9 creative ways to save for a down payment in Alberta
By ATB Financial 10 May 2023 5 min read
Whether you’re looking at buying a home in the near or far future, saving for a down payment is an important step in beginning the path to home ownership. There are so many ways to save for a down payment. Whether it’s liquidating investments or changing your grocery shopping routine, creating a financial plan will set your savings up for success. Explore the ideas below and discover your own unique plan to come up with a down payment.
1. Finance yourself with your FHSA, RRSP or TFSA
In 2023, the Government of Canada introduced the first home savings account (FHSA), a registered plan that allows residents to save toward the down payment on their first home—tax free. You can save up to $8,000 in the year you open an FHSA and contribute up to a maximum of $40,000 throughout your lifetime.
The Government of Canada’s Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 per person from your registered retirement savings plan (RRSP) tax-free to buy or build a home if you qualify as a first-time homeowner. It’s like giving yourself an interest-free loan. You’ll have to repay this amount back to your RRSPs within 15 years. There are some other conditions—check out Canada Revenue Agency’s Home Buyers’ Plan for more details.
TFSAs are designed to help you save for anything you can think of. Contributions aren’t tax-deductible, but the interest they earn in your TFSA is tax-free. Unlike with RRSPs or FHSAs, you can withdraw money from a TFSA at any time without increasing the income tax you owe for the year. You start acquiring TFSA contribution room at age 18.
2. Sell your unused stuff
Whether it’s a record collection, outdoor gear, extra furniture, old electronics or unused workout equipment, you might own some valuable things that you don’t use much. Not only will you earn some extra money, you’ll also free up space, which means less stuff to move when you do find your perfect home. Online marketplaces make it easy to part with unused items.
3. Brew your own coffee
You’ve probably heard this recommendation before—that’s because it works. One of our ATB team members, Chris, shared that drinking coffee at home made a big impact. “My wife and I decided a year ago to brew coffee at home. Between the two of us cutting our daily Starbucks addiction, we’re saving $160/month.”
Want to make the money you’re saving go even farther? The ATB Tax Free Saver Account (TFSA) pays you a premium interest rate and allows you to grow your savings tax free.
4. Try a side gig
Earn more, and put the extra money towards your down payment with a part-time job that suits your lifestyle and interests. You never know—maybe you’ll end up discovering work that you love doing.
5. Rent money, not real estate
While this may not be an accessible option for everyone, most lenders will allow you to use gifted funds from a family member for a down payment if that opportunity arises. Your mortgage provider will ask you to provide a signed letter stating that the funds are a gift and don’t need to be paid back.
7. Go down to one vehicle
Going down to one car might sound impossible, especially with kids or both partners working. But if you’re looking to save big and willing to try something new, it can work. Here's how Carmen, one of our ATB team members, did it.
“We have four kids, currently aged 11–14, and for the past 12 years we’ve only had one vehicle while living in Airdrie. My husband takes a commuter bus downtown every day, so the car is available at home for appointments and activities. We’re very strategic with how we plan the kids’ activities and find opportunities to carpool with other parents.
In the rare occurrence of an overlap and we need to be in two places at once, we rent a car or borrow from a grandparent. Considering we could avoid a second car payment, parking downtown and insurance, it made the most sense for our budget. We estimate we saved roughly $300–$500 per month.”
Do you have stocks, bonds, cryptocurrency, mutual funds or other investments that you could sell? Talk to your tax professional first to make sure you won’t have to pay more tax than you need to, but selling investments can contribute to your down payment savings.
9. Shift how you grocery shop
Switching up where you buy your groceries can cut your expenses and allow you to put those extra funds towards your down payment. ATB team member, Tayllor, ended up cutting down her and her husband’s grocery bill by over $300 when they stopped buying branded organic products from a large natural food retailer.
Now they shop at another grocery store and buy the store-brand organic products. “If you want to buy natural foods, many grocery stores offer in-house products that are comparable in quality to what we were paying double for at a specialty store. We also saved by buying eggs, honey and meat directly through local farms, and growing some of our own herbs and veggies.”
If buying organic isn’t a priority of yours, switching to store-brand products can still save you a lot in the long run and won’t compromise on the quality.
No matter where and how you shop, having a mindful approach to shopping can help you save on cash that can go towards your down payment. Go in with your grocery list in hand and stick to what’s on the list.
Learn more about making a down payment and the other steps of the home buying process in our complete guide to buying a home in Alberta.
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