Saving A $100,000 Down Payment

71 Comments

Greetings readers! I have some big news: My boyfriend proposed on September 21 and we’re engaged! He proposed after a 4km hike in the rocky mountains — and I used the car ride home to snapchat shots of the ring to all my cousins and call my parents.

Want to put six-figures down on your first home?

This is how my fiance and I are saving a $ 100 000 down payment!

me & my husband-to-be at my cousin's wedding this past July

me & my husband-to-be at my cousin’s wedding this past July

I’m still not used to saying “fiancé” but “my betrothed” confuses people and takes up too many characters on twitter.

We’re still deciding what kind of wedding we want — both of us have the same financial values, so it’s hard to think of spending tens of thousands of dollars on a single day. On the other hand, it’s hard for me to turn down the opportunity to throw a really big party 😉 We haven’t set a date, but we’re thinking Fall 2015. Right now I’m in a rush to find a decent venue for that time. Many I’ve called area already booked for Sept/Oct next year, and I’m hesitant to go later because there will be snow on the ground.

I don’t know how much I’ll be blogging about wedding planning. Firstly, because I know enough about the wedding industry to be an unwilling participant in much of the nonsense beyond a decent dinner and an open bar. I don’t care. I just don’t freaking care about bridesmaids and wedding colors and centrepieces and having a Say-Yes-To-The-Dress moment. This isn’t new: I’ve been singing this tune since 2011.

Secondly, because I’m so sick of reading “frugal wedding” posts (sorry recently married PF blog friends!) that I can’t justify contributing to the collection. There are hundreds, possibly thousands, of personal finance blogs that have done excellent posts on how to save money on your wedding. You don’t need me here, kids.

That said, I do have a lot to say about getting married, so I’ll be blogging about that soon.

We’ve been sharing finances since we moved in together, but now that we’ve committed to sharing a life together, we’re now sharing major financial goals. The first?

We’re saving a $100 000 down-payment on a home.

If you think that number is totally ridic, I don’t blame you. But I recently blogged about Calgary real estate prices where we live, and $100,000 is an appropriate sum to ensure we’re putting over 20% down. It’s important to pay for at least 20% of your home’s value in the down-payment to avoid insurance fees. By putting 20% down (or more, depending on the final purchase price), we’re ensuring a lower monthly payment, a more affordable mortgage, and starting with a strong equity stake in our first property.

How are we going to save such a large sum in 2-3 years?

The most obvious way is there’s two of us contributing, which means we each need to save $50,000. $50,000 is still a big number, but it’s not nearly as intimidating as $100K. Both my fiancé (god, still so weird to say that) and I are savers, so we’re not starting from scratch, and there are some tools to help us:

Each of us can withdraw up to $25,000 from our RRSPs under the first-time homebuyers plan to be used as a down-payment, giving us $50,000 together. I’ve set a personal goal to get a $100,000 RRSP by age 33, which means withdrawing $25,000 (that I have to pay back within 15 years) will not eviscerate my retirement accounts. Options like this are available all over the world, so it’s worthwhile to see what’s available where you live. It is very important to me NOT to have all my funds in one place, and that includes a home. Since I’ve already saved a significant amount of money in my RRSPs, my goal right now is rebalancing so I don’t have to sell more profitable investments, such as stocks, when I make the withdrawal under the first-time homebuyers plan. I’m hoping my RRSP withdrawal under the HBP will be primarily cash and a low-cost mutual fund, with the bulk of my retirement savings remaining in stocks and ETFs. I recently bought a 2-year GIC RRSP to plan for this.

This leaves only $25,000 each to save up outside of our RRSPs. Now, don’t get me wrong, $25,000 is not petty change, but with a 2 or 3 year timeframe it’s very manageable — mostly, again, because we’re not starting from zero. The TFSA contribution limit is currently at $31,000 with another $5,500 to be added for 2016. Since I withdrew a ton of money out of my TFSA over the past 1.5 years to go back to school for my MBA, I’m actually not sure if I’ll be able to max out my TFSA in the next 2-3 years since now I have to catch up and save up to the new contribution limits, but at least I can get over $25,000. Again, I am hesitant to sell profitable investments like stocks and ETFs or wipe out my Emergency Fund which I also keep in my TFSA, but it’s still the best account tax-wise for saving, so it’s better to put my down-payment fund money here than anywhere else.

