The Myplace Playbook // 065
Hey Everyone,
This was the most common reply I got a few weeks ago when I asked you to finish the sentence.
"I'll buy when I have a bigger down payment."
It came in more than any other answer. By a lot.
And every single time, I wanted to ask the same follow-up question.
Bigger than what, exactly?
Because almost nobody who sent that reply had a specific number. It wasn't "I need $47,000 and I'm at $31,000." It was just... more. A little more than right now. Enough to feel ready. Enough to feel safe.
And "enough to feel safe" is a moving target. Which means for a lot of people, it never actually arrives.
So this week I want to make the down payment conversation real. Not scary. Just real.
What the minimum actually looks like in Canada.
On a home priced under $500,000, the minimum down payment is 5%. On a home between $500,000 and $1,499,999, it's 5% on the first $500K and 10% on the remainder. Over $1.5M, you're at 20% with no default insurance available.
So on a $450,000 home, the minimum down is $22,500.
That's it.
Now, putting down more than the minimum reduces your mortgage insurance premium and lowers your monthly payment. Those are real benefits. But the question worth asking is: how much does it actually move the needle?
Going from 5% down to 10% down on a $450,000 home, that's an extra $22,500 saved. At the rate most people are able to set aside money, that's roughly 18 to 24 more months of renting.
During those 18 to 24 months, your rent keeps going. The market keeps moving. And the down payment you're chasing is now measured against a home that may cost more than it did when you started counting.
That's not an argument for jumping in underprepared. It's an argument for knowing your actual number and making a real plan around it, rather than just chasing "more."
What a lot of people don't know is where down payments can actually come from.
Savings is the obvious one. But it's not the only one.
A gift from a family member. This is more common than people think, and lenders allow it. If a parent, grandparent, or sibling wants to gift you money toward a down payment, that counts, as long as it's a true gift and not a loan. Lenders will ask for a signed gift letter confirming it doesn't need to be repaid. That's it. The money is yours to use.
Your FHSA. The First Home Savings Account lets first-time buyers contribute up to $8,000 a year, to a lifetime maximum of $40,000, with contributions being tax deductible. If you haven't opened one yet and you're planning to buy in the next few years, you're leaving money on the table. The contributions reduce your taxable income now, and the growth comes out tax-free when you use it for a qualifying home purchase.
Your RRSP. Under the Home Buyers' Plan, first-time buyers can withdraw up to $60,000 from their RRSP toward a down payment. Couples can each pull $60,000, so up to $120,000 combined. You have 15 years to repay it back into the plan. It's not free money, but it's your money, working for you now instead of sitting there while you rent.
A combination of all three. Gift plus FHSA plus RRSP. More people qualify for this combination than realize it. A conversation usually takes about fifteen minutes to figure out what you actually have access to.
The scenario I see more than any other.
Someone has been saving diligently. They've got $20,000 to $25,000 in their account. They think they're not ready because they've heard "you need 20% down" somewhere along the way, probably from a well-meaning relative who bought their first home in 1987.
They don't know their parents could gift them $15,000 and it would be perfectly clean with the lender.
They haven't opened an FHSA, so they haven't started the clock on tax-sheltered savings.
They have $28,000 sitting in an RRSP they completely forgot counts.
They were $60,000 ahead of where they thought they were. They just hadn't looked.
Here's what I'd suggest.
Before you spend another year saving toward a number that may already be within reach, let's figure out what you actually have.
Hit reply and tell me roughly what you've got set aside, whether you have an FHSA or RRSP, and whether family has ever offered to help. That's enough to start.
I'll tell you what you're actually working with. And if you're closer than you think, you deserve to know that sooner rather than later.
-Andrew
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