Ever feel like your rent payments are just covering your landlord’s mortgage? Curious about how much money you’d actually need to buy a house in Canada? Well, that depends on where you live. Let’s explore what it takes to transition from tenant to homeowner across the country.
Current picture of real estate in Canada
Some areas in Canada have recovered from 2023 but some have gone down even more. If you are actively looking for a home to buy, look at the neighbourhood’s history. If prices are fluctuating lately, hold off purchase and wait for a more affordable deal. If this is your first investment property as a landlord, real estate is still a good passive income. Buying a new property in cities like Toronto, Mississauga, Vancouver, and Montreal might feel expensive but it will also give good returns. Let’s break down how much down payment you’ll need across Canada:
1. British Columbia
Starting on the West Coast, British Columbia remains one of the most sought-after locations. In Vancouver, one of Canada’s hottest markets, you’ll need a substantial down payment. A 3-bed, 2-bath detached house will cost you $2.4M, while a 2-bed condo will cost $1.2M. This means, you’ll need $480,000 for a down payment for a detached house and $240,000 for a condo in Vancouver.
As for the rest of British Columbia, a single-family house costs $952,100 on average, for which you’ll need $70,456 in down payment to purchase.
2. Alberta
Calgary and Edmonton are becoming a choice among millennials for its affordable housing prices. A median-priced home costs $585,000 in these cities and requires a minimum down payment of 5.8% or $33,930. You’ll need mortgage insurance since the down payment amount is lower than 20% of total property price.
3. Ontario
Ontario presents a mixed bag, with Toronto housing standing out as the most expensive. An average home in Toronto costs $1.1M, which requires a 20% down payment or $220,000. As for other big cities in Ontario, a house in Mississauga, Brampton, Milton, Pickering, and Ajax costs around the same. Some affordable cities that offer a balanced life include Hamilton, St Catherines, and Barrie.
4. Quebec
A single-family home in Quebec costs $517,900 on average and needs $26,931 in down payment (around 5.2%). While it helps being a French speaker in Quebec, you can still enjoy a balanced lifestyle.
5. The Maritimes
The Maritime provinces, including New Brunswick, Nova Scotia, and Prince Edward Island, are known for their affordability and scenic beauty. Here, the dream of homeownership is within reach for many, with down payments for an average single-family home costing you around $30,000.
Saving for Your Down Payment
Now that we’ve explored the cash requirements across Canada, let’s focus on how to save for that all-important down payment. Here are some strategies to help you build your savings:
1. Downsize Your Lifestyle
Review monthly expenses and look for areas you can cut back. It could be travel, food and dining, or experiences. If you live in a metropolitan area and can get around without a car, that will bring you closer to your goal quickly. Insurance and gas bills add up to $750 in monthly expenses.
2. High-Interest Savings Account
A TFSA is a type of savings account that allows you to earn interest on your savings without paying tax on the growth. You can put money into a number of investments within your TFSA, such as cash, stocks, bonds, and mutual funds. This means any interest, dividends, or capital gains you earn on your investments won’t be taxed, even when you withdraw them. Once you’ve saved enough for your down payment, you can withdraw the money from your TFSA tax-free to use towards purchasing your home.
3. Use RRSPs to Your Advantage
Through RRSP’s Home Buyers’ Plan (HBP) you can withdraw up to $35,000 from your RRSPs tax-free to put towards your down payment. If both you and your spouse are first-time homeowners, both can withdraw $35,000 each. This withdrawal is tax-free, but it must be repaid over 15 years, starting the second year after the withdrawal. If you don’t repay the annual amount, it will be added to your taxable income for that year.
As your real estate agent in Brampton, I’m here to provide the right information you need to make informed decisions and begin your journey as a home buyer. Book a free consultation today.