When we buy a house and how much we put down will depend on a lot more than just saving up $100,000 — such as market fluctuations, interest rate changes, and even what city we live in (I think we’ll stay in Calgary, but I’d be open to moving to another major Canadian city if our jobs took us there). In the meantime, saving now means being prepared to take advantage of opportunities later.

What are your thoughts on our $ 100 000 down payment? How much did you save for your first home? What are your strategies for putting money away?


71 Comments

  1. Congratulations on the engagement!
    $100k such a nice round savings number. It is hard to argue with. Now you just get to juggle where the money comes from.
    For some reason I like to start my savings goals from $0, but I hope to put between $80- 100k away for our first place. We’ve got about 5 years to get there. I just have to get rid of these pesky student loans and max out my Roth IRA first.

    • Bridget (Author)

      Agreed, I’m having a total love affair with $100K — it’s my new number for everything.

      Definitely easy just to direct the money rather than drum it up from scratch. So glad I got into personal finance early so this is even an option.

      5 years goes by fast, you’ll be there in no time.

  2. Sounds like a great goal, B, and I have no doubt you guys’ll make it happen. Plus, you’ll need $100,000 when you move to Vancouver. Just sayin’! Keep those options open 😛

    • Bridget (Author)

      HAHA I would LOVE to move to Vancouver, but not sure C’s job is that transferable… never say never though!

  3. Congratulations, Bridget! $100,000 is a fantastic goal for a down payment. Looking forward to reading about your exciting future plans! 🙂

    • Bridget (Author)

      thanks Kate!! Tons of future plans… not so many wedding plans, but tons of future plans.

  4. T

    I think you would be crazy to each take out $25,000 of your RRSP money … I know it gets repaid over 15 years but with the way compounding works taking out $50,000 (between the both of you) could cost you $100,000’s in the long run…. Especially with how over valued the housing market is right now … Once interest rates rise I think we will see a sharp decline in housing prices … This is just my opinion … I know there a pros and cons with every decisions … And who knows in 2-3 years when you are ready to buy we may have already seen a correction in our very heated housing market … Good luck to you guys

    • Bridget (Author)

      I’ve thought the same, which is one of the reasons we’re waiting to see what the housing market does + save up money in other accounts and are waiting 2-3 years. Taking out such a large sum from our RRSPs right now would simply do too much damage to our requirements (also, I love where we’re renting right now and am not in a hurry to change things).

      The nice thing about the HBP is the pay-back is in addition to your regular RRSP contributions.. so we can spend 15 years paying back our $25K but that doesn’t mean we’ll only put $25,000 in each of our RRSP’s over that time — we’ll actually probably put more like 10x that.

      I’m really hoping for a correction in the housing market in the next few years. If not, we can choose just to put $50,000 in from our other savings and leave the rest, or we can withdraw the other $50,000 from our RRSPs. I’ll definitely be calculating all the possible scenarios to see what’s best at that point!

  5. Congratulations on your engagement!

    I think avoiding the CMHC fees is a great idea and I don’t think the $100,000 will be too tough for you guys. It sounds like you’ve got a good start. I wanted to fix up my first place, so I only put 10% down. I haven’t done that again!

    • Bridget (Author)

      Thanks!! Yeah because of the housing costs here, I’m terrified of putting a small amount down… even with a huge down-payment, we still end up with a huge mortgage =\

  6. Bridget,

    Big CONGRATS! Happy for you guys. 🙂

    Sounds like a reasonable goal there on the savings. Sucks that Canadian real estate is so crazy expensive, though.

    Best of luck with all the planning and everything else. Exciting times!!!

    Best wishes.

    • Bridget (Author)

      Thank you!!
      I know, part of me is tempted to continue renting in Canada and buy a house in Arizona….

  7. Congratulations on your engagement! And that’s def a smart move, saving that much for a down payment!

  8. Congrats! Housing costs always surprise me in Canada. Are you planning on purchasing a small starter home or the place you’ll be for several years?

    • Bridget (Author)

      Honestly I think we’d like to get a downtown condo where we’d stay for at least 5 years.. we both enjoy living in the centre of the city, preferably where we can walk to work.

  9. I don’t blame you for saving up that much we did the same thing and it was just another reason why we were able to pay our mortgage off in the first 5 years. We rented until we had enough money to put down to avoid those fees and get us closer to our goal. Congrats to you both! This is awesome news.

    • Bridget (Author)

      Thank you!!

