A majority of Canadians are doing their research and making informed financial decisions when buying their first home, but many are taking on more debt than they can afford, a new report reveals.

The TD Canada Trust Home Buyers Report surveyed 1,000 Canadians who have purchased their first home in the past 2 years or who intend to purchase a home in the next 2 years.

It found that Canadians are making informed financial decisions before buying their home by learning about mortgage options, getting pre-approved, calculating closing costs and estimating utility costs. However, many homebuyers felt unprepared for such expenses as land transfer taxes, closing costs and legal fees.

And many are ambitious in their quest for their first home. The survey found homebuyers largely prefer newer and detached homes to older and semi-detached homes or condos, with six-in-ten opting for fully detached homes, and three-quarters wanting a new home.

These homebuyers are relying on debt to finance a significant part of this major purchase.

Nine-in-ten first time buyers took out or expect to take out a mortgage for their home and of these buyers, only 30% plan to or make a down payment of more than 20%. The remaining 70% will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation.

Six-in-ten are worried about being able to afford their home if interest rates rise. Nearly three-quarters of those surveyed have or plan to have a fixed-rate mortgage.

“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time,” said Farhaneh Haque, regional sales manager, mobile mortgage specialists, TD Canada Trust.

Advisors can help homebuyers recognize the importance of making a down payment of at least 10%, Haque suggests.

“It may mean that you need to save longer before buying your first home, but it will pay off in the end,” says Haque.

The survey found that 57% saved or plan on saving for two years or less for their home purchase.

IE