1. Prioritize your financial and life goals

Saving for a big purchase, like a first home, isn’t easy. It usually requires making hard decisions when it comes to budgeting and weighing your “wants” versus “needs.” You may have to look at cutting back on vacations, eating out in restaurants, your morning drive thru coffee, and even everyday items like clothing and expensive groceries. If you decide saving for a down payment is a top priority, try to find other areas of your life where you can cut down on spending. It’s important to create a detailed financial plan that clearly lays out your path to a down payment. If you’re unsure about how to create a plan, consider booking an appointment with a financial advisor.

2. Pay off your debts before considering a mortgage

A mortgage is a big commitment. If you have any, try to pay off all other debts before taking one on. This is especially true of credit card debt; it’s hard to save for a down payment if you’re paying interest fees every month. Freeing yourself from other debts can also improve your credit score and ability to qualify for a mortgage at a more competitive rate. 

3. Keep your credit score in good standing

It’s important to keep your credit score in good standing if you want to qualify for a mortgage at a good rate. Easy ways to do this include paying all your bills on time, never going over your credit card limits, and staying on top of any suspicious activity on your cards or in your bank account. You’ll also want to build up your credit history in Canada by regularly using credit cards or paying back loans for other items like university tuition or a vehicle. This shows potential mortgage lenders that you can be relied upon to pay your debts. 

4. Borrow from your RRSP

Did you know you can borrow up to $35,000 CAD tax-free from your Registered Retirement Savings Plans (RRSP) to put towards your first home in Canada? If you and your spouse are both first-time home buyers, you can each borrow from your RRSP for a total of up to $70,000 CAD. You’ll have to pay back the funds within a 15-year period, but this is a great way to boost your down payment. In order to qualify for this program, you must plan to use the home as your principal residence within one year of buying or building it. 

5. Use savings from your TFSA

 Tax-Free Savings Accounts (TFSAs) are a great option when it comes to saving for down payments in Canada. They can be an even better option than using your RRSP to fund a down payment because you can take from your TFSA without restriction and there’s no time limit on having to pay the money back, if ever. A TFSA can be accessed at any time, for any purpose, without tax implications. You can also potentially use funds from both your RRSP and TFSA accounts for your down payment. 

6. Factor in maintenance costs and other fees 

Remember that there’s more to purchasing a home than just the sale price. Make sure to calculate all maintenance costs and fees including legal fees, home inspection fees, land survey fees, appraisal fees, land transfer taxes, and new home warranties. These purchases are usually not optional and can add thousands of dollars to your final bill. It’s important to include them in your financial plan.

Buying your first home as a newcomer in Canada is a major milestone. Every individual’s situation is different. In addition to these tips, it’s important to talk to a financial advisor for guidance on how you can save for a down payment and achieve your homeownership dreams. If you’re hoping to become a homeowner in the next few years, book an appointment with a financial advisor to put a financial plan in place and make your goal a reality.