Saving up for a down payment on a home is the main obstacle for 32 per cent of prospective homebuyers, according to a new survey, but that's just one of the many hurdles they're facing.
Thirty per cent point to high mortgage payments as their top barrier in home ownership, the survey by CPA Canada and BDO Debt Solutions said, but just 10 per cent preferred the flexibility of renting.
“The dream of owning a first home is slipping away for many Canadians,” Nancy Snedden, a licensed insolvency trustee and president at BDO Debt Solutions, said in a news release.
“With the cost of living on the rise, saving for a home has become increasingly challenging. It’s concerning that only two per cent of non-homeowners in Canada are able to make their emergency fund a financial priority, while many are relying on credit to cover their expenses.”
Down payment amounts depend on several factors, but the minimum needed for a home valued at less than $500,000 is five per cent of the purchase price. For homes valued between $500,000 and $1 million, a five per cent down payment is required for the first $500,000 and 10 per cent for the remainder. Homes valued at more than $1 million require a 20 per cent down payment.
Under these general conditions, the average selling price from March of $678,331 would require a down payment of at least $43,833, but home prices are much higher in Canada’s urban areas.
“Homeownership is closely tied to financial stability and wealth accumulation,” Li Zhang, a financial literacy leader at CPA Canada, said in the release.
“This is reflected in the behaviour of Canadians: homeowners are more likely to save for retirement and invest, while renters often live paycheque to paycheque. Only four per cent of renters report prioritizing lifestyle spending — most are simply struggling to cover the basics.”
It’s become so hard to save for a down payment that Canadians are increasingly relying on their parents for support. A CIBC survey in 2024 said 31 per cent of first-time homebuyers relied on parental gifts for a down payment, compared to 20 per cent in 2015.
Despite the challenges, the federal government has tried to make saving for a down payment more accessible.
The first home savings account (FHSA) is designed to help first-time homebuyers with their down payments, offering savings accounts that work as both a tax-free savings account (TFSA) and registered retirement savings plan (RRSP).
The federal government has also announced 30-year mortgage amortizations, which are meant to help younger prospective homebuyers by reducing monthly mortgage payments.