      Yep the $100K is a sum that will give us the right headstart.. I don’t want to be house poor or spend more than 10 years paying off our mortgage, so I want to start with a lot of money right from the beginning.

  10. Congrats on the engagement. My wife and I got married before we really got serious about our finances and although we came in on budget we probably spent too much. We joke that if we did it all over again we would elope or do a destination wedding.

    • Bridget (Author)

      Thanks! I’m tempted to do the same, but grandparents can’t travel to a destination… and we already have a big family vacation planned next August so not sure if we can fit 2 trips in such a short time.

      I’m totally cool with a courthouse wedding and a party, maybe I can convince everyone to let us do that.

  11. Congrats on your engagement and plan to buy a house! $100k is a great savings goal. I recently started my house fund (haven’t blogged about it yet) and I’m starting out with a small goal of saving $20,000 in cash over the next few years. My husband is going back to school so we’ll be on reduced income, so I think $20k over two years will be a good start.

    I’ve considered withdrawing from my RRSP when the time comes to actually buy, but I’m concerned about how much compounding interest I’d actually be missing out on. That would actually be a good idea for a post, calculating how much interest you’d be missing out on, and if it is offset by the decreased interest costs on your mortgage. Anyway, I’m rambling, congrats again, can’t wait to see you work your way towards this goal.

    • Bridget (Author)

      oh there will definitely be posts with tons of spreadsheets… will need to know if the interest we miss on RRSP compounding will be more than the interest we save on the mortgage, etc.

      I’m all for buying a small cheap home rather than a mcmansion in suburbia, so if we can get closer to 20% without touching the RRSPs by choosing a more affordable home, we’ll do that. Also even though you can withdraw $25K from your RRSPs doesn’t mean you have to — maybe we’ll only need to take $10,000 each out to meet a 20% down-payment!

      Your goal sounds totally doable — looking forward to sharing the journey to home ownership with you!

  12. Oh my gosh Bridget, congratulations!!! This is so exciting. I’m so excited for shared goals some day. For now, we just talk about our separate goals and that’s pretty fun too. When/if we buy a house some day, I think we are looking at $800k or so, which is super scary. I’m trying to convince my boyfriend we should buy our next place in cash 😀 I love that he’s on board with my paying the mortgage down on my current place too.

    $100k was my original home fund goal too 🙂 Mostly because it seemed like a big number and really far away. In the end, that was about how much I had in savings total when I bought my place, with part of that being my EF, and it took much less time to save that than I thought. So I’m sure you guys will be there in no time! What kind of place do you want to buy??? If you buy a condo, would you plan to rent it later? Or are you just going straight for the house?

    • Bridget (Author)

      Thank you! I’m really pleased — though sad to leave the independent PF single girl club 😉

      $800,000 is a TERRIFYING number… though $100,000 used to be terrifying to me before too, now it’s obtainable by just moving money around.

      I think we definitely want a condo, would probably rent if we move.. but neither of us are particularly set on ever buying a house with a lawn, etc. so we might always live in condos. Probably won’t be thinking seriously about the place we want to buy for another year, when we have saved up a bit more and can actually start really planning. We’ll see!

  13. Congratulations on your engagement!!! $100K would almost pay for our entire house in TX.

    • Bridget (Author)

      argghhh I know!! Seeing American house prices just makes me depressed. Can’t fight the market though, so we have to play the game.

  14. Congratulations Bridget! To answer the question, I think $100,000 is a totally solid number for down payment planning, can’t wait to read more about it (inspire me girl!)

    • Bridget (Author)

      hahaha I’ll do what I can… truthfully it’s a pretty boring process right now, just diligently transferring money into the accounts. I feel like I can’t really plan until I’m done the MBA in 6 months… god that will be so much better.

  15. Congrats on the engagement Bridget! And that’s about the same amount me and the HB are saving (if not more). Real estate in Toronto and Vancouver is bananas!

    • Bridget (Author)

      sucks to be us right?? Can’t win here in the great white north, but at least it’s possible so home ownership isn’t totally out of reach.

  16. Congrats again, B! $100k is a great number, you two will have that put aside in no time at all. Looking forward to following along on your progress with this goal and YAY for your comment about spreadsheets breaking down the numbers! Love those.

