Top tips on saving for a down payment

Oct 2023

Saving for a down payment has always been challenging, but with home prices, interest rates and inflation finally stabilizing, the time is right for prospective homebuyers – especially first-time buyers – to strategize on buying that longed-for home.

Here are 10 tips on saving for a down payment.

  • Start by realizing it takes time to accumulate your down payment. Don’t get discouraged: a good home, unlike a restaurant meal, is a long-term proposition that will give you and your family long-term pleasure. If it takes a couple of years or longer to save the down payment, you’ll be glad you stuck with it.
  • Use a calculator like this one to figure out how long it will take to save for your down payment based on various scenarios, including how much you have saved to date. Note: it’s an American calculator but that makes no difference to the results.
  • Set up an automatic monthly transfer from your current account into a high-interest savings account (“high-interest” isn’t actually very high but it’s better than spending the money). Start with what you can afford and keep increasing the amount, even if it’s just by a few dollars a month.
  • Cut expenses. Instead of heading to the coffee shop every morning, get your shot of java at home or work. Are you paying for a streaming service you almost never use or buying takeout lunch instead of bringing something from home ($10 a day on lunch is more than $2,000 a year)? Could you spend less on new clothes and accessories? When we say, “Rome wasn’t built in a day,” it means goals are accomplished in small increments.
  • If you get a tax refund, a bonus at work or a gift of money from a relative, put it immediately into your down payment savings account. It can add up quickly.
  • Are you carrying a balance on a credit card with an interest rate of 20%? Pay off the debt, look for a card with a lower interest rate and, if you have to use it, make sure you always pay the balance at the end of the month (set up an automatic email or other digital reminder so you don’t forget to make the payment).
  • Where else can you shave costs? If you’re a couple, do you really need that second car? According to, it costs an average of more than $1,000 per month to own a car in Canada, including interest payments on a car loan, depreciation, maintenance and other expenses. Even with just one car, you’d be further ahead using public transit for your daily commute.
  • Canada’s Home Buyers’ Plan lets you withdraw up to $35,000 from your RRSP for a home purchase. If you’re a couple, you can withdraw a total of $70,000. You have to repay what you’ve withdrawn or pay income tax on it, but you have 15 years in which to repay (for a couple withdrawing $70,000, repayment works out to less than $400 per month). What’s more, your repayment starts the second year after withdrawing funds from your RRSP. If you withdraw funds in 2023, you don’t start repaying until 2025.
  • If you have a TFSA (Tax-Free Savings Account), you can use the money in it for your down payment. You might also be able to move TFSA funds into your RRSP to get a tax deduction and then withdraw the money from your RRSP for your down payment. If you do that, you must leave the money in your RRSP for 90 days to qualify for the tax break.
  • The new federal First Home Savings Account (FHSA) program lets you save up to $8,000 per year toward your first home and deduct the contribution on your income tax return. Total lifetime contributions per person are $40,000.

Saving isn’t easy. None of us likes to sacrifice the little pleasures we work so hard for. But when you’re handed the key to that beautiful new home, you’ll realize the sacrifices were worth it.