29.6K
CAFHSA is the most powerful account for home buyers in Canada. Tax deduction in, tax free out, no repayment. No other account does both. Pair it with the Home Buyers Plan ($60K per person from your RRSP) and you can fund a home purchase without touching your TFSA.
On the 5% vs 20% debate, most comparisons use the same rate for both. That’s not how it works. Insured mortgages get a lower rate because CMHC backs the lender’s risk.
5% down at 3.69% vs 20% down at 3.99%.
The trade-off: 5% down still costs about $49K more over 25 years (CMHC premium plus extra interest on a larger mortgage).
But it frees up $75K on day one. If you invest that at 6% or higher, it more than covers the extra cost. The breakeven is a bit above 6%, which a basic balanced portfolio gets you.
20% down wins on simplicity. Lower payment, no insurance, more equity, less stress. You don’t need to trust yourself to invest $75K and not touch it for 25 years.
Neither strategy wins if you don’t actually invest the money. Be honest with yourself on that one.
Three takeaways:
Open an FHSA today
Max it yearly
Keep your TFSA invested
And don’t forget your $1,500 first time home buyer tax credit plus the GST/HST new housing rebate on new builds.
#canadianrealestate #fhsa #homebuyersplan #firsttimehomebuyer
@calmmoneycoach
