How to Save for a House Down Payment in Canada

Saving for a house down payment in Canada is the biggest financial challenge most young Canadians face. With average home prices ranging from $350,000 in Halifax to over $1,000,000 in Toronto and Vancouver, the down payment can feel impossibly large. But with the right strategy — especially using the FHSA and RRSP HBP — it is achievable.

How Much Down Payment Do You Need?

Under $500,000: Minimum 5% down. Example: $400,000 home = $20,000 down payment. CMHC mortgage insurance required.

$500,000 to $999,999: 5% on the first $500K + 10% on the remainder. Example: $800,000 home = $25,000 + $30,000 = $55,000 down payment.

$1,000,000+: Minimum 20% down. No CMHC insurance available. Example: $1,200,000 home = $240,000 down payment.

The FHSA — Canada’s Best Down Payment Tool

The First Home Savings Account (FHSA) launched April 2023 and is the most powerful savings tool for first-time buyers. Contributions are tax-deductible (like an RRSP), growth is tax-free, and withdrawals for a home purchase are tax-free (like a TFSA). Maximum: $8,000/year, $40,000 lifetime.

RRSP Home Buyers’ Plan (HBP)

You can withdraw up to $60,000 from your RRSP tax-free for a first home ($120,000 for a couple). You must repay the withdrawal over 15 years starting 2 years after withdrawal. This is essentially a 0% interest loan from your future self.

Combining FHSA + RRSP HBP

A couple can access up to $200,000 tax-free: $80,000 from two FHSAs + $120,000 from two RRSP HBPs. This combination makes homeownership realistic even in expensive markets.

Where to Invest Your Down Payment Savings

Buying in 1–2 years: High-interest savings account (EQ Bank 4%+) or GICs. Capital preservation is priority. Buying in 3–5 years: Short-term bond ETF (ZST) or GIC ladder. Buying in 5+ years: Balanced ETF (VBAL) for moderate growth with some protection.

Frequently Asked Questions

What is the minimum down payment in Canada?

5% for homes under $500,000. 5% on the first $500K + 10% on the remainder for homes $500K–$999K. 20% for homes $1M+.

Can you use FHSA and RRSP HBP together?

Yes. You can withdraw from both for the same home purchase. A couple can access up to $200,000 tax-free combined.

How long does it take to save a down payment?

On a $75K salary saving $1,500/month: roughly 14 months for a $400K home (5% = $20K), 37 months for a $800K home ($55K), or 160 months for a $1.2M home ($240K).

Should I invest my down payment savings?

Only if your timeline is 3+ years. For shorter timelines, use a HISA or GIC to protect your principal. Stock market drops of 20–30% can delay your purchase by years.