Down Payment Saving Strategies for Homebuyers in a Cooling Market

📰 Blog Post:

Introduction

With housing prices stabilizing across many Canadian cities, 2025 is shaping up to be a buyer’s market—but that doesn’t mean homeownership is easy.
The biggest challenge for most first-time buyers remains the same: saving for a down payment.

Whether you’re just getting started or trying to grow your savings faster, here are practical and proven strategies to help you build your down payment in a cooling market.

1️⃣ Set a Realistic Savings Goal

Before you start saving, determine how much you’ll need.
In Canada, the minimum down payment is:

• 5% on the first $500,000 of a home’s price

• 10% on the portion between $500,000–$999,999

• 20% for homes $1 million and above

💡 Example: For a $600,000 home, your minimum down payment is $35,000.

Setting a clear goal helps you stay motivated and measure progress.

2️⃣ Open a First Home Savings Account (FHSA)

The FHSA is one of the best tools for homebuyers in 2025.
It lets you save up to $8,000 per year, tax-free, for a maximum of $40,000.
Contributions are tax-deductible, and withdrawals used for your first home are tax-free — making this a double win for savers.

📈 Combine your FHSA with an RRSP Home Buyers’ Plan to access up to $75,000 in total tax-advantaged savings as a couple.

3️⃣ Automate Your Savings

The easiest way to save is to make it automatic.
Set up a monthly auto-transfer to a dedicated “Home Fund” account right after payday.
This ensures consistency and prevents impulse spending.

Even $250 biweekly adds up to $6,500 a year, not including interest or tax-free growth from investment accounts.

4️⃣ Cut Unnecessary Expenses Strategically

Instead of broad budgeting cuts, target big wins:

• Cancel unused subscriptions

• Cook more meals at home

• Review car insurance and cell plans

• Pause luxury or impulse buys

Redirect those savings straight into your home fund — it’s about smart reallocation, not deprivation.

5️⃣ Invest Your Down Payment Wisely

With a cooling market, buyers may have more time to save before purchasing.
If your homebuying timeline is 2–3 years away, consider low-risk investments like high-interest savings accounts, GICs, or balanced ETFs to grow your down payment faster.

💬 Tip: Keep your funds safe and liquid — you don’t want your down payment tied up in volatile markets when it’s time to buy.

6️⃣ Use Cash Windfalls Strategically

Tax refunds, bonuses, or side hustle income can accelerate your savings goal.
Rather than spending it, deposit a portion directly into your home fund.

🎯 Challenge yourself to save at least 70% of any windfall income — a habit that can shave years off your timeline to homeownership.

7️⃣ Consider Co-Buying or Family Assistance

If solo saving feels out of reach, explore co-buying options with friends or family members.
Alternatively, many parents now use gifted down payments, which are accepted by most lenders as long as the funds come from an immediate family member.

A gift letter is required to confirm that it’s not a loan.

8️⃣ Take Advantage of a Cooling Market

The silver lining? With prices stabilizing and competition easing, buyers may need smaller down payments than during peak years.
This gives first-time buyers a unique window to enter the market before prices rise again when rates drop.

Conclusion

Saving for a down payment takes discipline, but with today’s programs and a cooler market, it’s more achievable than ever.
By combining tax-free accounts, automated savings, and smart financial habits, you can reach your homeownership goal faster — and confidently step into your first home.