    • Bridget (Author)

      haha there will be many a spreadsheet… it’s such a big purchase, it’s going to take some serious planning =\ I actually think I’ll enjoy the financial planning more than the actual house hunting…

      • Yup house hunting was incredibly stressful! But the financial planning was super fun 😉

  17. Congratulations! 100K is such a lovely number to aim for. Too bad Canadian real estate is ridiculous but I’m hoping there will be at least a minor correct in 2-3 yrs.

    • Bridget (Author)

      Me too… and then our $100K will go much further. It’s one of the reasons we’re waiting.

  18. Congrats on the engagement! That’s really exciting. We did not save up 20% for our first house and that was a mistake – i felt trapped in it for years. We won’t be making that mistake again. I refuse to buy another house unless I have 20% plus a budget for any renovations.

    • Bridget (Author)

      Thanks!

      That is reassuring to know. With prices what they are, sometimes I feel a sense of urgency to “get in while you can still afford it” with hopes then I’ll own when they increase further, but it’s just not worth the stress. I don’t want to be house poor — I want our mortgage to be as affordable or even cheaper than our rent right now, and that requires a big down-payment.

  19. Jaye

    Congratulations Bridget – This post made my day! (I’m a huge romantic)

    I think 100k is a well rounded figure for a house down-payment. I’m aiming for 100k also as I’d be looking In the 400 – 500k range & wouldn’t consider putting less than 20% down. I still have 60k to save so hopefully within the next 3 years I’ll be able to reach that goal.

    • Bridget (Author)

      Thank you! $60K to go, especially after you’ve already saved $40K, is totally doable in the next 3 years. One of the things really helping me out right now is all our savings is earning interest which is compounding over the next few years. On a few hundred bucks this is pennies but on a few tens of thousand, it can really make a difference.

  20. Brian

    Congrats! Exciting times ahead for you two!

    Since I live in one of the most affordable good sized cities in North America, a $100K downpayment seems insane. Of course saving the $100K sounds great. My house was a little of $100K and we paid cash for it. So I don’t see a problem with your goal at all!

    • Bridget (Author)

      haha don’t worry, $100K sounds insane to me too! It’s just the only option if you want to put 20%+ down, so that’s why we’re doing it.

      Great job paying cash for your house, that is inspiring!

  21. Congratulations on the engagement! That’s such exciting news. Looking forward to your upcoming posts about marriage, as I loved your post about sharing finances.

    $100K definitely sounded like a huge number at first – until I realized you two already had half of that in retirement savings that you could withdraw. That definitely makes the remainder more manageable.

    I live in Toronto, where the housing market is out of control as well, so I understand the need to save a large sum of money for your first down payment. Good luck!

    • Bridget (Author)

      haha I should mention that *I* will have it in my RRSPs but hubby-to-be has some catching up to do. Before me he didn’t have have an RRSP — but he did have savings, which I’ve since taught him to move into the best tax-advantaged accounts, including the RRSP. But even though he’ll need to save more than me to get to his $50,000 share, right now he’s earning a higher income so it balances out.

      Whenever I’m sad about housing prices in Calgary, I just think about what it would be in TO or Van and stop my whining 😡

  22. Big congrats on the engage!!!

  23. Congrats again! And you get to start off a new part of your relationship with a BAHG (I think those are the right initials).

    It boggles my mind that your 20% down-payment is more than half my house 🙂 Also, I’m not sure that raiding the RRSP is in your best interest, but I haven’t crunched the numbers on it yet.

    • Bridget (Author)

      I’m not sure about the RRSP thing either — it will really depend on whether taking the money our of our RRSPs saves us more on our mortgage than it would earn compounding over the same time frame. If it avoids insurance, then yes, but if we can accumulate 20% down outside of our RRSPs then it’s probably not worthwhile to borrow from those accounts. We’ll see!

      & thanks for the congratulations =)

  24. Congratulations on the engagement and best wishes! 😀

    $100,000 sounds very reasonable for a downpayment, and it’s certainly a nice healthy sum considering the real estate market in your area!

    • Bridget (Author)

      Yep! It’s almost a necessity more than a goal haha

      Thanks for the congratulations & well wishes!

  25. Congrats on the engagement! That’s very exciting! When Mrs. T and I got married we did a lot of DIY’s and that allowed us to save A LOT of money. Maybe that would be the approach you could do too? Take a look on my blog for some ideas if you want.

    Utilizing RRSP for downpayment is a great idea!

