Getting into the housing market

Saving for a downpayment

For a lot of people, saving for a downpayment is one of the hardest parts of the home ownership journey. With increased costs of living, it can feel daunting to save up such a large sum of money – but there are a few programs, incentives and rebates that can help you succeed! 

We have tonnes of ways to help you gear up to buy a home, let us know which ones you have tried below or if there are any we are missing – and check out our blog on deposits and down payments if you want more info on how much money you need to buy a home!

Home Buyers Plan (HBP)

The home buyers plan is an RRSP withdraw that you can make to purchase your first home. You can withdraw up to $35,000 tax free, as long as you repay it within 15 years. This is a great way to add to your downpayment, especially since many companies take RRSP contributions off of your pay – you could even up your contribution through your workplace while saving for your downpayment. This is a great option because the money is taken off before you get paid and you don’t have the opportunity to spend it!  If this interests you, you can get more info here here!.

First time home buyers savings account (FHSA)

This account is new for 2023 . You can open this account if you are 18 years +,a resident of Canada and a first time home buyer.

Below are some other qualification requirements and contribution amounts 

  • The home must be your principal residence
  • You can make a lifetime contribution of $40,000
  • You can contribute $8,000 annually
  • you can carry forward unused contribution room
  • The account can stay open for 15 years
  •  You can transfer directly between FHSA and RRSP without tax consequences as long as you are within your yearly allowance
  • If you dont buy a home within 15 years you can transfer to an RRSP
Find out more info about the FHSA here!
 

First Time Homebuyer Incentive

This is a shared equity program offerd by the government – you can get 5% or 10% towards your downpayment. With this incentive, you must repay the loan with interest of a maximum of 8% per annum.

  1. You have 25 years to repay, or if you sell you must repay the loan
  2. Your qualifying income can not exceed $120,000 (or $150,000 in Toronto & Vancouver)
  3. Must meet minimum downpayment requirements with traditional funds.
You can get more info on the incentive here!

Gifts from Family

A gift from immediate family is tax free money that cannot be repaid and must be gifted to the purchaser. If your family member is willing to gift you a downpayment, you could also consider giving them a portion of the equity (tenant in common) for a certain percentage that they would benefit down the road when you sell. Adding them on the purchase as a cosigner may also help you qualify for a mortgage.

Other ways to save

There are other ways you can cut your expenses to help save money – don’t get me wrong, I understand that it sucks sometimes to make sacrifices, but reaching your goal of home ownership will allow you to build wealth – short term pain for long term gain! 

  •  Evaluate your subscriptions-think Netflix, , Crave, monthly app subscriptions (On the iPhone, you can click on your name at the top of the settings menu –> subscriptions to see if there are any app subscriptions you aren’t aware of or aren’t using)
  • Have coffee + eat at home – eating out can add up. We decided to plan our meals every Sunday and this helps us stay on track with cooking AND not buy unnecessary items at the grocery store.
  •  Set up automatic transfer to savings- You can set up a set amount to be transferred at a desired frequency – I used to do $20 a week – small amounts add up over time especially with other savings strategies! 
  •  Look for cheaper ways to do things! 
    • Get books from the library instead of buying 
    • Rent a movie at home instead of going out (cineplex.ca you can rent new movies too!)
    • Go on a day trip or weekend getaway instead of week long vacations 
    • Cut down on expensive hobbies – maybe choose one while you’re working on saving. 
  • Land Transfer Rebate- Once youve purchased a home, you can get up to $4,000 rebate on land transfer tax if you are a first time home buyer – make sure your lawyer is aware of this!

If you want to know how much of a downpayment you need and want a free budget tracker – download our freebie! 

Happy Saving!

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