Purchasing a home in Ontario, especially the Greater Toronto Area, can be a dream come true, but saving enough for your down payment can feel intimidating, if not impossible.
Short of winning the lottery or getting help from family, there’s no magic way to instantly have enough saved for the home you want. But there are ways to get yourself closer.
Create a Realistic Savings Plan
The first step in saving for your down payment is to create a realistic savings plan. This involves figuring out how much money you think you’ll need for a down payment and how much you can afford to save each month. From there, you can determine how long it will take to reach your savings goal.
To get an idea of how much you’ll need to save, try out our Buy now vs Buy Later Calculator.
Be prepared for the possibility of unexpected expenses, and build a buffer into your plan to accommodate them.
Cut Your Expenses
Trimming your expenses is a good way to increase the amount you can save for your down payment. Look for areas where you can reduce your spending without significantly affecting your quality of life.
Some great ways to save include:
- Cutting back on dining out and entertainment expenses
- Reducing your streaming service subscriptions
- Shopping sales and using coupons at the grocery store
- Considering more affordable housing options to lower your current rent
- Trading in your vehicle for a more fuel-efficient model or using public transportation
Open a First Home Savings Account
The First Home Saving Account (FHSA) is a registered savings plan that allows Canadians to save up to $40,000 tax-free for their first home. Combining features of the Registered Retirement Savings Plan and the Tax-Free Savings Account, the FHSA provides both tax-deduction benefits and enables tax-free growth on investments.
The FHSA is a great way to build your down payment while you keep an eye on the market. Learn more: The First Home Savings Account (FHSA): Here’s what you need to know.
Automate Your Savings
Setting up an automatic transfer from your chequing account to your FHSA, high-interest savings, or investment account only takes a few minutes, but it can make a big impact.
By ensuring that a portion of your income is put aside for your down payment, this automation helps you prioritize saving, reduces the temptation to spend, and takes the stress out of manually transferring funds each month.
Leverage Local Programs like Ourboro
Even if you do everything right – stick to a budget, cut down on spending, and diligently save – the reality of today’s real estate prices may mean you’re still not able to save enough for the home that you want. At that point, you can make compromises on your wish list, wait and save, or look into new options, like co-ownership.
Co-buying your home with Ourboro means you can purchase a home using less of your personal savings, improving affordability and helping you start building equity sooner. By becoming a homeowner earlier, you can save more money in the long run by avoiding years of rising rent costs.
To take advantage of Ourboro’s co-investment program, you can contribute anywhere from 5-15% of the home price toward the down payment. Then, Ourboro can provide the remaining funds to reach a 20% down payment.