Common Savings Mistakes to Avoid

Saving for a home is a multi-year effort, and there are several pitfalls that trip up even well-intentioned buyers. Avoiding these common mistakes can save you thousands of dollars and months — or even years — of unnecessary delay. If you take nothing else from this section, remember: the earlier you start and the more strategically you use your accounts, the better off you will be.

1. Not Opening an FHSA Early Enough

This is the single most costly mistake we see. The FHSA’s annual contribution room of $8,000 starts accumulating from the year you open the account — not from the year you start contributing or the year you decide to buy.

If you wait 3 years to open an FHSA, you lose 3 years of contribution room. The carry-forward rule lets you recover some of it (up to $8,000 of unused room from the prior year), but you can never fully catch up. Here is what that looks like:

The Cost of Waiting

When You Open	Max Contributions by 2030	Amount Lost by Waiting
2024	$48,000 ($40K limit applies)	$0
2025	$40,000	$0 (maxed at $40K lifetime)
2026	$40,000	$0 (can still max out by 2030)
2027	$32,000 by 2030	$8,000 in room
2028	$24,000 by 2030	$16,000 in room
2029	$16,000 by 2030	$24,000 in room

If you opened in 2024 and maxed your contributions, you would reach the $40,000 lifetime cap by 2028 — giving you 2 extra years of investment growth. Someone who opens in 2029 and wants to buy in 2030 can only contribute $16,000 total. That is a $24,000 gap, plus years of missed investment growth and tax refunds.

The fix: Open your FHSA today. Even if you can only contribute $100, you start the clock. You can always contribute more next year when you have the carry-forward room. There is no scenario where opening the account early hurts you.

2. Misunderstanding HBP Repayment

Many first-time buyers treat the RRSP Home Buyers’ Plan withdrawal as “free money” and are genuinely surprised when they learn about the 15-year repayment obligation. This is not free money — it is a zero-interest loan from your future self.

What Catches People Off Guard

The annual repayment amount is significant. A $60,000 HBP withdrawal requires $4,000/year in repayments — that is $333/month that must go back into your RRSP, every year, for 15 years.
Missing a repayment has real consequences. The unpaid amount is added to your taxable income. At a 30% marginal rate, missing a $4,000 repayment means an unexpected tax bill of $1,200.
The repayment is on top of everything else. New homeowners already face tight budgets with mortgage payments, property taxes, insurance, maintenance, and utilities. Adding $333/month on top of that can be the difference between comfortable and stressed.

How to Plan Around It

Before you decide how much to withdraw under the HBP, run the numbers for your post-purchase budget. Ask yourself: can I comfortably afford my mortgage, all housing costs, and $333/month (or whatever your repayment amount works out to) in RRSP repayments?

If the answer is no, consider withdrawing less than the $60,000 maximum. Withdrawing $30,000 instead of $60,000 cuts your annual repayment to $2,000 ($167/month) — much more manageable.

3. Forgetting the 90-Day RRSP Rule

If you contribute to your RRSP specifically for the Home Buyers’ Plan, those funds must sit in the account for at least 90 days before you can withdraw them. This rule catches buyers off guard in two common scenarios:

Scenario 1: Last-minute contribution. You make a large RRSP contribution in March and find a home in April. You cannot access the recent contribution for the HBP until June (90 days later). If your closing date is in May, you are short on funds.

Scenario 2: Top-up contribution. You have $40,000 in your RRSP and want to add $20,000 more before withdrawing the full $60,000. You contribute the $20,000, but now the 90-day clock is ticking on that portion. You might be able to withdraw the original $40,000 immediately, but the new $20,000 is locked for 90 days.

The fix: Contribute to your RRSP well in advance of your expected purchase date. If you think you might buy in the spring, make your contributions no later than January. Better yet, contribute throughout the year as part of your regular savings plan so the 90-day rule is never an issue.

4. Keeping Everything in Cash

If your home-buying timeline is 3 or more years away, keeping your FHSA and RRSP savings in a basic savings account at 1.5% to 2% means you are losing purchasing power to inflation. In a world where inflation runs 2% to 3% per year, your money is effectively shrinking in real terms.

The Cost of Staying in Cash

Here is the difference investment returns make over 5 years on $40,000 in total contributions:

Approach	Avg. Annual Return	Balance After 5 Years	Difference
Basic savings account	1.5%	$41,530	Baseline
High-interest savings	3.5%	$43,770	+$2,240
Balanced ETF portfolio	5.5%	$46,150	+$4,620
Growth ETF portfolio	7.0%	$48,100	+$6,570

Over $6,500 in additional growth just by choosing a growth ETF portfolio over a basic savings account. And because the money is inside your FHSA, all that growth is completely tax-free when withdrawn for a home purchase.

