RRSP Home Buyers' Plan

If you're contributing to an RRSP, it can pull double-duty to get you into your first home.

Use your RRSP savings now for your first down payment — and pay it back later. Or, combine it with a FHSA for a larger down payment. We can help you decide if this program is right for you.

Apr. 20, 2023

Access your investment product — to invest in your first home.

For first-time home buyers, the federal government Home Buyers' Plan (HBP) allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) and put it toward the purchase or new build of a qualifying home without having to pay tax on the withdrawal.

You'll be required to repay the funds over a 15-year period. But, it means you'll keep your investment fund intact for future needs (though you won't accumulate interest on the withdrawn funds until amounts are placed back in your RRSP).

Currently, the HBP withdrawal limit is $35,000.

You can withdraw funds from more than one RRSP as long as you own each RRSP account (your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less).

To be able to withdraw for the HBP, you'll need to meet all the conditions that apply to you. Here are some of the details.

Why use your RRSPs?

Your RRSP investments may help top up your first down payment to at least 20% of the home's purchase price, allowing you to avoid mortgage default insurance premiums. If you have less than 20% down, your high-ratio mortgage will come with added premiums (though typically also with a lower interest rate).

Or, if you've contributed to RRSPs and haven't had a chance to save up your down payment separately, it's a helping hand to repurpose your initial investment into a real estate purchase (which, of course, is also considered an investment).

Last but not least, increasing your down payment will help you borrow less and reduce your monthly mortgage payments to increase affordability.

Do you qualify for the HBP?

To qualify for the HBP, the 'first-home' definition means that you haven't owned and lived in another home for the past 4 years, including the year up to your HBP withdrawal.

You must be considered a first-time home buyer according to government rules
You'll need a written agreement to buy or build a qualifying home
For Canadian residents only
You intend to live in the qualifying home as a primary residence within one year of buying or building
You won't be able to participate in the HBP again until you've repaid in full by January 1st of the year that you wish to withdraw again (assuming re-eligibility)

Are you eligible for a disability tax credit? You may qualify for the same HBP $35,000 withdrawal limit even if the first-time home-buyer requirement is not met — special rules can apply when buying a more accessible or better-suited home for specialized personal needs and care.

Can your spouse or common-law partner also use the HBP for the home purchase?

Yes, they can. If you're buying with someone else, they can also withdraw up to $35,000 towards the down payment for a total of $70,000, assuming both of you meet the eligibility requirements.

When do you have to repay the RRSP withdrawal?

You'll have 15 years to pay it back into your RRSP, which keeps your investment intact.

Amounts withdrawn under the HBP are repayable in instalments over a period (not to exceed 15 years)
If a scheduled repayment for a year is not made, it will be treated as a withdrawal and added to your income for that year

Remember that you won't be earning compound interest on the withdrawn amounts until you repay them.

Can you combine the HBP with an FHSA for your first home?

If you also have funds in an FHSA, you can bring these two savings products together to invest in your first primary home. Different than the HBP, you won't need to repay your FHSA, and you'll be able to withdraw the funds tax-free (eligibility and withdrawal conditions will apply).

Is using the RRSP Home Buyers' Plan worth it?

Taking advantage of this program could be considered an investment win-win — doing double-duty as a retirement and a real estate investment to help build towards a healthy financial future.

Taking the full 15 years to repay the withdrawal will affect the amount of compound interest accumulating during that time. But considering the generous time frame given to pay it back, if it helps you afford your first real estate purchase, you may think it a sound strategy for your overall financial goals.

More about the HBP?

Of course, you may have other questions, such as how using the HBP affects your RRSP contribution room. A True North Mortgage expert (in your preferred language) will happily help you with the details.

We have more first-time help for you!

Your highly trained broker can let you know about other incentives or rebates available in Canada to help you one day walk through your own front door.