How to Save for a Down Payment in Canada

To save for a down payment in Canada, work backwards from the price you can realistically afford: confirm the minimum down payment your purchase requires, add closing costs and a cash buffer, then automate savings into accounts built for this goal — a First Home Savings Account (FHSA), an RRSP using the Home Buyers' Plan (HBP), or a TFSA. Most buyers need a few years of consistent saving, so starting early matters more than saving perfectly.

How much down payment you actually need

In Canada, the minimum down payment depends on the purchase price. As of the current year, a home priced at $500,000 or less requires 5% down. The portion of the price between $500,000 and $1.5 million requires 10%, and a home priced at $1.5 million or more requires 20% down. Confirm the current tiers on the CMHC website before you lock in a target, since these thresholds are set by policy and can change.

If your down payment is under 20% of the purchase price, your mortgage must be insured by CMHC or a private mortgage insurer. The premium is typically paid by the borrower and is often added to the mortgage balance. Insured mortgages also come with price and amortization limits, so a smaller down payment can narrow the homes you are allowed to buy. Our guide to minimum down payment rules in Canada breaks down the tiers and the insurance trigger.

A 20% down payment avoids default insurance entirely and lowers your monthly payment, but it is not the only sensible target. Plenty of first-time buyers put down 5% to 10% and keep a healthy cash reserve instead, which can matter more than a smaller mortgage.

Save for the costs that aren't the down payment

The down payment gets all the attention, but you need more cash on closing day. Budget for:

• Land transfer tax (or a provincial equivalent), which varies widely by province and municipality and may include a first-time buyer rebate.
• Legal fees, title insurance, and a home inspection.
• Appraisal and mortgage setup costs, where your lender charges them.
• Moving costs, immediate repairs, and utility deposits.
• An emergency fund covering at least a few months of mortgage payments and living expenses.

Our walkthrough of closing costs when buying a house in Canada lists these line by line. Read it before you settle on a savings number, because a solid buffer is what keeps a first purchase from turning into a cash-flow emergency.

Use the accounts built for this goal

Three registered accounts do most of the heavy lifting for Canadian first-time buyers.

The FHSA is the newest of the three. It has an annual contribution limit and a lifetime cap, and as of the current year those figures are set by the federal government — confirm the exact amounts on the CRA website. You generally need to be a first-time home buyer to open one, and the account has a window in which you must use it or transfer the funds. Our guide to the First Home Savings Account covers eligibility and timing.

The RRSP Home Buyers' Plan lets you withdraw a set amount from your registered retirement savings to buy or build a qualifying home, as long as you repay it into your RRSP over a defined period starting a couple of years after the withdrawal. Miss a repayment and that year's amount is added to your taxable income. Details are in the RRSP Home Buyers' Plan, explained. You can generally use the FHSA and the HBP together if you qualify for both, but the rules interact, so check the current CRA guidance.

Build a savings plan that runs on autopilot

1. Set a target and a date. Divide the total you need by the number of months you have, and treat that as a monthly bill.
2. Automate a transfer on payday. Money you never see in your chequing account is money you are far less likely to spend.
3. Save a windfall, not just a salary. Tax refunds, bonuses, and gifts are the fastest way to close a savings gap.
4. Review quarterly. Adjust the monthly amount as your income or target changes.
5. Watch the details. Cancelling unused subscriptions and renegotiating recurring bills frees up real money quickly.

Run your numbers with the down payment calculator to see how a higher down payment changes your mortgage amount and payment.

Where to keep the money while you save

Your down payment is short-term money with a fixed deadline, so protecting the balance matters more than chasing a return. High-interest savings accounts, short-term GICs, and cash held inside a TFSA or FHSA are common choices because the value does not swing with markets. Investments that can fall sharply in a bad quarter are a poor fit for cash you plan to spend within a few years.

Get mortgage-ready before you need the money

Lenders assess federally regulated mortgages under OSFI Guideline B-20, and they qualify you using the mortgage stress test. That means you must show you can afford payments at the higher of your contract rate plus two percentage points, or the published qualifying-rate floor. Confirm the current floor with OSFI or your lender, since it is set periodically.

Lenders also look at your GDS and TDS ratios, which compare housing costs and total debt payments to your income. A larger down payment lowers both ratios and strengthens your application. Getting a mortgage pre-approval early tells you the price range you qualify for, and keeping your credit report clean while you save protects your rate options. If you are exploring federal support, review first-time home buyer programs in Canada to see which ones fit your situation. None of these programs guarantee approval or funding — every application is assessed on its own merits.