RRSP Home Buyers’ Plan (HBP) in Canada

Buying your first home is exciting — but coming up with the down payment can feel overwhelming.

The RRSP Home Buyers’ Plan (HBP) is a government program that allows eligible Canadians to withdraw funds from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home — tax-free.

Let’s break down how it works.

🔹 What Is the RRSP Home Buyers’ Plan?

The Home Buyers' Plan (HBP) allows you to withdraw up to:

• $60,000 per person (current limit)
• $120,000 per couple, if both qualify

The withdrawal is not taxed, as long as you repay the amount back into your RRSP over time.

This program is administered by the Canada Revenue Agency (CRA).

👤 Who Qualifies?

You may qualify if:

• You are considered a first-time home buyer
• You have a written agreement to buy or build a qualifying home
• You intend to live in the home as your principal residence
• You are a resident of Canada at the time of withdrawal
• You have not owned and occupied a home in the previous four years

💡 Important: The “first-time home buyer” rule includes a four-year lookback period — meaning you may qualify again even if you owned a home in the past.

There are also special rules for:

• Individuals with disabilities
• Helping a related person with a disability buy a home

💰 How Much Can You Withdraw?

• Up to $60,000 per individual
• Withdrawals must come from your RRSP (not TFSA)
• Funds must have been in your RRSP for at least 90 days before withdrawal

You must complete Form T1036 through your financial institution to make the withdrawal.

📅 How Does Repayment Work?

The HBP is not free money — it is a loan from yourself.

You must repay the amount:

• Over 15 years
• Starting in the second year after withdrawal

Each year, you must repay at least 1/15th of the total withdrawn.

Example:

If you withdraw $30,000, you must repay:

• $2,000 per year for 15 years

If you do not repay the required amount in a given year:

• That portion is added to your taxable income for that year.

🧮 Example Scenario

Maria withdraws $40,000 from her RRSP in 2025 to purchase her first home.

• She does not repay anything in 2025 or 2026.
• Her first repayment is due in 2027.
• She must repay at least $2,667 per year ($40,000 ÷ 15).

If she only repays $1,000 in 2027:

• The remaining $1,667 is added to her taxable income.

⚖ Pros and Cons of the HBP

✅ Advantages

• Helps increase your down payment
• Reduces mortgage insurance costs
• No tax withheld on withdrawal
• Flexible repayment timeline (15 years)

⚠ Considerations

• You lose investment growth inside your RRSP during withdrawal
• Missed repayments become taxable income
• It may impact your long-term retirement savings

🔍 Is It the Right Move for You?

The HBP can be a powerful tool — but it’s not always the best option for everyone.

You should consider:

• Your long-term retirement goals
• Your current income level
• Whether you plan to make consistent RRSP contributions
• Mortgage affordability

Sometimes, using the HBP makes sense. Other times, it may be better to preserve your RRSP and explore other savings strategies.

📌 Final Thoughts

The RRSP Home Buyers’ Plan is designed to make home ownership more accessible — especially for first-time buyers.

But like any financial decision, it should be part of a broader plan that balances home ownership with retirement security.

If you're considering using the HBP, professional guidance can help you:

• Understand repayment obligations
• Estimate tax implications
• Structure contributions strategically