Financial Planning Tips for First-Time Homebuyers in Canada

Canada Mortgage and Housing Corporation’s (CMHC) recent decision to end the First-Time Home Buyer Incentive program caught Canadians off guard, sending many in a panic to find another way to afford a home. In the immediate aftermath, potential homebuyers are looking for alternatives to help steer them toward residential property, be it a family home or an apartment, without breaking the bank. 

In light of the pressing question, in this post, we discussed financial strategies and solutions to help you make it aboard a real estate market that might well be out of control.

What measures can Canadian first-time homebuyers employ anyway?

First is the RRSP Route.

The RRSP is a very useful tool for Canadians trying to save to become a first-time homeowner. Here are three ways to take advantage of RRSPs to buy your first home.

  1. The RRSP Home Buyer’s Plan (HBP): This allows first-time homebuyers to use up to $35,000 from their retirement savings for a down payment without paying taxes. If you purchase a home, especially with another first-time homebuyer, you may be eligible to use the $35,000 program. This allows both of you to access $70,000 toward a down payment. Keep in mind that the entire amount must be repaid over 15 years.
  1.  Home Buyers Plan (HBP): For a period of up to 90 days, you can use your RRSP to invest in a new property and make a down payment. This loan is called the Home Buyers Plan (HBP). However, before you can qualify for the plan, you need to ensure that your money stays in your account for at least 90 days. Then, as long as you follow the HBP’s rules, you can move funds out of your RRSP and begin building your dream home.
  1. You can withdraw from multiple RRSPs as long as your total withdrawals do not exceed the maximum amount. In this case, the entire amount can be paid out to the plan owner or in the case of a multi-annuitant contract can be paid out to the annuitants’ RRSPs.

If the entire amount is not repaid within that period, the annuitant will include 1/15 of the amount not repaid annually in his or her income for the year. The maximum withdrawal amount from all plans is available under the RRSP section of the Department of Finance’s website. Remember to claim the HBP amount on your tax returns in the same calendar year.

First Home Savings Account (FHSA)

In 2022, the federal government introduced the First Home Savings Account (FHSA). Designed for prospective homeowners, this registered savings tool offers distinct advantages to individuals saving for a home. It has components that can make buying your biggest investment less difficult for you:

Contributions and withdrawals that are eligible for tax deductions

  • A maximum lifetime contribution of $40,000
  • The capacity to transfer unused contribution room of up to $8,000 to the next year
  • The account has the potential to stay open for as long as 15 years or up to the calendar year that you hit the age of 71.

Even though there are critics who assert that the waiting period on the FHSA is too esoteric to significantly affect your home buying, they believe that the FHSA could be an important tool to pull out in your home buying toolbox.

Home Buyer’s Amount (HBA)

The Home Buyer’s Amount is a non-refundable tax credit used for the purchase of homes. The intention of this initiative is mainly to cater to the needs of new home purchasers. Anyone eligible for the disability tax credit can also avail it. Although they themselves may not be purchasing the house, if they are pursuing the task for someone who falls under the category of those who are qualified for this credit, they’re good to go. Eligible homes include semi-detached houses, apartments in multi-unit buildings, townhouses, single-family houses and even mobile homes.

Mortgage Affordability

To estimate the amount of mortgage for which you may qualify and the one that you may afford, utilize the comprehensive tool offered by Rivers Real Estate or similar features provided by banks and other mortgage lenders. These tools take into account your salary, properties, and debts, along with other important financial factors relevant to buying a home. It is imperative to remember that the down payment demands are somewhat manipulative based on the price of a property you are interested in.

The purchase price will be calculated at five percent if it is equal to or less than $500,000.

Five percent of the first $500,000, plus ten percent of the amount exceeding $500,000, from $500,000 to $999,999

For purchases of $1 million or more, the percentage taken is 20 percent of the price.

By analyzing the data, you can address important inquiries about monetary accessibility, money reserved, beginning financial obligations, far-flung plans, and your strength of will to jump through the hoop.

Budget Efficiently

Most inexperienced people buying homes don’t understand that the basic costs of obtaining a mortgage are only the beginning of the expenses. While the total cost of a mortgage is important, you need to budget for various parts of the whole, such as closing costs, including land transfer taxes, lawyer’s fees, and registration fees, which almost certainly will eat into your total budget. 

Other costs are involved in buying a home and affect this budget — home inspection fees, utility connections, condominium fees, property taxes and potential home repairs or replacements. It’s a good idea to set aside at least 4 percent of your down payment to cover these expenses.

Find Opportunities To Cut Costs Wherever You Can

In the long run, as you prepare to start looking around for a new house, it becomes important to put away as much money as you can. It’s great if you can make use of these savings, but the thing is, owning a house is a major commitment, so you need to be ready in case something goes wrong.

For instance, if a person gets a raise at work, they must save the raise in a high-interest bank account and forget about it. The same rule goes for anyone who happens to get a tax refund or any unexpected cash payment. Also, try to reduce the amount you pay for your day-to-day life, such as going to a fancy restaurant or spending too much money at the grocery store, as well as eliminating any necessity which one can live without. It is so you can prove to yourself that you are definitely ready to buy a house.

More Than Simply Saving

Although building up the savings package is considered crucial in the process of buying a house, it’s necessary to look beyond the savings package. Instead, when buying a new home, first-time Home Depot shoppers should pay close attention to the options to work on improving their credit scores as well, as initially, this will have a more significant effect on the mortgage rate of the final price they qualify for. 

It is possible and achievable with the right mindset to push your receipts to the right level as long as you pay your bills on time to reduce your credit card balance and stop asking for new credit right before you walk in and start working through your new house’s entrance.

In addition, it is crucial to collaborate with seasoned experts who can lead you through the process of purchasing a home. A trustworthy real estate agent is part of this, someone who comprehends your demands and can also find you suitable properties. A lender and a mortgage broker make up the remainder of this team, connections that ensure you secure the finest financial incentives. Do not be afraid to seek advice or ask questions; these individuals have the knowledge you need to successfully make your way through the realm of real estate, which brings complexity with it.


To sum up, even though ending the FTHBI may have surprised several home buyers in Canada, lots of financial planning methods and tricks can be adopted by first-time homebuyers in order to enter the real estate world. By using up the RRSPs, the FHSA, and the HBA, utilizing mortgage affordability calculators, getting a comprehensive budget before house hunting, and saving money properly, you can increase your chances of becoming a homeowner. 
Don’t forget that the journey to be a homeowner is not only achieved by saving money wisely, but also by teaming up with professionals who have many years of rich experience, and who will give you meaningful,  and wise advice. At Rivers Real Estate, we stand behind you all the way.