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Saving for a down payment

To save the largest amount possible, put together a savings plan  — and stick to it.

If your down payment is at least 20% of the purchase price of your home, you can apply for a regular mortgage. If you can't save that much, you will have to apply for a high-ratio mortgage or second mortgage.

3 tips for saving a down payment

  1. Keep the money separate from other savings.
  2. Grow your money safely in no-risk or low-risk investments.
  3. Save in an RRSP if you're a first-time buyer.

Learn more about short-term savings options.

Your employer may offer savings plans that are suitable for saving for a down payment. The advantage of these plans is automatic saving through payroll deductions.

Make saving automatic

You can arrange for a set amount to be taken each month, from your bank account or from your pay, to help you save. This is often called a pre-authorized debit (PAD), pre-authorized contribution (PAC) or pre-authorized purchase (PAP). Learn more about automatic savings plans.

Saving in an RRSP

Under the federal government’s Home Buyers’ Plan, you can use an RRSP to save for the down payment on your first home. Your contributions are tax deductible. And you can borrow up to $25,000 from the RRSP for your down payment when you are ready to buy. You won’t pay any tax on the money as long as you pay it back over the next 15 years.

Use this Mortgage calculator to see how different down payments affect your mortgage payments. A larger down payment will reduce your mortgage payments, and may give you the room to add extra payments to pay off your mortgage sooner.
 

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