Buying a home on your own: Ideas for a challenging market
Despite ongoing affordability issues, almost half of first-time homebuyers say they want to apply for a mortgage on their own. If you're one of them, here are a few ideas to help you get started.
RETIREMENT
BY Tamara YOung
April 2025
When Michael Palumbo, a senior manager at TD Bank, purchased a home in 2020, he did something he never thought he'd be able to do: He bought it entirely on his own. "It was honestly a combination of blunt force saving and a ton of luck," he says. "I was living at my parents’ house at the time and had been for quite a while. Then COVID-19 hit and suddenly, I could devote nearly 100% of my salary to my goal. After eight months of aggressive saving and a timely stall in the Toronto condo market, I realized I had a down payment."
Buying a home in many parts of Canada is expensive — we all know that. But what if you want to buy a home on your own?
Build a budget
IMAGE: INNA GERTSBERG
When you're planning to buy a home, saving up for a down payment is often a crucial first step. Not only can building a budget help you identify opportunities to save more, but it can also help you set realistic goals for your eventual purchase. For example, if your budget shows that you can reliably save $12,000 a year, and you hope to buy a home in five years, you can expect to have a down payment of at least $60,000. From there, you can review your monthly income to estimate what sort of mortgage you might be able to afford.
Now may also be a good time to set up automatic savings contributions. Rather than go through the hassle of manually depositing funds into a savings or investment account each month, it can be easier to have your financial institution automate these deposits.
Disclaimer
There are three registered accounts available to help you save for your home purchase, and they each work in a different way. The First-Home Savings Account (FHSA), which was introduced in 2023, allows you to save up for a home tax-free and provides a tax deduction for any contribution you make up to $40,000. FHSAs have an annual contribution limit of $8,000 and can be held for a maximum of 15 years (as long as you don't reach the age of 71 in that time period), at which point the funds can be transferred directly to an RRSP or RRIF, withdrawn as taxable income or used to purchase a qualifying home. Also of note, the transfer to an RRSP/RRIF must happen before December 31 of the of the 15th anniversary of the opening of your FHSA, or the year you turn 71, or the year following your first qualifying withdrawal.
A Tax-Free Savings Account (TFSA) is another registered account that allows you to save and invest in a tax-free environment. While TFSAs don't offer a tax deduction like FHSAs, you can hold them throughout your lifetime and withdraw the funds at any time without incurring tax. What's more, if you were at least 18 years old in 2009, and have been a resident of Canada, your cumulative unused contribution limit is now $102,000 — provided you have not yet utilized the account. Each year, the annual contribution limit is indexed to inflation and adds to this sum. (In 2025, the annual limit is $7,000.)
Finally, a Registered Retirement Savings Plan (RRSP) enables first-time homebuyers to borrow money from their retirement savings through the Home Buyers' Plan (HBP). Under the HPB, you can temporarily withdraw funds from your RRSP to purchase a home, without paying tax, as long as you make prescribed minimum payments and repay those funds within 15 years. You may also transfer funds from your RRSP to a FHSA without incurring a tax penalty.
To learn more about the difference between RRSPs, TFSAs and FHSAs, check out this MoneyTalk Article.
Take advantage of registered accounts
Understand the recent changes
The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
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While you’re answering those questions, think about what you truly enjoy and whether you could see yourself doing more of it. But also consider what you'd do if things don’t go to plan.
Where would you find health-related assistance if you needed it? Would you move in with family or hire a live-in caregiver?
Here's something else to consider: You may not want to wait until retirement to try out some of these lifestyle changes. Travelling for months on end or taking a multi-year RV trip may sound great right now, but before you invest in a camper, you may want to consider taking shorter ventures to see if it’s actually a lifestyle you enjoy, says Ewing.
Include friends and family in your thought process, as well. “You might want to better understand their goals, too,” she says. “Are your plans tied to theirs?” For instance, if your mission statement highlights the value of time with family and friends, make sure they are not planning to relocate. On a similar note, if you’re considering buying a place in Mexico to be near friends, you might want to confirm they intend to stick around for a few years.
“At the same time, don’t get too anchored in someone else’s vision of the future," says Ewing. "Know whether you need to expand your thinking or consider other possibilities." This applies to your partner, too. As important as it is to have a shared vision as a couple, recognize you may also have different interests.
Principal, Wealth Planning Office,
TD Wealth
NICOLE EWING
A retirement mission statement can be a bit like the North Star, in that it provides direction and helps people understand what's possible.
According to Statistics Canada, single-person households are the fastest growing household type in the country, having first become predominant in 2016. And yet, with the average Canadian home now costing upwards of $670,000 1, and the average Canadian earning a salary of $68,832 2, it has become increasingly challenging for solo homebuyers to enter the market.
