How to Turn $150K Into a $200K Down Payment: A Playbook for First-Time Buyers

Buying a first home is a big financial milestone—and for many, it’s also a challenge to save enough for the down payment. 

Rising home prices and borrowing costs have turned down payments into a serious financial challenge for many Canadians. 

Fortunately, if you and your partner each have $75,000 saved, you’re already on the path to success. The key is knowing how to supercharge that $150K into a $200K down payment with tax-smart strategies. Here’s how you can do it…

The Secret Weapons: RRSP and FHSA

Canada’s housing programs can be confusing, but two stand out for first-time buyers:

RRSP First-Time Home Buyers’ Plan (HBP)

• Withdraw up to $60,000 tax-free per person to buy your first home.
• Contributions reduce your taxable income, giving you a hefty refund at tax time.

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 a first home are completely tax-free.

These programs don’t just help you save—they help you grow your savings into something much bigger.

The Game Plan: Two Years to Transform $150K

Here’s how to leverage these government programs and turn your savings into a powerhouse down payment:

Year 1: Lay the Groundwork

• RRSP Contributions: Each partner contributes $30,000.
  • Result: $9,900 in tax refunds per person (based on a 33% marginal tax rate).
• FHSA Contributions: Each partner maxes out $8,000.
  • Result: $2,640 in tax refunds per person.

Total Refunds in Year 1: $12,540 per person, or $25,080 combined.

Year 2: Build Momentum

• RRSP Contributions: Another $30,000 each.
  • Result: Another $9,900 in tax refunds per person.
• FHSA Contributions: Another $8,000 each.
  • Result: Another $2,640 in tax refunds per person.

Total Refunds in Year 2: $12,540 per person, or $25,080 combined.

The Results

After two years, here’s how your savings add up:

1. RRSP Withdrawals (HBP): $60,000 per person, or $120,000 total.
2. FHSA Balances: $16,000 per person, or $32,000 total.
3. Tax Refunds: $25,080 per person, or $50,160 total.

Total Down Payment:
$120,000 (RRSP) + $32,000 (FHSA) + $50,160 (refunds) = $202,160

Why This Strategy Works

This isn’t just about saving; it’s about tax optimization. RRSPs provide immediate tax relief, allowing you to claim significant refunds while setting up tax-free withdrawals through the HBP. 

FHSAs, on the other hand, combine tax-deductible contributions with tax-free growth. Together, they maximize your buying power.

The strategy also ensures you’re spreading contributions over two years to maximize tax refunds without straining your budget. It’s the kind of efficient planning that puts every dollar to work.

What’s the Payoff?

1. A Bigger Home Budget: A larger down payment reduces your mortgage, saving you thousands in interest and giving you access to better homes.
2. Tax Savings That Count: Combining RRSP and FHSA contributions delivers additional tax refunds—cash you can put right back into your home.
3. A Path That Works: This strategy isn’t pie-in-the-sky; it’s a practical, proven way to boost your down payment and fast-track homeownership.

Take Action

If you’ve been sitting on your savings, now’s the time to move. Open an FHSA, max out your RRSP contributions, and plan your way to a larger down payment.

With government programs and tax-smart planning on your side, your dream home is closer than you think. The first step is seeking advice from a professional mortgage advisor who can tailor a strategy to your unique situation. 

To dive deeper into maximizing your First Home Savings Account (FHSA) contributions, check out our comprehensive guidebook. Start today, and let informed decisions and expert guidance turn your savings into the key to unlocking the home you’ve always wanted.