How does the RRSP home buyers plan work
Saving for a down payment can be one of the biggest hurdles for first-time homebuyers. One tool Canadians use to help bridge the gap is the Home Buyers’ Plan.
The HBP allows first-time homebuyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP, called an RSP at Tangerine) to help buy or build a home.
Normally, these withdrawals would be treated as taxable income and would be subject to withholding taxes. But the HBP lets you access your RRSP savings tax-free, as long as you repay the funds within the required time frame. For buyers who already have savings in an RRSP, the program can provide a significant boost to a down payment, closing costs or moving expenses, among other cost.
Here’s a closer look at how the program works.
What is the RRSP Home Buyers' Plan?
The HBP is a federal program designed to help eligible Canadians use their existing retirement savings toward the purchase or construction of a home.
Essentially, it works like an interest-free loan to yourself. You withdraw money from your RRSP to help cover the costs of buying or building a qualifying home and agree to repay those funds to your RRSP over time. If you follow all the program’s rules, you won’t pay any income tax on the HBP withdrawals from your RRSP.
Who qualifies for the Home Buyers’ Plan?
To participate in the HBP, you must meet the eligibility requirements set by the Canada Revenue Agency (CRA). Two main categories of buyers qualify:
1. First-time home buyers: According to the federal government, this means you’re an individual who did not occupy a home that you or your current spouse or common-law partner owned during the previous four calendar years. As such, it’s possible to qualify as a first-time buyer more than once in your life. For example, if you make a withdrawal on July 31, 2025, you would be ineligible if yourself or your spouse owned a property between January 1, 2021, to June 30, 2025.
2. People with disabilities: This can be a specified disabled person or someone helping a specified disabled person buy or build a home that better suits their needs.
In addition, participants must:
1. Be a resident of Canada at the time of the withdrawal and remain one until the home is purchased or built.
2. Have a written agreement to buy or build a qualifying home. Qualifying homes must be located in Canada and include single-family homes, semi-detached homes, townhouses, mobile homes, condominium units and apartments.
3. Intend to occupy (or have the disabled person occupy) the home as a principal residence within one year of buying or building it.
In some cases, you may also qualify for the HBP if you have separated from your spouse or common-law partner, even if the first-time buyer requirement does not apply. Check the Government of Canada's website for more information.
How much can you withdraw?
Each eligible HBP participant can withdraw up to $60,000 from their RRSP. So, if you’re purchasing a home with a spouse or common-law partner who also qualifies for the HBP, you could withdraw up to $120,000 in total.
When can you withdraw funds under the HBP?
The funds need to be in your RRSP for at least 90 days before they can be withdrawn under the HBP.
You can make multiple withdrawals from one or more RRSP accounts. Withdrawals generally must occur in the same calendar year, or in January of the following year, and no later than 30 days after taking title to the home.
READ MORE: How to save for your first home
How to use the Home Buyers’ Plan: a step-by-step guide
If you decide to use the Home Buyers’ Plan, the process typically follows a few key steps.
1. Confirm your eligibility
Make sure you meet the program’s requirements.
2. Enter into a purchase agreement
Before withdrawing funds, you must have a written agreement to buy or build a qualifying home.
3. Complete Form T1036
To request the withdrawal, fill out Form T1036 (Home Buyers’ Plan – Request to Withdraw Funds from an RRSP) and submit it to the financial institution that holds your account.
4. Withdraw the funds
Your account provider processes the form and releases the funds to you. Depending on how your funds are invested, you may need time to sell investments before the withdrawal can be completed, so it’s worth checking with your financial institution ahead of your planned withdrawal date.
5. Use the funds toward your purchase
The money can then be used toward your home purchase, such as contributing to your down payment.
How does HBP repayment work?
Repayments start the second year after the year you made your first withdrawal. From that point on, you have 15 years to pay back the money to your RRSP. (Note: if you made an HBP withdrawal between January 1, 2022, and December 31, 2025, you may have up to five years before repayments begin under temporary relief measures.)
The minimum annual repayment is generally one-fifteenth of the total HBP withdrawal. For example, if you withdrew $60,000, the minimum repayment would be $4,000 per year for 15 years. If you repay less than that amount in a given year, the shortfall is added to your taxable income.
Keep in mind that repayments don’t have to go back into the same account you withdrew from — you can contribute to another RSP instead.
Tax implications and CRA rules
The CRA tracks your outstanding HBP balance and includes the information on your Notice of Assessment. When you file your income taxes, you can designate part or all of your annual RRSP contributions as HBP repayments. Note that HBP repayments don’t reduce your RRSP contribution room or generate a tax deduction.
👉 Keep in mind: Any missed or incomplete HBP repayments are considered regular RRSP withdrawals, which get added to your taxable income for the year. Not only will you face a higher tax bill, but you’ll also lose that RRSP contribution room.
What are some pros and cons of using the Home Buyers' Plan?
Pros
👍 Helps boost your down payment: You can use money you’ve already saved to reach the minimum down payment required for a mortgage.
👍 Zero interest or tax obligations: The HBP is a rare program that allows you to withdraw from your RRSP without incurring withholding taxes — and you pay no interest on the loan, as long as you make the scheduled repayments. It’s like an interest-free loan from yourself.
👍 Flexible repayment options: You can repay more than the minimum amount in any year.
👍 Contribution flexibility: Repayments don’t reduce your RRSP contribution room, so you can still make new contributions up to your limit.
Cons
👎 Reduced investment growth: Depending on market performance, withdrawing money from your RRSP could mean missing out on years of potential investment growth until the amount is repaid.
👎 Repayment obligation: If you fail to make the required annual repayment, the amount becomes taxable income.
👎 No tax deduction on repayments: Some of your annual RRSP contributions must be designated as HBP repayments and are not tax deductible.
Is the Home Buyers’ Plan right for you?
The HBP can be a helpful tool for Canadians looking to fund their downpayment or other home purchase costs and enter the housing market. But it’s important to remember that withdrawing from your RRSP also means temporarily reducing your retirement savings and that you’ll also have to pay back the withdrawn amount over the next few years.
Before using the HBP, consider whether you’ll be able to manage the repayment schedule while continuing to save for retirement. Understanding the rules and how the program fits into your broader financial plan can help ensure the HBP works to your advantage rather than creating unexpected tax or repayment obligations later.
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