Header bg
Apollo logo
Apollo logo mobile
  • Tenant Insurance
  • Student Tenant Insurance
  • Homeowner's Insurance
  • Condo and Townhouse Insurance
  • Landlord Insurance
  • Get A Quote
  • Get A Quote
  • section background

    How to Save for a Down Payment on a Home in Canada

    Hero bg 2
    how to save for a down payment Canada

    Thinking of buying a home, but don’t know where to start? Here are the steps you can take as a first time home buyer to save for your down payment!

    Saving to buy a home for the first time can be daunting at a glance, especially, if you’re new to the real estate market. There are various unknowns, and putting aside thousands of dollars for a down payment might seem unattainable, but it is possible!

    In this article we’ll go through a step-by-step guide on how to start saving for a house.

    How to Set Your Savings Goals

    Everyone dreams of buying a home, but without setting a clear end goal, achieving your dreams can become a rarity. Clear targets will allow you to remain intent on holding yourself accountable.

    You’ve probably already established your intended end goal, but don’t quite know how to achieve it. Well, after you’ve established it, it’s imperative that you set smaller benchmarks!

    Below there are some steps to assist you in reaching these targets, so that you can celebrate your little victories throughout the journey.


    Need Home Insurance?

    Learn More


    1. What are you looking for in a home?

    Determining what the intended use for the home you’re buying will help you adjust your objectives. It’s important to ask yourself the following as it will heavily impact the purchase price of the house and subsequently your interim targets:

    • Style: Will the home be detached, semi-detached, or a townhome?

    • Decor: What finishes, fixtures, and features would the home ideally have?

    • Use: Will it be an investment property to be renovated or rented?

    Related: When should I start to search for home insurance when buying a house

    2. Have you done your research?

    It’s a good idea for you to conduct research to determine the average home prices in the area you’re interested in. While completing this research, it’s important to take into consideration the features you’d like, property taxes, and closing costs since this will help you gauge how much to save.

    From there, you’ll be able to calculate a precise overall dollar amount of how much money you’ll need to set aside.

    3. How much money should you put aside for a down payment?

    You’ve likely heard of the 20% rule when it comes to purchasing a home, but is it enough? Yes! In fact, you can make a smaller down payment of 10-to-15%. However, there are good reasons as to why 20% of the purchase price is standard for a down payment.

    If you plan on using a smaller sum of money like a 10% or 15% down payment, while you may save time, you should take the following into account:

    • Higher mortgage payments

    • Potential for high interest rates

    • Loans by private investors as opposed to a bank

    • Private mortgage insurance is necessary

    Whereas, with the unofficial 20% rule, you can anticipate the following:

    • Lower monthly mortgage payments

    • Potentially lower interest rates

    • Sellers often favour buyers with higher down payments

    After taking some thought, make a decision about the percentage of the purchase price you are willing to save for. You will then need to calculate that percentage and divide it by how many months you intend to save. This will become your monthly target.

    Related: Hidden costs of buying a house Canada

    How to Save Money

    Beyond dedicating yourself to a goal and creating a strict budget, there are additional steps you can take to save. These may seem relatively small, yet every action taken makes a significant contribution and will help you inch closer to your goals!

    1. Check your credit and debt

    It likely comes as no surprise that you are more likely to qualify for a mortgage if you have a good credit score. In other words, bad credit could mean you’re required to have a higher down payment and save for longer for your house. The reason for this is that lenders usually examine your debt-to-income ratio when you are being considered for a mortgage.

    So, before you begin saving, you must ensure you have a good credit history. If you haven’t established a credit history yet, get started by using your credit card for regular small purchases.

    If you already have a credit history, try to clear as much credit card debt as possible. However, if you have more extensive debt, such as student loans, you’ll want to begin with your smallest high interest debt and work your way up the list.

    2. Set up savings accounts

    When saving for a house, there are three types of bank accounts you should consider opening:

    • Savings account

    • Tax free savings account (TFSA)

    • Registered retirement savings plan (RRSP)

    With a savings account, you can automate payments where your bank withdraws an authorized amount from your primary bank account and transfers it into your savings. A TFSA will allow your savings to grow without paying income taxes. Lastly, in Canada, you can use $35,000 from your RRSP for a down payment under a home buyer’s plan.

    3. Cut down on unnecessary expenses

    It’s very easy to justify repetitive, unnecessary spending or impulse buys, however, these purchases can quickly add up and get in the way of your saving goals. While making a budget, try to limit yourself to necessities and take a hiatus on some luxuries.

