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Saving for a down payment is one of the biggest challenges for first-time homebuyers in Canada.

The good news? You can turn $150,000 in savings into $200,000 by using smart strategies and government programs like the RRSP Home Buyers’ Plan (HBP) and the First Home Savings Account (FHSA).

With the right approach, you can maximize tax benefits and supercharge your down payment.

Now, let’s dive in!

Canada offers two powerful tools to help first-time buyers grow their down payment:

1. RRSP Home Buyers’ Plan (HBP):

• Withdraw up to $60,000 per person ($120,000 per couple) tax-free for your first home.
• Contributions reduce taxable income, resulting in significant tax refunds at tax time.
• Learn more about how the HBP works on the Government of Canada’s RRSP Home Buyers’ Plan page.

2. First Home Savings Account (FHSA):

• Save up to $8,000 annually, with a lifetime limit of $40,000 per person.
• Contributions are tax-deductible, and withdrawals for your first home purchase are completely tax-free.
• Learn more about the FHSA on the Canada Revenue Agency’s FHSA guide.

By combining these programs, you can maximize your savings while minimizing taxes.

Here’s how to transform $150K into $200K using these tools over two years:

Year 1:

• RRSP Contributions: Each partner contributes $30,000.
• Tax Refund: Approx. $9,900 per person (based on a 33% marginal tax rate).
• FHSA Contributions: Max out $8,000 per person.
• Tax Refund: Approx. $2,640 per person.

Total Year 1 Refunds: $12,540 per person or $25,080 for a couple.

Year 2:

• Repeat the same contributions:
• RRSP: $30,000 each ($9,900 refund per person).
• FHSA: $8,000 each ($2,640 refund per person).

Total Year 2 Refunds: Another $25,080 for a couple.

Here’s how your savings grow after two years:

• RRSP Withdrawals (HBP): $60,000 per person, or $120,000 for a couple.
• FHSA Balances: $16,000 per person, or $32,000 for a couple.
• Tax Refunds: $50,160 combined over two years.

Total Down Payment:

$120,000 (RRSP) + $32,000 (FHSA) + $50,160 (refunds) = $202,160

Explore more strategies for saving with our Saving Tips for a Down Payment.

• Immediate Tax Savings: RRSP contributions lower your taxable income, resulting in large refunds.
• Tax-Free Growth: Both RRSP and FHSA funds grow tax-free, maximizing your savings.
• Double the Benefits: Combining RRSP and FHSA contributions ensures you make the most of available programs.

Spreading contributions over two years balances your savings goals without straining your budget.

• Can I use my RRSP to buy a house?

Yes, the Home Buyers’ Plan allows you to withdraw up to $60,000 tax-free per person for your first home. Learn more here.

• Is it better to use RRSP/FHSA or TFSA for a down payment?

While TFSAs are flexible, RRSP and FHSA contributions offer tax deductions, making them better for maximizing your down payment.

• Does FHSA have to be used for a down payment?

Yes, FHSA withdrawals are tax-free if used for a home purchase. Otherwise, funds are taxed as income or can be transferred to an RRSP.

Don’t let your savings sit idle—start maximizing them with RRSP and FHSA contributions today.

• Open an FHSA and begin making tax-deductible contributions.
• Contribute to your RRSP and plan to withdraw funds through the Home Buyers’ Plan.
• Visit our First-Time Homebuyer Guide to uncover more.

With government programs and smart tax planning, your dream home could be closer than you think.

By combining RRSP and FHSA contributions, you can transform $150K in savings into $200K—without breaking a sweat.

Ready to put this strategy into action? Speak to a mortgage professional today and start planning your path to homeownership.

Need some advice on how to buy your first home?

Contact me today to discuss how I help you build a saving and borrowing strategy to help your realize your goals faster than you though possible!