All the Numbers

Where the down payment comes from

From the All the Numbers wiki · Housing

All the Numbers does not ask you to type a down payment you have already decided on. It answers the harder question — can you buy? — from the accounts you actually hold.

The order, and why

  1. FHSA — tax-free out, no repayment, and it exists for exactly this. The FHSA allows $8,000 a year and $40,000 for life, and a withdrawal for a first home is not taxed.[1]
  2. TFSA — tax-free out, room restored the following January.
  3. Unregistered savings — no tax on the principal.
  4. Home Buyers' Plan — untaxed but repayable; see the HBP. Up to $60,000 per person can come out of an RRSP without being counted as income.[2]
  5. Taxed RRSP withdrawal — the most expensive dollar in the plan, taxed at your marginal rate in the year you take it.

Each source is priced for what it costs, so $10,000 from an RRSP does not close the same gap as $10,000 from a TFSA. A taxable gain on unregistered holdings is included in income at one half, as for any capital gain.[3]

In the projection itself

When a plan buys a home, the closing cash is a bill of the closing month. For a first-time buyer All the Numbers meets any shortfall with the tax-free sources first: each buyer's FHSA by a qualifying withdrawal, then one new Home Buyers' Plan participation per buyer, up to the limit, and only then the ordinary order in which a short month draws on accounts.[4] Only the shortfall is drawn, so a household with the cash keeps both plans untouched. Each can be set to "keep" in the home's advanced settings, for example to roll an FHSA into an RRSP instead.

A couple's home is owned 50/50 unless the ownership shares are given. Every owner's FHSA and Home Buyers' Plan can then fund the purchase, and the plan says the 50/50 split was assumed.[5]

Whatever the tax-free sources leave is drawn by All the Numbers' funding order: cash first, then the accounts in the order the plan lists them, each taxed by its own rule on the way out.[6] A sale from a taxable account to cover the deficit sells whole units at that month's value, pays no trading commission, and takes the gain on the pool's average cost.[7] If the accounts together cannot cover the bill, the plan borrows as far as a lender would lend; see when the plan runs short of cash.

What the engine warns about

  • Not a first-time buyer — the FHSA and the HBP both depend on that status, so both are removed from the sourcing.
  • RRSP room lost — a taxed RRSP withdrawal does not restore its room, unlike a TFSA.
  • Taxable gains ignored — capital gains on unregistered holdings are not priced when the money is drawn for the purchase, so that source is slightly flattered.

If the sources do not cover the cash to close, the gap is reported as an unfunded shortfall in the answer's own words rather than as a warning.

See also: mortgage default insurance, land transfer tax.

See also

  • Capital gains and the adjusted cost base · Selling an investment for more than its adjusted cost base is a capital gain, and half of it is added to taxable income in the year of the sale. Growth that has not been sold is not taxed.
  • Closing costs and the cash to close · The cash a buyer pays on closing day is the down payment, the land transfer tax after any first-time buyer refund, the taxes and fees on the purchase, and one amount for legal and inspection costs that starts at $3,000. Adjustments are not worked out unless they are added to that amount.
  • Expected returns and fees · The default return is 6.35% a year, nominal and net of fees, for an 80/20 stock and bond portfolio. It is an expected long-run average, not a forecast, and an account's own rate replaces it.
  • Land transfer tax · Ontario charges a tax on the price of a home, rising from 0.5% to 2.5% in brackets, and Toronto adds a second one of its own. A first-time buyer gets a refund of up to $4,000 from Ontario and $4,475 from Toronto.
  • Mortgage default insurance · A buyer putting down less than 20% must buy mortgage default insurance from CMHC or a competitor. The premium is 2.80%, 3.10% or 4.00% of the loan depending on the down payment, is added to the mortgage, and carries 8% Ontario sales tax paid in cash at closing.
  • RRSP room, deduction and withdrawals · Room accrues at 18% of earned income up to the annual cap, contributions earn a deduction refunded the following April, and withdrawals are taxed as income. The plan assumes you start with no carried-forward room unless you say otherwise.
  • TFSA contribution room · Room starts accruing the year you turn 18, not the year you open an account, and it never expires. Withdrawals come back the following January. Limits past 2026 have not been announced, so the plan projects them by the rule the Act sets and says so.
  • The First Home Savings Account · $8,000 a year with one year of carryforward and $40,000 for life, deducted from income and withdrawn tax-free for a first home. The refund is credited the following April, and the account winds up into an RRSP if it is never used.
  • The Home Buyers' Plan · Up to $60,000 out of an RRSP, untaxed, for a first home — but it is a loan to yourself, repaid over fifteen years, and a missed repayment is taxed as income that year.
  • When the plan runs short of cash · When a month needs more money than the plan has, it draws savings in a set order, then borrows on a home equity line at 5.13% and an unsecured line at 8.38%, as far as a lender would lend. When no lender would lend more, the projection stops.

References

  1. ↑CRA — First Home Savings Account · FHSA: $8,000 annual limit; $40,000 lifetime; unused room carries forward ONE year only (max $16,000 in a single year); non-qualifying withdrawal = ordinary income with RRSP-style withholding; qualifying-home closing deadline = end of year following first withdrawal · See the source · effective 2023-04-01
  2. ↑Income Tax Act s. 146.01 · Home Buyers' Plan: the RRSP withdrawal per person per calendar year excluded from income (ITA 146.01(1) "regular eligible amount" (h)); the HBP balance must be nil at 1 January of the withdrawal year (paragraph (i)); raised for withdrawals after 16 April 2024 · $60,000 · effective 2024-04-17
  3. ↑CRA Guide T4037, Capital Gains 2025 ("The inclusion rate for 2025 is 50%"; 2/3 proposal cancelled per PM release 2025-03-21) · Capital gains inclusion rate (individuals) · 50% · effective 2001-01-01
  4. ↑CRA "What is the Home Buyers' Plan"; CRA "Withdrawing from your FHSAs" (qualifying withdrawal is tax-free); our convention · A first-time buyer's closing shortfall is met tax-free first — every buyer's FHSA by qualifying withdrawal, then one new Home Buyers' Plan participation per buyer up to the limit — before the ordinary funding order; only the shortfall is drawn; each plan can be set to "keep" in advanced settings · effective 2026-09-19
  5. ↑CRA T4036 Rental Income — co-ownership; our convention · A couple's home whose ownership shares are not given is owned 50/50; each co-owner reports their share of rental income and expenses, and every owner's FHSA and Home Buyers' Plan may fund the purchase; reported on the run · 50% · effective 2026-09-25
  6. ↑Our convention; CRA: withheld tax "may not always be enough" · An opt-in ordered funding policy draws a month's cash shortfall from named accounts in order (savings, TFSA, taxable whole units, RRSP, RRIF above minimum, FHSA non-qualifying), solving gross for net with Reg 103(4) withholding and the tax the draw causes in the re-run annual assessment; one withdrawal per account per month, never split to lower the band; benefit base-year effects are outside the solver; RESP, program balances and spousal RRSPs inside the 146(8.3) window are refused with a reason; surplus above a cash buffer is contributed down an ordered list within room, a taxable pool on the list buying units at market with whatever is left; an optional savings reserve (an emergency fund, start-year dollars grown by a stated rate each year) is topped up first, and is the first thing a deficit draws when the deficit order names it · See the source · effective 2026-09-18
  7. ↑T4037 (ACB and outlays on disposition); our convention · A taxable-account sale the funding policy makes to cover a deficit carries no trading commission, sells whole units at the month's value and uses the pool's proportional adjusted cost base · effective 2026-09-18