💸 Can I Use My Tax Refund Toward a Home? Here’s How to Make It Work

If you’re planning to buy your first home—or just starting to dream about it—your tax refund might be more powerful than you think.

Rather than splurging on something short-term (looking at you, patio furniture), you could use your tax refund to make a long-term investment in your future: homeownership.

Let’s break down the smart ways to use your refund this year—whether you’re weeks away from making an offer, or just starting your mortgage readiness journey.

✅ 1. Use It Toward Your Down Payment

This is the most obvious (and most impactful) way to put your refund to work.

In Canada, the minimum down payment you need is:

• 5% for homes under $500,000

• 10% on the portion from $500,000–$999,999

• 20% for homes over $1 million

💰 Even a $2,000–$5,000 refund could:

• Help you reach the next down payment tier

• Reduce your mortgage insurance premium

• Make your offer more competitive in a hot market

💡 Pro Tip: You can use your RRSP contributions through the Home Buyers' Plan and replenish it using your refund. Double win.

✅ 2. Apply It to Closing Costs

Many first-time buyers forget about closing costs—and are caught off guard at the finish line.

These include:

• Legal fees

• Appraisal costs

• Land transfer taxes

• Title insurance

• Home inspection

• Adjustments (property taxes or utilities)

• 
  

📌 Average closing costs = 1.5% to 4% of the home’s purchase price.

Using your tax refund now can ensure you’re not scrambling later.

✅ 3. Pay Down Existing Debt to Qualify for More

Lenders look closely at your debt-to-income ratio (DTI) when deciding how much mortgage you qualify for.

That means:

• Credit cards

• Student loans

• Car payments→ All affect your pre-approval amount.

📉 By using your tax refund to pay down debt:

• You reduce your monthly obligations

• Improve your credit utilization

• Potentially increase your mortgage approval limit

💡 Even a small paydown can shift your affordability numbers. Your mortgage broker can show you how.

✅ 4. Boost Your Emergency or Home Fund

Owning a home comes with unexpected costs—repairs, maintenance, life! A healthy savings cushion makes you more confident and less stressed as a homeowner.

✔️ Use your refund to start or top up a:

• Home maintenance/emergency fund

• Moving expense fund

• “Furniture & finishings” budget

It’s not the flashiest move—but Future You will thank you.

✅ 5. Use It to Start Your Journey (Even If You’re Not Ready to Buy Yet)

You don’t need to buy a home right now to use your refund wisely.

If you’re still in planning mode, your refund can:

• Pay for a session with a financial planner

• Cover credit repair services

• Fund a mortgage discovery call with a broker (hint: that’s free with me 😉)

• Be moved into a TFSA or FHSA to grow tax-free

📌 The point is: you’re building momentum.

✨ Real-Life Example:

Emily, a self-employed yoga teacher and first-time buyer, got a $3,500 tax refund in March.

Here’s how she used it:

• $1,500 to top up her down payment

• $1,000 to pay down credit card debt

• $1,000 into a high-interest savings account for closing costs

• 
  

By May, she was pre-approved—and under contract on a sweet little condo.

💬 Final Thought: Small Steps Create Big Shifts

Your tax refund isn’t just extra cash—it’s an opportunity to move one step closer to the life you’re building.

Whether that means bumping up your down payment, strengthening your financial foundation, or just starting the conversation, I’m here to help you make it count.

📥 Grab my free First-Time Buyer Checklist to get organized, stay clear, and move forward with confidence.

Download the guide here

📞 Book a free call or message me anytime

LET'S TALK MORTGAGES

– Edith Parinas

'The Mortgage Broker ~ The Yogi ~ The Blogger'

Hello@EdithParinas.com