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If you’ve started thinking about buying your first home, you have most likely also started thinking about the fastest way to save for your down payment. The great news is, there are two options that make it easier to save – and can help you buy your first home faster than you thought.

  1. Make an RRSP (Registered Retirement Savings Plan) part of your down payment saving strategy. It’s true – putting aside a small amount every week in an RRSP can help you build your down payment faster. Through the Home Buyer’s Plan, you can borrow up to $35,000 from your RRSP to use as a down payment on your first home.
  2. The new FHSA (First Home Savings Account) is a registered plan that can help you save for your first home tax-free. You can contribute up to $8,000 annually to a lifetime limit of $40,000 to buy a qualifying home.

How does the Home Buyer's Plan work?

This federal program lets you borrow funds from your Registered Retirement Savings Plan (RRSP) to purchase your first home. Here’s how it works:

  • You and your spouse can each withdraw up to $35,000 from your individual RRSPs to put towards a down payment
  • You pay no interest on the money you borrow from your RRSP
  • Your withdrawal is not taxable as long as you repay the money within a 15-year period (at least 1/15 of the funds must be repaid each year, beginning two years after the withdrawal). Your RBC advisor can help you figure out the easiest repayment strategy

How does the First Home Savings Account work?

An FHSA is a type of registered plan, which means you can hold investments in it to help you reach your goal of owning a home faster. At RBC, there’s no minimum balance required to open an account and you’ll be able to hold a full range of investment products.

  • Contributions are tax-deductible1 and could lower your tax bill
  • Pay no taxes on your investment earnings
  • Contribute up to $8,000 annually ($40,000 lifetime limit) to buy a qualifying home2, 3
  • Make a tax-free withdrawal at any time to purchase a qualifying home

Can I use both options to save?

You can use both the Home Buyers’ Plan (HBP) and FHSA to purchase a qualifying home. Keep in mind you’ll have to repay any funds through the HBP, but not with an FHSA. Making use of both options can help you reach your goal of homeownership sooner!

Start now and watch your savings grow.

Even a small amount invested regularly in an RRSP (weekly, monthly, etc.), can grow into a large down payment over time. Start with $50 a week or another amount that fits your budget.

$50 a week can grow to $14,761* in 5 years.

Set it and Forget it

Setting up regular automatic contributions to your RRSP or FHSA every time you get paid is a great way to save. Because it happens automatically you might not even notice it – except when you start to see your savings build! Tools like the RBC RSP-Matic® make setting this up easy, and RBC InvestEase and RBC Direct Investing each offer easy ways to automate your contributions.

Want to learn more?

  • Try the RSP-Matic Calculator to see how much you could save by contributing to an RRSP monthly. (tip: Instead of entering your desired retirement age into the calculator, enter the age at which you want to buy your first home).
  • Visit our FHSA page to learn how this account makes saving for your home easier and faster

Talk to an RBC advisor about your options today!

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