom on the main floor, or at least a layout that can become one. A separate entrance if you want everyone to keep their privacy. Room for a walker or a wheelchair later, not just today.

Where does everyone work, and how do they get there? A cheap commute on paper is a different thing at 7:30 in the morning.

What can you not change about a home? Location, lot, layout bones, ceiling height, natural light. Everything else is a renovation budget. Buy the unchangeable things first.

If a parent living with you is a real possibility, learn the rules early. A legal second suite, a garden suite, or a multiplex conversion each has its own zoning, permit, and building code requirements, and they vary by municipality. A basement apartment that is not legal is not an asset. It is a problem you inherit. Ask the city, or ask me, before you fall in love with a floor plan that depends on one.

6. Learn your neighbourhoods slowly

You have time. Use it the way a local would.

Pick two or three areas that could work and watch them the way you would watch a stock you plan to buy. Not the list prices. The sold prices. List prices are asking. Sold prices are the market. Watch what actually closes, how long it takes, and what sells over asking and what does not.

Visit at different times. A street at noon on a Sunday is not the same street at 8 a.m. on a Tuesday. Walk it. Sit in the park. Check the school, the grocery store, the transit stop, and the walk to all three. Talk to people who live there.

Keep a short list, written down, of what each area gives you and what it costs you. When buying time comes, you will not be starting from zero. You will be choosing between places you already know.

If you want, I will send you a monthly update for the areas on your list. No sales pitch. Just sold prices and what is moving. Watching the market for a year teaches you more than a weekend of open houses ever will.

7. Use the contractor advantage honestly

If one of you works in construction, you have a genuine edge. You can see past ugly carpet and dated kitchens to the bones of a home. You can price work properly. You can do much of it yourselves.

That edge has limits, and the limits are where fixer-uppers turn into money pits.

Structure, foundation, roof, and water. If any of those are wrong, the discount on the price is rarely enough.

Permits and inspections. Work done without permits can stall a future sale, an insurance claim, or a refinance. Budget the permit time, not just the material cost.

Your own time. A renovation done on weekends, with two small children, takes three times as long as the estimate. Price your evenings honestly.

The 10 percent rule. If a home needs more than about 10 percent of its price in work before it is livable, get a contractor quote and an inspection report before you offer, not after. Enthusiasm is not a budget.

The best fixer-upper for a handy buyer is a home that is ugly, not broken. Cosmetics are cheap. Structure is not.

The year-by-year checklist

Five to four years out: Open the FHSA. Get the soft lender check. Write down the ten-year needs list. Start the emergency fund if it does not exist yet.

Three to two years out: Revisit the lender check. Confirm the down payment target and the closing-cost budget. Narrow the neighbourhood list to two or three. Start watching sold prices monthly. Keep credit boring.

Twelve months out: Fresh lender check, this time a real pre-approval. Confirm the FHSA and RRSP withdrawal rules and timing with your accountant. Shortlist areas. Tour homes, including some you would not buy, to calibrate your eye. Line up your lawyer and your inspector before you need them.

Three months out: Pre-approval in hand. Proof of down payment ready. Offer strategy agreed with your agent before the first showing. Then buy the home, not the adrenaline.

What not to do

Do not wait for the perfect market. No one rings a bell at the bottom, and the people who waited for one in Toronto are still waiting. Buy when your life and your numbers are ready, not when a headline tells you to.

Do not stretch to the maximum a lender will approve. Approval is a ceiling, not a target. Leave room for rate changes, a parental leave, a broken furnace, and life happening.

Do not skip the inspection to win a bidding war. On a home that needs work, the inspection is the whole point. If a seller will not allow one, that tells you something too.

Do not buy a home that only works if everything goes right. Buy the one that still works if one thing goes wrong.

The honest close

Five years is a long time. Incomes change. Families grow. A parent’s health changes. The plan you make today will not survive untouched, and that is fine. The point of starting early is not to lock in a decision. It is to keep every option open and make the decision well when the time comes.

The people who buy well in this city are rarely the ones who moved fastest. They are the ones who were ready before they needed to be.

If buying in a few years is on your mind, the best first step is a conversation, not a search. Tell me where you are, what the home has to do, and when you think the timing might be right. I will tell you straight what I would do in your shoes, and what I would wait on. No pressure. Five years is plenty of time to do this properly.

General information only, not legal, tax, or financial advice. Confirm the account, tax, and mortgage details with your own lender, accountant, and lawyer before you act on them.

Sources, checked November 2, 2026: CRA, First Home Savings Account · CRA, Home Buyers’ Plan · Ontario, Land Transfer Tax Refunds for First-Time Homebuyers · City of Toronto, Municipal Land Transfer Tax Rebate Opportunities · OSFI, Guideline B-20 infosheet. Programs and limits change. Confirm current rules before acting.