    • Bridget (Author)

      DIY’s are totally the way to go. I’m not sure how much traditional wedding stuff we’ll be doing since neither of us care for the details (though both our families definitely do) but we’ll see.

  26. Congrats!!!! Y’all look crazy cute together 🙂

  27. 🙂
    Re: the RRSP Home Buyer’s plan. I suspect that you know this already, or will discover it, but you can only withdraw funds contributed up to (I believe) 3 months prior to the withdrawal date. As in, you can only access funds from before a cut off date, not everything in the accounts.
    100K sounds like a solid plan, especially because hopefully the vacancy rate goes down a bit in Calgary over the next few years and the market becomes slightly less insane.

    • Bridget (Author)

      .. but if I have over $25K in my RRSPs right now this is irrelevant right haha Maybe for my hubby-to-be, but with a 2-3 year timeframe he better have more than $25,000 in his RRSPs or I’ll be after him!

      I knew about the rule but yeah, because of my current retirement savings are above it and I’m still saving, it doesn’t matter.

  28. OMG great news!!! Congratulations! Good luck on the savings… Im sure you both can do it in the next couple of years =)

    • Bridget (Author)

      Thank you! Yep… I hope so, just a matter of sticking to a plan and both of us working our butts off 😉 I have faith!

  29. Yay! Many, many congratulations! How exciting! We had to pay a hefty downpayment when we bought our house two years ago. It’s just the reality of living in hot real estate markets. But, the awesome flip side is that we now own a house in a hot real estate market! Good luck to you!!

    • Bridget (Author)

      Thank you!!

      It is a bummer living in a hot real estate market but you’re right, OWNING a house in such a market would be rad. Onward!

  30. natalie

    Congratulations! Oh my goodness! That’s such exciting news. Does that mean that i will not see your saturday personal dating GIFs anymore? But i will wait for your new gifs additions about your newly engaged/soon to be married husband! 🙂

  31. Jim

    Congratulations Bridget! You deserve all your accomplishments.
    Jim

  32. Congratulations i’m really happy for you both, and i’m also glad you both share the same financial values – it will make things so much easier in the relationship.

    I did a 70K down payment for our house. If you can do 100 then that’s awesome – go for it!

  33. ohh, so many great news here 🙂

    Saving as much as you can as a downpaymet is a great idea: you’d get better deals and it would be way easier to pay off the mortgage afterward. Keep up the great work.

  34. OMG Congrats! That is wonderful 🙂

    We saved just over $50K and used the RSP HBP to do it. We just put down the $50K (which was just over 10% downpayment) and used the rest for taxes, legal fees, etc Toronto is even more ridic than Calgary so I think you guys are doing a great thing by putting down that much, it will certainly help with the mortgage payment.

    All the best! 😀

    • Bridget (Author)

      Thanks!!

      Yeah Toronto prices are terrifying =\ The taxes & fees etc with homebuying worry me a bit too — which is another reason we’re aiming for $100,000. I’m expecting $100K will be more than 20% of the house cost so we’ll put at least 20% down and use the rest for the extra fees.

  35. Congrats! We are saving for a similar down payment. I need to stay motivated! 🙂

  36. SP

    Congrats! That was our downpayment goal as well, although we needed more for closing costs and such (we wanted $100k just for the DP).

    Prices here were/are terrifying, but you do get used to it after you have looked for awhile!

  37. First of all – congrats!!! My fiance proposed on September 1st and I’m still getting used to “The F Word” Haha! I plan on starting a wedding series on the blog just because I’d like to share. If you don’t feel like you want to, then you obviously don’t have to! I’m definitely looking forward to your posts on marriage though 🙂

  38. First and foremost, congrats on your engagement. Second, I admire your steps to home ownership. Drew and I are in a similar boat and I’m so paranoid about buying before we’re ready.

  39. Vcr

    Great article Jim. It’s hard for sonoeme to provide an honest and objective assement of their own profession, but you have done it in a balanced way.The biggest problem I see with the Financial Services industry, especially at the retail level, is the compensation. Often, companies who provide investment products incentivize them to promote the most lucrative (worst yielding) products. That’s why many advisors push the products with the highest fees, which yield the highest comissions, even though they are a poor investment choice for the customer. It’s a built-in conflict of interest.It takes an awfully honest adviser to overcome these incentives and do what’s right for their customer. Paying a fee-based adviser is one way to avoid this conflict. As Jim said, Plans and Advice aren’t Free .