Feeling overwhelmed by the price of homes which simultaneously increases the cost of a down payment? You look at today’s housing prices and wonder if you will ever be able to save enough. It’s a valid concern.

According to the MLS Home Price Index, the cost of a single-family home has skyrocketed over the past decade, making the 5-20% down payment a near impossible hurdle for many low/middle income families. With high costs of living and a rapidly accelerating market, saving up seems like a fantasy.

This post discusses the smart strategies and actionable tips to help you maximize your savings and reach your goal of owning a home. Here is a proven step-by-step method for earning higher returns on your down payment savings, helping you contribute more than the minimum down payment to reduce your mortgage principal and how to keep your contributions consistent your FHSA portfolio. The registered savings plan is an opportunity Canadian residents must take advantage since it a tax-free basis which is offered by the Canadian government, primarily the FHSA, to help address the rising cost of homes and in a combination of other savings accounts like the TFSA and RRSP to further increase your downpayment to eventually pay off your mortgage earlier an be debt free.

Part I understanding FHSA

What is an FHSA?

The FHSA is a tax-free savings account introduced by the Canadian government to help first-time home buyers save toward buying their new home. To be eligible to hold an FHSA, the individual must be a resident of Canada, 18 years of age and is buying a home for the first-time.

Benefits of investing Using the FHSA

Herre are the key benefits of using FHSA to save up for your first home:

• Tax-deductible Contributions: The amount you Contribute to FHSA reduces your taxable income and potential getting back a tax refund.
• Tax-Free Growth and Withdrawals: The money you contributed on your FHSA grows tax-free withing the account and no taxes on any interest, dividends, or capital gains realized from your investments. When is time to make your home purchase, withdrawal is also not taxed you get to keep your hard-earned money.
• Combining Multiple Account: The FHSA can be bundled with other registered account to boost your downpayment savings. For example, you can use (Registered Retirement Savings Plan (RRSP) + Home Buyers Plan(HBP)) and TFSA accounts in combination of FHSA, you can raised well beyond what any single account can achieve, thereby reducing your principal loan/mortgage amount you need and saving thousands of of interest over the life of your mortgage.

Not a Resident of Canada

Your country of residence may have similar schemes to support home buyers. For U.S residents, you ‘ll have to research what’s available in your area. There are government programs to assist new buyers like the National Home Buyers Fund, bank grants, state and local grants, and federal grants. The idea here is that even when you do not have those opportunities, one can still replicate the same investing approach to save up a down payment or the overall funding needed, depending on the type of home and timeline. If you are not a resident of Canada, you may skip the FHSA breakdown and navigate to Part II of this article, which covers the investing portion.

How Much Can I Contribute to an FHSA?

The First Home Savings Account (FHSA) has an annual contribution limit of $8,000 and a lifetime contribution limit of $40,000. These are some of the conditions that must be satisfied to avoid paying taxes on the over-contribution which is typically a 1% monthly tax on the excess amount.

If you contribute more than the annual or lifetime limit, the excess amount will be subject to a tax. If you under-contribute, the unused room will be carried over to the next year. For instance, if you contributed a total of $7,000 in 2025, your contribution room for the next year will increase to $9,000 ($1,000 carried over from the previous year plus the $8,000 new annual room).

Part II: Managing Your FHSA Portfolio

Managing a portfolio for significant and consistent returns can be quite challenging, particularly for new investors. However, no matter your strategy, it’s always worth taking the bold step to invest and increase your money—it’s far better than letting a downpayment sit idle in a checking or low-yield savings account.

How to Invest Using FHSA

There are two primary ways to manage your FHSA investments, depending on your experience level:

• Managed for You: For beginners, a managed account is an excellent option. Professionals at traditional banks, investing firms, or robo-advisors (like Wealthsimple or Questrade) handle your investments for you. While this option comes with management fees, it provides peace of mind and helps protect your capital.
• Do It Yourself (DIY): This approach requires you to handle all aspects of your RESP portfolio, from researching and selecting investments to managing them over time. The upside is you get to keep all your returns, but the downside is you risk losing money if you make poor investment decisions.