    Below is a list of ways you can cut down on your spending:

    • Cancel streaming subscriptions

    • Learn a new recipe and skip on eating out

    • Move in with family if possible

    • Sign a lease on a smaller apartment

    • Walk or use public transportation to save on gas

    • Skip vacation and explore areas near you

    • Swap brand name items for generic labels

    All of these minimal adjustments, among others, will help you achieve your goals quickly.

    Related: What are all the costs of owning a home in Canada

    4. Find a side hustle

    A great way to have money to set aside is to find a way to make an additional or passive income. Some ways you can make extra money to put towards a house are:

    • Rent out your spare bedroom

    • Start freelancing if you have a skill

    • Look into high-yield, low-risk investments

    • Pick up work from ride-sharing and delivery services

    In addition to these options, you should also consider asking for a raise or looking at available jobs near you to see if you could earn a higher wage.

    Protect Your Investment with Insurance

    Saving to buy a home takes a lot of effort, and it is easy for unforeseen circumstances to derail your plans. A great way to protect your assets while saving is to have tenant’s insurance.

    Once you have your dream home, it’s important to protect your investment with home insurance as well! APOLLO offers coverage that can prevent your hard work from going to waste if anything were to happen.

    Related: When to get home insurance?


    APOLLO Has You Covered

    Get the protection you need in minutes with custom Home Insurance from APOLLO.

    Learn More


    Originally published July 28, 2022, updated August 25, 2023

    Back to APOLLO Magazine
    Share this article

    Limited time offer: Get comprehensive Tenant Insurance starting at just $11/month

    Get no-nonsense coverage that's the best value for your money. Purchase in less than a minute, receive your policy instantly, and save when you buy online.

    Get a free quote

    4.6 rating

    Google Logo

    Limited time offer: Get comprehensive Tenant Insurance starting at just $11/month

    Get no-nonsense coverage that's the best value for your money. Purchase in less than a minute, receive your policy instantly, and save when you buy online.

    Relevant articles

    Toronto – apollocover.com – 1920×1080

    How Much is Tenant Insurance in Toronto?

    customize my tenant insurance canada

    4 Best Alternative Tenant Insurance Companies to CIBC Tenant Insurance

    financial goals canada

    How to Set Up Financial Goals

    are we in a recession canada

    How to Prepare for a Recession

    section background
    section background

    Getting insured is as easy as 1 - 2 - 3

    Tell us (very little) about yourself
    1

    Tell us (very little) about yourself

    Just tell us your address, your name, email and phone number. And that's it. We'll give you a price in less than a minute.

    Pay online easily and securely
    2

    Pay online easily and securely

    You can choose to pay monthly or save money by paying for the entire year in one easy payment.

    Get your documents in your inbox - instantly
    3

    Get your documents in your inbox - instantly

    As soon as you complete your purchase, you'll find your proof of insurance and policy documents waiting for you in your inbox.

    Get covered today - it couldn’t be easier

    We’ve provided more than 1,000,000 quotes to Canadians just like you. Give it a try!

    Google Logo

    Reviews

    4.6 rating

    1,472 reviews

    view all

    Across Canada

    Contact Us
    Apollo logo

    © 2024 APOLLO Insurance Solutions Ltd.

    111 Water Street, Unit 210, Vancouver, British Columbia, V6B 1A7

    APOLLO Insurance Agency Ltd. (o/a APOLLO Brokerage in the province of Ontario only) is a licensed retail brokerage, offering our clients with a comprehensive set of insurance solutions to meet their individual needs. APOLLO Insurance Agency Ltd. maintains necessary corporate licensing in provinces across Canada. Availability of products and service depends on licensing and product availability. The information that appears on this page is provided for information purposes only. Advertised products and prices are not guaranteed and vary based on insurance provider and/or insurance company's discretion and product availability.

    Transparency and Disclosure: APOLLO Insurance Agency's role is to provide you with exceptional service and the best insurance products that suit your needs. As a licensed retail brokerage, our compensation is based on a commission basis already built into your insurance premium and varies based on the product purchased through our platform. For a description of how APOLLO Insurance Agency is compensated and how this is calculated, please refer to our Compensation Disclosure document. For consumers in Ontario, please review the RIBO Conduct Fact Sheet and the RIBO Conduct Guidance document.