Buying a home is an exciting milestone, but one of the biggest hurdles is saving for the down payment. Whether you’re a first-time buyer or upgrading to a new home, setting aside the right amount of money requires planning and smart financial habits. In this guide, we’ll walk you through how much you need, strategies to save faster, and programs that can help.
How much do you need for a down ayment?
In Canada, the minimum down payment depends on the home’s purchase price:
- Less than $500,000 → Minimum 5% down
- $500,000 to $999,999 → 5% on the first $500,000 + 10% on the remaining amount
- $1,000,000 or more → Minimum 20% down
If your down payment is less than 20%, you’ll need mortgage default insurance, which protects the lender in case of missed payments.
Smart ways to save for your down payment
1. Set clear savings goal
Start by calculating how much you’ll need based on your target home price. Factor in closing costs, moving expenses, and emergency funds so you’re financially prepared beyond the down payment.
2. Open a dedicated savings account
A high-interest savings account (HISA) or Tax-Free Savings Account (TFSA) can help grow your money faster while keeping it separate from everyday spending.
3. Automate your savings
Set up automatic transfers to your savings account each time you get paid. Even small, consistent contributions can add up quickly!
4. Cut back on non-essential expenses
Review your budget and find areas to reduce spending—whether it’s dining out, subscriptions, or impulse shopping. Redirect those savings into your down payment fund.
5. Boost your income
Consider taking on extra work, freelancing, or selling unused items to speed up your savings. Bonuses, tax refunds, or work raises can also go straight into your savings.
6. Pay off high-interest debts
Reducing credit card balances and other high-interest debt will free up more money for saving and improve your mortgage qualification chances.
Government programs to help you save
The Canadian government offers several programs to make homeownership more accessible:
- First Home Savings Account (FHSA) – A tax-free account that lets first-time buyers save up to $8,000 per year (up to $40,000 total).
- Home Buyers’ Plan (HBP) – Withdraw up to $35,000 from your RRSP tax-free for your first home purchase.
- First-Time Home Buyer Incentive – A shared-equity program where the government contributes 5-10% of your home’s purchase price to reduce mortgage payments.
Taking advantage of these programs can significantly lower the amount you need to save.
Stay motivated & on track
Saving for a down payment takes discipline, but it’s worth the effort! Keep track of your progress, celebrate small milestones, and stay focused on your goal.
Need expert mortgage advice? At Sheth Mortgages, we help homebuyers navigate the process and find the best financing options. Let’s make your dream home a reality—contact us today