“Groundhog Day” down payment tip for first-time buyers


Dear David: We’re saving for our first home and are almost there. It feels like the hardest part is getting our down payment together. Any tips? – SCRIMP & SAVE

DEAR S&S: Last week was Groundhog Day. While this is typically memorable for Wiarton Willie’s weather predictions, it also marks the time for first time buyers to take advantage of the federal Home Buyer’s Plan (HBP), a time-sensitive saving strategy that can help them land their first home.

Many first-time buyers find that aside from the purchase price, one of the biggest barriers to home ownership is the down payment. At five percent of the property price, the down payment is a big nut to crack, and banks will typically require buyers to save an additional 1.5 percent on top of it to make sure they can cover their closing costs.

The HBP allows you to withdraw up to $35,000 from your RRSPs to put towards your down payment. If your spouse or significant other is also a first-time buyer, you can pool your eligibility for a maximum $70,000 RRSP withdrawal per couple.

This year’s RRSP contribution deadline is March 1st, which is only a few weeks away. By making the maximum allowable contribution, you can pull off a rare financial “triple play” and boost your savings. Here’s how:

  1. Make the maximum allowable RRSP contribution, which will boost your income tax refund
  2. File your 2021 taxes early, so you receive your tax refund as soon as possible
  3. When your recent RRSP contribution has been in your account for at least 90 days, withdraw it. Put these funds, along with your 2021 income tax refund, towards your down payment

There is no better time to get the combined benefit of an RRSP contribution and a tax refund. The HBP can make it worth finding funds wherever you can, whether you appeal to the bank of Mom and Dad, look at your current TFSA savings account, or hit up Facebook Marketplace to see how much you can get for your dirt bike or vintage hockey card collection.

If you top up your RRSPs by March 1st and file taxes ahead of the April 30th deadline, you could have your tax refund in hand and the necessary steps complete in time to make a purchase in early June. Check with your mortgage specialist or accountant to make sure your bases are covered.


If your income can support it, a $40,000 down payment may be enough to get you into an $800,000 home. You’ll have to re-contribute what you take out of your RRSPs, but you have 15 years to do so, and your home will appreciate in the meantime. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.