Updated: April 2025  |  bremo.io financial guides

Saving for a Down Payment in Canada 2025 — Best Accounts and Strategy

Saving for a home down payment in Canada is one of the most significant financial goals a person can undertake. With home prices elevated in many markets, getting the most out of every dollar saved — through the right accounts and tax strategies — can meaningfully accelerate your path to homeownership.

How Much Down Payment Do You Need?

• 5%: Minimum for homes under $500,000
• 5–10%: For homes $500,000–$999,999 (5% on first $500K, 10% on remainder)
• 20%: Avoids CMHC mortgage insurance (saves thousands over the mortgage term)

The FHSA: Canada's Best Down Payment Account

The First Home Savings Account (FHSA) launched in 2023 and is the single most powerful tool for first-time home buyers. Key features:

• Contribute up to $8,000 per year
• Lifetime contribution limit of $40,000
• Contributions are tax-deductible (like an RRSP)
• Qualifying withdrawals for a first home are completely tax-free (like a TFSA)
• Unused room carries forward up to 1 year

Open an FHSA as early as possible — room begins accruing from account opening, not from birth. A 22-year-old who opens an FHSA and contributes for 5 years can accumulate $40,000 in tax-advantaged savings plus investment growth.

RRSP Home Buyers' Plan (HBP)

First-time buyers can withdraw up to $60,000 from their RRSP tax-free to use as a down payment. The amount must be repaid to your RRSP over 15 years (1/15 per year). If you don't repay in a given year, that year's amount is added to your taxable income.

Combine the FHSA ($40,000) with the HBP ($60,000) for up to $100,000 in tax-sheltered down payment savings per person — $200,000 for couples.

TFSA as a Down Payment Vehicle

For those who have already exhausted FHSA and HBP capacity, or who don't qualify as first-time buyers, the TFSA is the next best vehicle. Interest on savings inside a TFSA is tax-free, and withdrawals are penalty-free.

Where to Keep Down Payment Savings

Match your savings product to your timeline:

• Under 2 years: HISA inside FHSA or TFSA — liquid, no market risk
• 2–5 years: GICs inside FHSA or TFSA — lock in a higher guaranteed rate
• 5+ years: Consider low-risk ETFs inside FHSA or TFSA for potential growth

How Much to Save Per Month

Take your down payment target, subtract current savings, and divide by months until purchase. For example: Target $100,000, have $20,000 saved, buying in 4 years (48 months) = ($100,000 - $20,000) ÷ 48 = $1,667/month. Factor in interest earned to reduce that number slightly.