How much do I need for a down payment in Canada?

Minimum down payment is 5% for homes under $500,000. For homes $500,000-$999,999, it''s 5% on first $500K plus 10% on the rest. For homes $1M+, it''s 20% minimum. However, 20% down avoids CMHC insurance premiums.

What is the best account to save for a down payment?

The FHSA (First Home Savings Account) is the best option for most first-time buyers — you get a tax deduction on contributions AND tax-free growth. After maxing FHSA, use a high-interest TFSA. For short timelines (<2 years), consider GICs or HISA.

How long does it take to save for a down payment?

It depends on your income, expenses, and target home price. Saving $500/month for a $50,000 down payment takes about 8 years. With aggressive savings of $1,500/month, it takes under 3 years. Government programs like FHSA can accelerate this.

Should I wait to save 20% for a down payment?

Not always. Putting down 20% avoids CMHC insurance ($19,000 on a $500,000 home with 5% down), but waiting years in a rising market can cost more than the insurance premium. If home prices rise 5% annually, a $500,000 home costs $25,000 more each year you wait. Run the numbers for your market — sometimes paying the insurance and buying sooner is the better financial decision.

How to Save for a Down Payment in Canada: Complete Guide (2026)

Q: How long does it take to save for a down payment?

It depends on your income, expenses, and target home price. Saving $500/month for a $50,000 down payment takes about 8 years. With aggressive savings of $1,500/month, it takes under 3 years. Government programs like FHSA can accelerate this.

Q: Should I wait to save 20% for a down payment?

Not always. Putting down 20% avoids CMHC insurance ($19,000 on a $500,000 home with 5% down), but waiting years in a rising market can cost more than the insurance premium. If home prices rise 5% annually, a $500,000 home costs $25,000 more each year you wait. Run the numbers for your market — sometimes paying the insurance and buying sooner is the better financial decision.

The FHSA (First Home Savings Account) has fundamentally changed the math on saving for a down payment in Canada. Contributing $8,000 per year gets you a tax deduction worth roughly $2,400 (at a 30% marginal rate) plus tax-free growth — after five years of maxing it out, you’ll have about $46,000 in the account ($40,000 contributed plus $6,000+ in growth) and you’ll have received $12,000 in tax refunds to deploy elsewhere. No other savings vehicle in Canada gives you both the deduction going in and tax-free withdrawals coming out.

The minimum down payment is 5% on homes up to $500,000, but putting down less than 20% means paying CMHC mortgage insurance — a one-time premium of 2.80–4.00% of your mortgage amount, added to your loan balance. On a $500,000 home with 5% down, that’s $19,000 in insurance premiums financed over the life of the mortgage. The sweet spot for most buyers is to stack an FHSA, TFSA, and the RRSP Home Buyers’ Plan ($60,000 per person) to get as close to 20% as your timeline allows — but don’t let the pursuit of 20% keep you renting for five extra years in a rising market.

How Much Down Payment Do You Need?

Minimum Down Payment Requirements

Home Price	Minimum Down Payment
Up to $500,000	5%
$500,000 - $999,999	5% on first $500K + 10% on remainder
$1,000,000+	20%

Example Calculations

Home Price	Minimum Down	20% Down
$400,000	$20,000 (5%)	$80,000
$600,000	$35,000 (mixed)	$120,000
$800,000	$55,000 (mixed)	$160,000
$1,000,000	$200,000 (20%)	$200,000

CMHC Insurance Costs

Down Payment	Insurance Premium
5-9.99%	4.00% of mortgage
10-14.99%	3.10% of mortgage
15-19.99%	2.80% of mortgage
20%+	$0 (no insurance required)

Example: $500,000 home with 5% down = $475,000 mortgage × 4% = $19,000 insurance added to mortgage.

Best Accounts for Down Payment Savings

Account Comparison

Account	Tax Deduction	Tax-Free Growth	Tax-Free Withdrawal	Best For
FHSA	Yes	Yes	Yes (home purchase)	First-time buyers
TFSA	No	Yes	Yes	Everyone
RRSP (HBP)	Yes	Yes	Yes (must repay)	Additional savings
HISA	No	No	Yes	Short-term (<2 years)
GIC	No	No	Yes	Short-term, locked

FHSA (First Home Savings Account)

Feature	Details
Annual contribution	$8,000
Lifetime maximum	$40,000
Tax deduction	Yes (like RRSP)
Growth	Tax-free
Withdrawal	Tax-free for qualifying home
Best for	First-time home buyers

Example FHSA Growth:

Year	Contribution	Tax Refund (30% bracket)	Balance (5% growth)
1	$8,000	$2,400	$8,400
2	$8,000	$2,400	$17,220
3	$8,000	$2,400	$26,481
4	$8,000	$2,400	$36,205
5	$8,000	$2,400	$46,415

5-year result: $40,000 contributed + $6,415 growth + $12,000 tax refunds = $58,415 toward down payment.

