How to Save for a House

When eyeing a 20% down payment, tread the path of low-risk investments and vigilant savings to bolster your mortgage conditions and secure a solid financial footing.
Bruce Hodges
November 16, 2023
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Table of Contents

How to Save for a House

Navigating Your Path to Homeownership: A Financial Blueprint

In today's ever-climbing real estate market, snagging your dream abode may appear elusive. Despite the hurdles – from stagnating salaries to a dip in property ownership among the younger generation – owning a home remains within reach with strategic financial planning.

Blueprint for Home Savings

Committing to a house-saving quest means tightening your budget belt and exploring multiple avenues to gather your down payment. Ensuring a reputable credit score is also crucial, especially if a mortgage is on the horizon.

Trim the Fat on Everyday Expenditures

The journey to a substantial down payment starts with forgoing the small, routine splurges. By reining in habitual, non-essential spending – think gourmet lattes, impromptu shopping sprees – you might be surprised at the savings you can compile over time.

Rethink Your Rental Strategy

Given that rent devours a hefty slice of your monthly budget, finding savings in this area can fast-track your home acquisition goals. Consider downsizing your living space, embracing the shared economy with a roommate, or even repositioning to a more economical locale.

Transition to Cash Transactions

Swapping plastic for paper can lead to more tangible financial mindfulness. By allocating cash for daily transactions, you're likelier to ponder the necessity of each purchase.

Smart Storage for Your Savings

Invest your saved funds wisely. A high-interest savings account or a diversified investment portfolio can help grow your nest egg. If the stocks and bonds market seems alien, consider a robo-advisor to automate and optimize your investments.

Tax Incentives and Windfalls Are Your Allies

From maximizing your Tax-Free Savings Account (TFSA) to saving unexpected cash windfalls – think tax refunds or bonuses – every extra dollar shores up your future home fund.

Establish an Untouchable Down Payment Vault

Create a separate savings or investment account exclusively for your down payment, contributing to it regularly while resisting the temptation to dip into it for other expenses.

Renting While Saving: A Balancing Act

Even as you diligently stockpile money for a house, renting remains a reality. However, it doesn't have to be the nemesis of your saving efforts.

Embrace Less-Trendy Neighborhoods

Choosing a modest area over a swanky zip code curtails both rent and the temptation to splurge on local entertainment.

Subscription Slash

Reevaluate your subscriptions. Shift to digital content where possible, and seek shared streaming services among your social circle.

Generate Additional Income

Consider a side job or leveraging your hobbies for profit. More income translates into heftier savings.

Homeownership in One Year: Accelerated Saving Techniques

If you're set on hurdling from tenant to homeowner within a year, it's time to embrace some significant lifestyle adjustments.

Reassess Your Mode of Transport

If feasible, swap four wheels for two, or opt for public transportation. The elimination of car-related expenses can massively bolster your savings.

Vacation on Hold

Resist the siren call of vacation envy, and stay focused on the tangible joys of future homeownership.

Family Finance Boot Camp

Temporarily moving back in with family can be a strategic – albeit challenging – move to eradicate rental outlays and amplify savings.

Financial Roadmap to Your Dream Home

Understanding how much to sock away for your dream home is about striking a balance between practicality and aspiration, while also navigating the particulars of mortgages, maintenance costs, and down payment intricacies.

Down Payment Detailed

Know the percentage required for your down payment. In Canada, this scales with your home's price bracket and its impact on your total savings goal.

Overlook Not the Additional Costs

Acknowledge hidden homeownership expenditures like real estate commissions and home inspections.

Leverage First-Time Buyer Programs

Explore Canadian incentives devised to aid first-time homebuyers, such as the First-Time Home Buyer’s Tax Credit or the Home Buyers' Plan (HBP).

Maintain a Healthy Debt-to-Income Balance

Your debt-to-income ratio dictates your purchasing power and affects mortgage eligibility. Strive to keep it within affordable bounds.

Vehicle for House Savings

Choosing where to stow your down payment involves a strategic assessment of accessibility and risk.

Savings Versus Investing

For near-future home purchase plans, a high-yield savings account may be prudent. For longer timelines, a diversified investment portfolio might offer greater growth potential.

Saving for the Substantial Down Payment

When eyeing a 20% down payment, tread the path of low-risk investments and vigilant savings to bolster your mortgage conditions and secure a solid financial footing.

Bruce Hodges
Bruce, Founder and CEO of Parachute, worked for several of Canada’s top Banks, published research for the Canadian Bankers Association, and taught E-commerce Strategy in Wilfrid Laurier University’s MBA program. His first start-up built credit solutions for the likes of National Bank, Fair Isaac, and Ford Credit globally. Prior to starting Parachute, Bruce was COO of Foresters Financial, and EVP Transformation at CIBC, one of Canada’s top 5 banks. Bruce founded Parachute to disrupt the financial wellness space taking on payday, and high interest predatory lenders, with the intent to bring at risk Canadians back from the brink to good financial health.
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