In regions where the cost of living and renting overshadows the ability to save, accumulating a substantial downpayment for a home may seem like climbing a mountain. However, with a bit of creativity and exploration of available resources, this mountain might not be as insurmountable after all.

Here are some strategies to consider:

Family Support:

Sometimes, the bank of mom and dad can be the first place to turn. Borrowing from family, if possible, might offer more flexible repayment terms with no interest – making it a viable first-choice option.

Speak with a Financial Advisor:

Your bank’s financial advisor could help you restructure your finances. They can offer insights into how to move money around without facing penalties, potentially freeing up some funds for your downpayment.

This is especially useful if you’ve been putting money into a RRSP intending to use it for your downpayment; but now, using the FHSA might make more sense.

Alternatively, they may suggest a LOC to finance your downpayment. This might be an option if you already have a pre-approved mortgage and your credit is good enough to not jeopardize your ability to buy a house. Either way, your bank’s financial advisor would provide the best advice on what to do.

Leveraging Your RRSP:

The Home Buyers’ Plan allows first-time buyers to borrow up to $35,000 from their RRSPs tax-free. It’s a helpful option if your retirement funds can serve as your step into the housing market.

This was the best “borrowing” option before the FHSA was introduced, so it’s best to get advice on which way to go. The consideration in using this is that you only have 15 years to put all the money you borrowed back into your RRSP, so choose wisely.

First-Time Home Buyers Incentive:

This government initiative is designed to assist first-time homebuyers, offering 5% or 10% towards the purchase of a new home, thereby reducing mortgage payments without additional interest. Second to that, it assists in a sizeable downpayment if you feel you don’t have enough.

How this works is that they’ll match the percentage you put down. What is offered might depend on the location and age of the home, so investigate this first.

While helpful, this option also means the government – in addition to your mortgage issuer – will place a lien on your home. You will be required to repay the % amount after 25 years, or as soon as you decide to sell, in order to remove this lien. The best practice when taking this offer is to pay it off as soon as possible as the 5% they initially covered will grow along with your home’s value.

Embarking on the journey to homeownership requires more than just dreaming of the perfect home; it demands action, creativity, and sometimes, a little help from available resources. By exploring these options, the path to securing a downpayment becomes less daunting, paving the way to the front door of your future home.