Good income, but not much saved? You're not alone, and you may be closer to your first home than you think.
Here's the good news: with a brand-new home, you don't pay your whole down payment on day one. You pay it bit by bit while the home is being built. That gives you time to save, and Canada has programs that help you do it faster. This guide explains it in plain language.
Which path is yours?
You have some savings
Money in a TFSA, FHSA or RRSP can cover deposits now and closing later, with tax savings along the way.
See path 1 ā 2Good income, little saved
Pay deposits from your income as the home is built, and consider an RRSP loan the year before you close.
See path 2 ā 3Not ready yet
Open an FHSA now, talk to family early, and build a plan to buy in the next year or two.
See path 3 āNot sure which one fits? Book a free call and we'll work it out together.
How paying for a new home works
Buying pre-construction happens in stages. Your deposits count as part of your down payment, so by the time you get your keys, a big part of it is usually already paid.
Step 1 Ā· Day 1
Sign
Pick your home, sign the agreement and pay the first deposit.
Step 2 Ā· Ongoing
Deposits
Pay the rest of the deposit in parts, on set dates.
Step 3 Ā· 1 to 3 years
Build
The builder builds. You keep saving, including in your FHSA.
Step 4 Ā· Closing
Keys
Pay the rest of your down payment and closing costs. Your mortgage starts.
Every project has its own deposit schedule, and some builders offer smaller or longer ones. Deposit structures and incentives are subject to change.
How much do you need? The minimum down payment is 5% of the first $500,000 and 10% of the part above that (up to $1.5 million).
Example: on a $650,000 home, that's $25,000 + $15,000 = $40,000. You'll also need money for closing costs.
Where the money can come from
You can combine these. For example, you can use the FHSA and the Home Buyers' Plan for the same home, plus savings and a family gift.
$40,000
FHSA (First Home Savings Account)
A savings account just for first-time buyers. Put in up to $8,000 a year, get a tax refund for it, and take it out tax-free for your home. You never pay it back.
$60,000
RRSP Home Buyers' Plan
Take up to $60,000 out of your RRSP, tax-free, for your first home. Your partner can do the same.
Savings and your TFSA
Money you've already saved. A TFSA is the most flexible: take out any amount, any time, tax-free, and the room comes back on January 1.
A gift from family
Many lenders accept money from parents or close family toward your down payment.
Limits per person, as published at the time of writing. Eligibility rules apply.
One rule to know for new homes
With the FHSA and the Home Buyers' Plan, the home generally has to be finished (or bought) before October 1 of the year after you take the money out. New homes can take years to build, so in most cases you pay deposits from savings, your TFSA or a gift, and keep your FHSA and RRSP money until you're close to getting your keys.
Build dates can change. Check with your tax advisor before taking money out.
Path 1: You have some savings
Use your TFSA and regular savings for deposits, since they have no timing rules. Let your FHSA and RRSP keep growing during the build, and use them at closing.
Keep adding $8,000 a year to your FHSA while the home is being built. Each contribution lowers your taxes, and together the FHSA and Home Buyers' Plan can give you up to $100,000 per person, or $200,000 for a couple.
Worked example Ā· Couple, small savings
Priya and Sam buy a $650,000 condo
- Deposit schedule of 10% ($65,000) over about 18 months
- A $20,000 gift from Priya's parents, and $2,500 a month saved
- Both open an FHSA and contribute $8,000 a year during a two-year build
| When | What happens | Amount |
|---|---|---|
| Signing | Family gift pays the first deposit | $20,000 |
| Next 18 months | They save $2,500 a month for the rest of the deposits ($2,500 Ć 18) | $45,000 |
| During the build | FHSA contributions: $8,000 Ć 2 people Ć 2 years, plus a tax refund each year | $32,000 |
| Closing | Minimum down payment needed ($25,000 + $15,000) | $40,000 |
Result: their $65,000 in deposits already covers the $40,000 minimum. Their FHSA money (about $32,000, plus any growth) pays closing costs and lowers their mortgage.
Path 2: Good income, little saved
Choose a home whose deposit schedule fits your monthly budget, and pay it from your income. If you have unused RRSP room, an RRSP loan can help you build the down payment for closing. Here's how it works:
Step 1 Ā· Year before closing
Borrow
Take an RRSP loan, up to your unused room, and put it in your RRSP.
Step 2 Ā· Tax time
Refund
The contribution is tax-deductible, so you can get a refund.
Step 3 Ā· Day 90+
Withdraw
Take the money out tax-free under the Home Buyers' Plan.
Step 4 Ā· Closing
Buy
Use it for your down payment. Repay the loan, and your RRSP over 15 years.
For a new home, timing is everything. Do this the year before you close, not when you sign, so you're not paying off a loan for years while the home is built.
