RRSP Home Buyers' Plan

Already have money saved? It can pull double-duty to get you into your first home.

Use your RRSP savings now for your down payment — and pay it back later. Sound like an investment win-win? We can help you decide if this program is right for you.

Access your other investment — to invest in a 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. And, you can repay the funds over a 15-year period.

Currently, the HBP withdrawal limit is $35,000. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP account (your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less).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. We list some of the details below.

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, which will allow 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.

Who qualifies 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. That goes for your spouse or common-law partner, as well.

For someone who is eligible for the disability tax credit, there are special rules that can apply in buying a home that is more accessible or better suited for their personal needs and care, even if the first-time home-buyer requirement is not met. These rules have also been modified to provide the same $35,000 withdrawal limit.

When do you have to repay the RRSPs?

You'll have a 15-year period 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Amounts withdrawn under the HBP are repayable in instalments over a period not to exceed 15 years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

It's important to pay back the amount you borrowed from your RRSP investment, so that you don't affect your long-term savings goals and retirement plan. Keep in mind that you won't be earning compound interest on the amounts you'll need to repay.

Can you and your spouse both use the HBP for one home?

If you're buying with another individual, they can also withdraw up to $35,000 towards the down payment. In this case, both individuals will need to meet the eligibility requirements, for a total of $70,000.

Is using the RRSP Home Buyers' Plan worth it?

Using this program could be considered an investment win-win — giving you both a retirement and a real estate investment to help build towards a healthy financial future.

If you take the full 15 years to repay the amounts back to your RRSP, you won't have the full compound interest on that amount during that time period. But considering the generous time-frame to pay it back, if it helps you afford your first real estate purchase, you may consider it a sound strategy for your overall financial goals.

What are the eligibility conditions for the HBP?

You must be considered a first-time home buyer
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 it
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

Of course, you may have other questions, such as how using the HBP affects your RRSP contribution room. For further help, please get in touch with a True North Mortgage expert (in your preferred language) who will happily go through it with you.

Wait, there's more help out there. Your mortgage expert will let you know about other incentives or rebates that may be available for your first home purchase.