Of course, ETFs come with volatility. A growth portfolio might lose 15% in a bad year. But over a 5-year period, the historical odds strongly favour positive returns — and the FHSA’s tax-free withdrawal means every dollar of growth goes directly into your down payment.

The fix: Match your investment approach to your timeline. Under 2 years, stick with GICs and high-interest savings. Between 2 and 5 years, use a balanced or conservative ETF portfolio. Over 5 years, a growth-oriented approach is reasonable. Consider shifting to more conservative investments as you get within 12 to 18 months of your purchase date.

5. Not Coordinating with Your Partner

If you are buying as a couple, both partners should be maximizing their own accounts. This sounds obvious, but many couples make one of these mistakes:

Only one person opens an FHSA. Both partners should have their own FHSA. You cannot contribute to your partner’s FHSA, but each person having their own doubles your lifetime capacity from $40,000 to $80,000.
Ignoring income differences. The higher-income partner gets a larger tax benefit from deductible contributions. If one partner earns $100,000 (38% marginal rate) and the other earns $50,000 (25% marginal rate), the same $8,000 FHSA contribution generates $3,040 in tax savings for the higher earner but only $2,000 for the lower earner. In tight-budget years, prioritize maximizing the higher earner’s deductible contributions first.
Not considering a spousal RRSP. If only one partner has RRSP room, the higher-income partner can contribute to a spousal RRSP to get the tax deduction, while the lower-income partner can later withdraw under the HBP. This is a sophisticated strategy worth discussing with a financial advisor.

6. Ignoring the FHSA Deadline

You have 15 years from opening your FHSA to use the funds for a qualifying home purchase. If the 15-year deadline arrives and you have not purchased a home, you must either transfer the balance to your RRSP/RRIF or withdraw it as taxable income.

While 15 years sounds like plenty of time, life has a way of accelerating. If you opened your FHSA at age 25, the deadline arrives at age 40. If you opened at 30, it arrives at 45. Set a reminder to review your FHSA strategy annually so you are not caught off guard.

The good news: if you decide not to buy, transferring to your RRSP is tax-free and does not affect your RRSP room. You effectively got free RRSP contributions every year you claimed the FHSA deduction. There is genuinely no downside — but only if you make the transfer before the deadline.

7. Draining Your Emergency Fund for the Down Payment

In the rush to scrape together the largest possible down payment, some buyers empty their emergency fund. This is a dangerous move. As a new homeowner, you face potential expenses that renters do not:

A hot water tank failure on day 30 of ownership: $1,500 to $2,500
A basement leak discovered after heavy rain: $3,000 to $10,000+
A tree falling on your fence during a storm: $2,000 to $5,000

Without an emergency fund, these costs go on a credit card at 20% interest — which undermines the entire point of saving strategically for your home purchase. A poor credit score from carrying high-interest debt can also hurt your mortgage approval.

The fix: Your emergency fund is not part of your down payment. Keep it separate, keep it liquid (in a TFSA or high-interest savings account), and keep it at 3 to 6 months of expenses. If that means buying a slightly less expensive home or waiting 3 more months to save, it is worth it.

8. Not Reinvesting Tax Refunds

Your FHSA and RRSP contributions generate substantial tax refunds — potentially $5,000 to $12,000 per year for a couple. These refunds are a powerful savings accelerator, but only if you reinvest them. Too many buyers treat the refund as bonus spending money.

What to do with the refund:

First, top up your TFSA for closing costs
Next, add to your emergency fund if it is not yet fully funded
Finally, consider putting extra into next year’s FHSA or RRSP contributions

A couple who reinvests $12,000/year in tax refunds accumulates an extra $60,000 over 5 years — before investment growth. That could be the difference between needing CMHC insurance (under 20% down) and avoiding it entirely.

Quick Checklist: Are You Making Any of These Mistakes?

I have opened an FHSA (or plan to this week)
I understand the HBP repayment obligation and have budgeted for it
My RRSP contributions are at least 90 days old before I plan to withdraw
My savings are invested appropriately for my timeline (not sitting in cash)
My partner (if applicable) has their own FHSA and is contributing
I am aware of my FHSA’s 15-year deadline
I have an emergency fund separate from my down payment
I am reinvesting my tax refunds, not spending them

If you can check all of these boxes, you are already ahead of the vast majority of first-time buyers. If a few items gave you pause, address them now — the sooner you correct course, the less it costs you.

Next: Down Payments and Mortgage Basics

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