RRSP Home Buyers’ Plan (HBP)

Feature	Details
Maximum withdrawal	$60,000 per person ($120,000 per couple)
Repayment	Must repay over 15 years
First payment	Starts 2 years after withdrawal
Tax	Tax-free withdrawal if repaid

Strategy: Use FHSA first, then HBP for additional funds.

TFSA for Down Payment

Feature	Details
Contribution room	~$7,000/year (2024)
Growth	Tax-free
Withdrawal	Tax-free, room restored next year
Best for	After maxing FHSA

Savings Strategies

How Much to Save Monthly

Target Down Payment	Timeline	Monthly Savings Needed
$50,000	3 years	$1,389
$50,000	5 years	$833
$100,000	5 years	$1,667
$100,000	7 years	$1,190

Not including investment growth.

Accelerating Your Savings

Strategy	Potential Impact
Automate transfers	Consistent savings without thinking
Save tax refunds	FHSA refund = $2,400+/year
Reduce rent	Roommate saves $500-1,000/month
Side income	$500-1,500/month extra
Reduce subscriptions	$100-300/month
Cut car costs	Transit saves $300-600/month
Employer RRSP match	Free money (use HBP later)

The “Pay Yourself First” System

Step	Action
1	Calculate target monthly savings
2	Set up auto-transfer on payday
3	Put in FHSA first ($667/month to max)
4	Overflow to TFSA
5	Budget with what’s left

Investment Strategy by Timeline

Short-Term (1-2 years)

Option	Expected Return	Risk
FHSA Savings Account	3-4%	Very low
GICs	4-5%	None (locked)
HISA	3-4%	Very low

Strategy: Don’t invest in stocks — too risky for short timeline.

Medium-Term (3-5 years)

Option	Expected Return	Risk
Conservative ETF (VCNS)	4-5%	Low
GIC ladder	4-5%	None
Balanced ETF (VBAL)	5-6%	Moderate

Longer-Term (5+ years)

Option	Expected Return	Risk
Balanced ETF (VBAL)	5-6%	Moderate
Growth ETF (VGRO)	6-7%	Higher
All-equity (VEQT)	7-8%	Highest

Government Programs That Help

First-Time Home Buyer Programs

Program	Benefit
FHSA	Tax-deductible + tax-free growth
RRSP HBP	Withdraw $60,000 tax-free
First-Time Home Buyers’ Tax Credit	$1,500 tax credit
Land Transfer Tax Rebate (ON)	Up to $4,000 (provincial)
GST/HST New Housing Rebate	Portion of GST on new homes

Provincial Programs

Province	Program
BC	First-Time Home Buyers’ Program (PTT exemption)
Ontario	Land Transfer Tax Rebate
Quebec	Home Buyers’ Tax Credit

Down Payment Sources

Acceptable Sources

Source	Lender View
Personal savings	Best — shows financial discipline
FHSA withdrawal	Excellent
RRSP HBP withdrawal	Excellent
Gifted funds	Acceptable with gift letter
Sale of assets	Acceptable with documentation
Inheritance	Acceptable

What Lenders Want to See

Factor	Requirement
Source documentation	90 days of bank statements
Gifted funds	Gift letter (no repayment required)
Large deposits	Explanation required
Borrowed down payment	Generally not allowed

Action Plan

Step-by-Step

Step	Action
1	Calculate target home price and down payment
2	Open FHSA account
3	Set up automatic contributions to FHSA
4	Contribute to TFSA after maxing FHSA
5	Claim FHSA deduction, reinvest tax refund
6	Consider RRSP for additional HBP funds
7	Track progress toward goal

The Bottom Line

Open an FHSA today and max it at $667/month — it’s the single best down-payment vehicle in Canada. Reinvest every tax refund into your TFSA for additional tax-free growth. Keep savings in GICs or a high-interest savings account if your timeline is under three years; use a conservative or balanced ETF for three-to-five-year horizons. When you’re ready to buy, combine FHSA + TFSA + RRSP HBP withdrawals, claim the $1,500 First-Time Home Buyers’ Tax Credit, and apply for your province’s land transfer tax rebate.