Tips to help grow your portfolio

Let’s be honest: Spending less and saving money requires a lot of discipline especially with the high cost of living. It seems impossible to find any spare change to save towards downpayment to make your dream of owing a home a reality. Quick, easy steps to turn your dream into an actionable plan:

1. Open an Investment Account: Get a brokerage account for Registered account like FHSA or a Non-Registered account.  
2. Automate your Savings: Set automatic deposit directly from your bank account to your FHSA account depending on target timeline, decide on manageable contribution amount and keep it consistent which is important. Keep in mind, you can always transfer a lump sum when ever you want.
3. Build a Diversified Portfolio and Start Buying: After thorough research of the equities build a well-diversified portfolio of stocks on a simple spreadsheet. Then cautiously enter the market by purchasing shares of high valued stocks and ETFs.
4. Practice Dollar-Cost Averaging (DCA): Review your portfolio whenever you make a deposit. If you deposit funds biweekly or monthly, make a purchase at that time. This strategy gives you an advantage known as Dollar-Cost Averaging, allowing you to buy more shares when prices drop and potentially “average down” your cost over time.

What can I invest in

FHSAs allow a wide variety of investments options: Assets like Stocks, Exchange-Traded Funds (ETFs), bonds, commodities, cash, Guaranteed Investment Certificates (GICs), and mutual funds.

To illustrate, here is a sample of my personal FHSA portfolio: Broadcom Inc (AVGO), Dollarama (DOL), Pure Storage Inc (PSTG), Spotify Technology S.A. (SPOT), Axon Enterprise Inc(AXON), and Uber Technologies Inc (UBER). As of this writing, my year-to-date return on investment is 41.16% compared to a high-yield saving bank account which typically returns 5% to 10% annually.

You will quickly notice a couple of things: my portfolio consists only of stocks, includes no ETFs, and is not the diversified portfolio this post generally advocates for. My rationale is that Technology stocks have a high potential for dramatic value growth due to their continuous innovation. Ultimately, your investment choices should depend on your appetite for risk, your investing experience, and the timeline for your home purchase. Keep in mind: I have held this portfolio for almost two years. I take profits when I can, use dollar-cost averaging (DCA) to add to high-performing stocks during pullbacks, and sell off riskier stocks as economic conditions shift.

A Beginners Guide to building a Smart Portfolio for Your FHSA/Investment Account

This strategy also applies to saving for significant goals beyond home ownership, including purchasing a vehicle, completing renovation projects, travelling, or launching a business. The key is building a well-diversified and resilient investment portfolio. The level of risk you take should not be too conservative and should directly correspond to your time horizon either short-term or long-term. Your appetite for risk should be balanced against your time horizon. Remember the fundamental trade-off: higher risk offers the potential for higher reward, while lower risk typically yields lower returns.

Quick Insights what is a stocks and ETFs.

• Stocks represent ownership in a company.
• ETFs (Exchange-Traded Funds) are like a container that holds a collection of various assets, such as stocks, bonds, or commodities. Unlike a single stock, an ETF provides instant diversification by owning a basket of assets.

A well-diversified portfolio does not have to be complicated; you can build one effectively using just stocks and ETFs.

When selecting individual stocks, ensure you bundle a variety of categories together to manage risk. For example, you can diversify across different:

• Investment Styles: Balancing your portfolio with both growth and value stocks.
• Sectors: Holding shares in diverse industries such as technology, financials, consumer cyclical, healthcare and so on.
• Stock Types: Include blue-chip stocks, which are large, established companies that provide stability; reliable dividend stocks for generating consistent income; and resilient defensive stocks that are essential for absorbing shocks when the economy enters a downturn.

In combination with ETFs which offer an even simpler way to diversify, as they’re available for a wide range of strategies and sectors, from broad market indexes to specific industries like technology or energy.

Key takeaways

You do not have to invest; you can simply save your money in a bank account until it reaches your target amount. This is a very low-risk approach, but it is subject to inflation and time. By choosing to save, you will miss out on the unlimited gains that come with letting your money work for you. On the other hand, gains realized can beat inflation, shrink the time it takes to reach your goal of buying a home, and along the way sharpen your investing skills to mitigate risk.

The ultimate goal is to design a portfolio that requires minimal effort and can essentially be managed on “autopilot,” requiring only periodic reviews to ensure it still aligns with your investing goals and risk tolerance.

Sources
Canada Revenue Agency. (2023). First Home Savings Account (FHSA). http://Www.canada.ca. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html
CREA. (2025). News Release | CREA Statistics. Stats.crea.ca. https://stats.crea.ca/en-CA/

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