How to Maximize your Down Payment for your First Home

• Make a $19.2k RRSP contribution just three months in advance of buying a home…
• …assuming a 30% tax rate, deposit $6k tax refund back into RRSP…
• …then withdraw $25k maximum under HomeBuyers’ Plan following increased limit in
2008…
• …to be repaid to the RRSP in equal installments over 15 years with no interest penalty and the payments are not counted in mortgage serviceability calculations…
• …at, say, a 4% rate of interest, this equals $8k in interest savings over 15yrs…
• …which means the initial $19.2k RRSP deposit has been parlayed into an effective down payment of about $33k, or an extra 70%+
• No restrictions on the source of the original RRSP deposit (can borrow for it, ‘gift’, etc).
• ie: the zero-down mortgage can still theoretically exist but most don’t structure it like this.
• If a couple, and both are first time home buyers, double all of the math above (ie: turn $38k from liberally allowed sources into a $65k down payment)
No warranties, please consult your accountant regarding current legislation. Only applicable for first time buyers.