Worked example Ā· $100,000 income, $0 saved
From RRSP loan to down payment
- $40,000+ of unused RRSP room and a $100,000 income in Ontario
- Refund estimated at a 29.65% combined federal and Ontario rate
- Example loan rate of 6.5% over 5 years
| When | What happens | Amount |
|---|---|---|
| About 12 months before closing | Take an RRSP loan and contribute it to your RRSP | $40,000 |
| Tax time | Estimated refund ($40,000 Ć 29.65%) | ā $11,860 |
| 90+ days later | Withdraw under the Home Buyers' Plan | $40,000 |
| After that | Loan payment ($40,000 at 6.5% over 60 months) | ā $783/mo |
| Later | Home Buyers' Plan repayment to your RRSP ($40,000 Ć· 15) | ā $2,667/yr |
Result: $40,000 toward closing, which covers the minimum down payment on a $650,000 home. The refund can go toward closing costs or paying down the loan.
Estimates only. Your refund, rate and payment will differ. Home Buyers' Plan repayments generally start the second year after the withdrawal year; a federal proposal would give some buyers more time.
A good fit if you
- Have steady income and good credit
- Have enough unused RRSP room (see your Notice of Assessment or CRA My Account)
- Can easily afford the loan payment and your future mortgage
Think twice if you
- Already carry car loans or credit card balances
- Have new, irregular or hard-to-prove income
- Would be stretched by the extra monthly payment
Important: your lender will count the RRSP loan payment when working out how much mortgage you qualify for. Talk to a mortgage professional before you borrow.
Path 3: Not ready yet
Open your FHSA now
Opening it locks in $8,000 of room for this year, even if you put nothing in yet. Unused room carries forward.
Talk to family early
If parents plan to help, it's easier when the money and the gift letter are ready ahead of time.
Pick a schedule you can keep
Look for communities whose deposit plans fit your monthly budget. We can show you which ones do.
Get a plan, not just a pre-approval
We'll map out how much you need, when each deposit is due, and which accounts to use when.
Don't forget closing costs
On closing day, you'll need some cash on top of your down payment:
- Land transfer tax. First-time buyers in Ontario get up to $4,000 off. Toronto has its own extra tax, with its own first-time buyer rebate.
- Lawyer fees and title insurance.
- 8% tax on mortgage insurance if you put down less than 20%. It's paid in cash, not added to your mortgage.
- New-home charges in your agreement, like utility hook-ups and Tarion enrolment. Ask to have these capped before you sign.
- Occupancy fees for condos, if you move in before the building is fully registered.
A simple rule: plan for at least 1.5% to 2% of the price. On a $650,000 home, that's about $9,750 to $13,000.
Don't miss this deadline: March 31, 2027
Ontario's HST relief can save you up to $130,000 on a new home you'll live in. It applies to purchase agreements signed from April 1, 2026 to March 31, 2027, and you don't have to be a first-time buyer. If you're thinking about buying new, the date you sign matters.
Eligibility depends on the price, the type of home and the dates. Your lawyer can confirm before you sign.
Mistakes to avoid
- Waiting for a "big pile" of savings. With a new home, you save as you go.
- Not opening an FHSA as early as possible.
- Taking FHSA or RRSP money out too early on a home that won't be ready for years.
- Choosing a deposit schedule you can't keep up with.
- Forgetting closing costs. Set money aside from day one.
Quick answers
Can I really buy with no savings at all?
You'll need money for the first deposit and the payments after it. That can come from monthly savings, a family gift or your TFSA. You don't need it all on day one.
Do I have to pay back my FHSA?
No. It's yours to keep for your first home.
Can my partner and I both use these programs?
Yes. Each of you can have your own FHSA and use the Home Buyers' Plan, which doubles what you can use.
Do my deposits count toward my down payment?
Yes. Your deposits are part of your down payment.
Who counts as a first-time buyer?
Generally, someone who hasn't owned a home they lived in during this year or the past four years. Check the exact rules for each program.
Jay's take
I've seen a lot of buyers with good jobs wait for years because they thought they needed a huge amount saved first. With a new home, you have time on your side: you pay as you go, and the government programs help along the way.
That said, every situation is different, and borrowing isn't right for everyone. My job is to show you your options clearly, check the numbers with a trusted mortgage professional, and give you an honest answer, even if it's "not yet."
Let's map out your plan
Free and no pressure. We'll look at your income and savings, show you communities with deposit plans that fit your budget, and map out your path to getting the keys.
Jay Paramanathan, Broker, RE/MAX Experts, Brokerage. 416.700.3333 Ā· info@newhomecentre.com
This article is for general information only and is not tax, legal, mortgage or financial advice. I am a real estate broker, not a financial advisor or accountant. Program limits are as published at the time of writing and eligibility rules apply. Borrowing to fund a down payment carries risk, and lender, insurer, builder and CRA rules can change. Examples are illustrations, not guarantees of approval, refunds or payments. Prices, deposit structures, incentives and rebates are subject to change. Speak with a licensed mortgage professional and a qualified tax advisor before acting.