Despite the challenge, 42% of first-time homebuyers say they're considering applying for a mortgage on their own.3 If you're hoping to buy a home as a single person, here are a few ideas to help you prepare for this significant milestone.
The federal government recently made two updates to the rules that govern mortgages in Canada to better support Canadian homebuyers. For starters, all first-time buyers may now apply for a 30-year mortgage amortization, up from a previous limit of 25 years. Those who choose a 30-year amortization will see lower monthly mortgage payments but will also pay more interest over the mortgage's lifetime.
The second change sees the maximum purchase price for insured mortgages increase to $1.5 million. The limit increase means that a downpayment of 20% is no longer required for purchases from $1 million to $1.5 million. Although this change could alleviate the challenge of saving for a large down payment, it does not remove the stress test requirement (which helps determine if a buyer’s income can support their mortgage), nor does it change general mortgage affordability rules. As a result, the primary benefactors may be high-income earners who can shoulder the burden of a large monthly mortgage payment.
When it comes to entering the housing market, people often talk about getting onto the "property ladder." Essentially, if you can't afford a detached home in Toronto or Vancouver right now, that's OK. If your goal is to own property, you may need to start smaller with a condo or townhouse, or find something outside of a major city centre. While property in Toronto routinely goes for over $1 million, homes in Calgary for example, can go for much less. Alternatively, many Canadians who work in one of Canada's big cities choose to buy on the outskirts and commute in. Ultimately, where and how you end up buying property will depend on your personal goals and circumstances.
As for Palumbo, he's already looking forward to climbing the next rung of the ladder: "Fortunately, my partner and I both hold property equity, so now we can actually afford to buy something together. Because of the decision I made years ago to buy, I feel confident moving forward. I feel like I have something to contribute to our future."
Start small
Source: Globe & Mail, Oct. 21, 2024
Number of Canadian homebuyers planning to apply for a mortgage on their own.
42%
1. "National Price Map," The Canadian Real Estate Association, last modified January 2025, https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/national-price-map/ (accessed February 20, 2025). 2. Average Weekly Earnings, Statistics Canada, last modified March 2025, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410013401 (accessed February 20, 2025) 3. Kelsey Rolfe, "Is the new Canadian home buyer likely to be a solo buyer?" The Globe and Mail, October 21, 2024, https://www.theglobeandmail.com/investing/personal-finance/young-money/article-is-the-new-canadian-home-buyer-more-likely-to-be-a-solo-buyer.
SOURCES
Consider the financial side
Once you have a mission statement you like, you can use it to guide your retirement savings plan. “You don’t have to have all the answers today,” notes Ewing. “We just need to understand the overall direction to enable appropriate planning.”
You can start by determining the appropriate cash flow you'll need in retirement and identify potential risks. If, for example, you plan to spend a lot of time outside of Canada in retirement, you may want to structure your portfolio differently to ensure you’re not exposed to any unnecessary taxes if you need to access your funds while you are in another country.
If you’re managing your own portfolio, you'll want to consider the cost of the lifestyle you’re dreaming of. (And don't forget to factor in inflation.) An advisor can help you run the numbers based on your income, spending and investments to see what’s possible. They may even suggest ideas that you hadn't considered, based off those numbers, including the opportunity to buy a recreational property or leave more money to children and charity than you expected.
“Looking at the numbers can really help that conversation along,” Ewing says. “Often, people are surprised by what’s possible. It can spur some excitement and even take away some of that stress.”
Consider the financial side
1 "Steady rise in the average age at divorce," last modified February 7, 2023, Statistics Canada, www150.statcan.gc.ca/n1/daily-quotidien/220309/cg-a003-eng.htm. Accessed on March 1, 2025.
2 A cross-cohort comparison of the economic impact of divorce and widowhood on seniors, Statistics Canada, May 8, 2023, accessed Mar. 24, 2025, www150.statcan.gc.ca/n1/pub/36-28-0001/2023004/article/00003-eng.htm.
SOURCES
When you're planning to buy a home, saving up for a down payment is often a crucial first step. Not only can building a budget help you identify opportunities to save more, but it can also help you set realistic goals for your eventual purchase. For example, if your budget shows that you can reliably save $12,000 a year, and you hope to buy a home in five years, you can expect to have a down payment of at least $60,000. From there, you can review your monthly income to estimate what sort of mortgage you might be able to afford.
Now may also be a good time to set up automatic savings contributions. Rather than go through the hassle of manually depositing funds into a savings or investment account each month, it can be easier to have your financial institution automate these deposits.
Build a budget