Buying a home in Canada can feel both exciting and a bit out of reach. A down payment does not have to stay a distant dream or something you only think about in passing. Once you start building a plan for how to save for a house that fits your real life, it becomes much more manageable. With a bit of structure, a few simple money habits, and a clear sense of direction, you can turn that big number into something you are steadily working toward and see real progress month after month.
Choose Where to Save Your Down Payment
First Home Savings Account (FHSA)
A First Home Savings Account is usually the best place to start if you qualify. You can put in up to $8,000 a year, to a maximum of $40,000 total. Your contributions reduce your taxable income, so you may pay less tax or get a refund. You can invest the money, let it grow tax-sheltered, and then take it out tax-free to buy your first home, without paying it back. All of that together makes the FHSA one of the simplest, most powerful tools for how to save for a down payment in Canada.
Registered Retirement Savings Plan (RRSP) With Home Buyers’ Plan (HBP)
The Home Buyers’ Plan lets you use your RRSP to help with your first home. You can take out up to $60,000 from your RRSP, per eligible person, to buy or build a qualifying home. You do not pay tax when you withdraw it, as long as you pay it back over a period of up to 15 years. This can turn your RRSP into a useful second source for your down payment, especially if you are in a higher tax bracket and benefit from the deductions.
Tax-Free Savings Account (TFSA)
A TFSA is a very flexible place to build your house savings. You do not get a tax deduction when you contribute, but your money can grow tax-free, and you can take it out anytime without paying tax or having to repay it. That makes it a great fit if your plans might change, you want easy access to your savings, or you have already used your FHSA and RRSP options. It also fits naturally into any long-term plan for how to save money for a house without locking yourself in too tightly.
High-Interest Savings and Cash Accounts
High-interest savings accounts are a great place for the part of your down payment and closing costs that needs to stay safe and easy to reach. Your money does not go up and down with the market, and you can access it quickly when you need it. Using a separate “house savings” account, instead of your regular chequing, also makes it easier to track your progress and avoids the temptation to spend that money on everyday purchases.
Non-Registered Investment Accounts
If your home purchase is still a few years away, and you are okay with some market ups and downs, you can use a regular investment account to try to grow your down payment faster than keeping it in cash. You might choose a diversified, long-term mix of investments, knowing that your balance can rise and fall and that gains may be taxable. As you get closer to buying, slowly move this money into safer options, so a sudden drop in the market does not derail your plans when your timeline is short and you want more certainty.
Boost Your Savings With Extra Cash and Side Income
You can give your plan a big push by selling things you no longer need, such as electronics, furniture, gear, or collectibles, and sending every dollar straight into your dedicated house account. You can also add a side income stream, like freelancing, tutoring, rideshare or delivery driving, or weekend shifts. If you treat all of that extra money as down payment money, not lifestyle money, then even an extra $200 to $300 per month becomes a steady boost instead of cash that just disappears. This is a very practical way of how to save for a down payment on a house when your regular paycheque is not quite enough on its own.
Use Gifts, Borrowing, and Investments Carefully
If family is able and willing, a properly documented gift from close relatives can safely top up your down payment. It is usually the least risky of the “extra” options. Borrowing your down payment through a personal loan or line of credit raises your overall debt and can make qualifying for a mortgage harder. Selling other investments or assets, such as non-registered stocks or a second car, can also help, but may trigger tax and affect other goals. All three options should be weighed carefully, ideally with a professional, before you rely on them as part of your plan.
Maximize Government Incentives and Tax Advantages
Government programs and tax rules can give your savings a helpful boost. FHSA and RRSP contributions can lower your taxable income and may lead to a tax refund you can add to your down payment. If you are thinking about how to save money for a down payment, it is worth checking whether you qualify for first-time home buyer tax credits, land transfer tax rebates, or other local incentives, and making these part of your plan from the start.
Keep Your Savings Plan Realistic and Sustainable
The best savings plan is one you can actually live with. You want to push yourself enough that you see real progress, but not so hard that you keep raiding your savings or feel constantly deprived. If the monthly amount you need is simply too high, you can adjust by giving yourself more time, aiming for a slightly lower-priced home, or leaning more on side income instead of deeper lifestyle cuts. It also helps to check that your future mortgage, tax, utility, and maintenance costs will still leave you room to breathe once you are in the home. This is a much healthier approach to how to save money for a house over several years.
Down Payment Questions Home Buyers Ask
How much should I aim to save if I do not know my exact home price yet?
If you are not sure about your final price range, a simple starting point is to pick a realistic ballpark, for example $500,000 to $700,000, aim for 5 to 10 percent of the midpoint as a down payment, and add a few thousand for closing costs, then refine the number once you have talked to a lender and have a clearer sense of what you qualify for and what monthly payment feels comfortable.
How do I decide how to split savings between FHSA, RRSP, and TFSA?
A simple way to think about it is to start with the FHSA if you are eligible, because it gives you a tax deduction now and tax-free withdrawals for your first home. Next, look at RRSP contributions if you expect to benefit from the tax deduction and plan to use the Home Buyers’ Plan (HBP). Then, use a TFSA for extra flexibility or once your FHSA and RRSP are at the level you want. You can always adjust this mix over time as your income, tax situation, and comfort with HBP repayment change.
How aggressive should I be with cutting expenses for my down payment?
You want to cut enough that you see real progress, but not so much that your life feels joyless and you snap back into old habits. Start by attacking the easy wins first, like trimming takeout and coffee, cancelling unused subscriptions, and putting limits around impulse spending, then track how much those changes free up over a few months. If you are still falling short of your goal, that is when it makes sense to look at bigger, more strategic moves, such as downsizing your rental, renegotiating major bills, or even giving up a second car so you can speed up your timeline in a way that actually sticks.
Ready to turn your down payment plan into a real set of keys in your hand? Connect with your local REMAX agent today to get expert guidance on neighbourhoods, prices, and properties that match your budget and goals.
