The Down Payment Dilemma

One of the most significant challenges first-time home buyers face is saving for a down payment. In Ottawa, where property prices are high, the down payment requirement can be substantial. In this blog post, we will delve into the intricacies of the down payment dilemma, explore the factors that contribute to this challenge, and offer practical strategies for overcoming it.

Understanding Down Payment Requirements

A down payment is a portion of the home’s purchase price that the buyer pays upfront, with the rest covered by a mortgage loan. In Canada, the minimum down payment required depends on the home’s purchase price:

  • For homes priced up to $500,000, the minimum down payment is 5%. 
  • For homes priced between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000 and 10% of the portion above $500,000.
  • For homes priced at $1,000,000 or more, the minimum down payment is 20%.

Challenges of Saving for a Down Payment

  1. High Property Prices: As property prices rise, so does the required down payment. For example, a $500,000 home requires a minimum down payment of $25,000, while a $700,000 home requires a minimum of $45,000. These amounts can be difficult to save, especially for those just starting their careers or managing other debts.
  2. Cost of Living: Ottawa, like many major cities, has a high cost of living. Rent, utilities, transportation, and other daily expenses can make setting aside money for a down payment challenging.
  3. Student Loan Debt: Many first-time buyers are also grappling with student loan debt, which can impact their ability to save. Monthly loan payments reduce the amount of disposable income available for saving towards a down payment.
  4. Unexpected Expenses: Life is full of unexpected expenses, from medical bills to car repairs. These unforeseen costs can derail savings plans and delay homeownership goals.

Strategies for Saving for a Down Payment

  1. Create a Budget: Establishing a clear budget is the first step in saving for a down payment. Track your income and expenses to identify areas where you can cut back and allocate more funds towards your savings goal.
  2. Set a Savings Goal: Determine the amount you need to save for your down payment and set a realistic timeline. Break down the total amount into monthly or bi-weekly savings targets to make the goal more manageable.
  3. Open a Dedicated Savings Account: Create a separate savings account specifically for your down payment. This will help keep your savings organized and reduce the temptation to use the funds for other purposes.
  4. Automate Your Savings: Set up automatic transfers to your dedicated savings account. Automating your savings ensures consistency and helps you stay on track with your savings goals.
  5. Reduce Unnecessary Expenses: Review your budget for non-essential expenses that can be reduced or eliminated. Dining out, subscription services, and entertainment costs are common areas where you can cut back and redirect funds towards your down payment.
  6. Increase Your Income: Look for opportunities to boost your income, such as taking on a part-time job, freelancing, or selling unused items. The additional income can accelerate your savings progress.
  7. Leverage Government Programs: Take advantage of government programs designed to assist first-time home buyers. The First-Time Home Buyer Incentive allows eligible buyers to finance a portion of their home through a shared equity mortgage with the government. The Home Buyers’ Plan (HBP) allows you to withdraw funds from your RRSP to put towards your down payment. The government always comes out with other schemes to allow you to save.
  8. Consider Gifted Funds: Some first-time buyers receive financial assistance from family members in the form of gifted funds. If this is an option for you, ensure that the gift is properly documented to satisfy mortgage lender requirements.
  9. Explore Down Payment Assistance Programs: Various regional and municipal programs offer down payment assistance to first-time buyers. Research programs available in Ottawa to see if you qualify for additional financial support.
  10. Stay Motivated: Saving for a down payment can be a long and challenging process. Stay motivated by regularly tracking your progress, celebrating milestones, and keeping your homeownership goals in mind.


Saving for a down payment is one of the most significant challenges for first-time home buyers in Ottawa. High property prices, the cost of living and other financial obligations can make this goal seem daunting. However, overcoming the down payment dilemma with careful planning, disciplined saving, and leveraging available resources is possible.

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Stay tuned for the next post in our series, discussing the mortgage approval process and tips for securing favourable mortgage terms.


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