The RRSP Home Buyers' Plan (HBP) allows first-time homebuyers in Canada to withdraw up to $60,000 from their RRSPs to purchase or build a home, without incurring immediate taxes on the withdrawal. This amount is considered a tax-free loan, as it must be repaid to the RRSP within 15 years. The HBP is a good option for those who regularly contribute to their RRSPs and are looking for a way to access funds for a down payment on their first home. The HBP is essentially an interest-free loan from your own savings—making homeownership more accessible without borrowing from a bank. For many first-time buyers, it is a powerful tool to reduce mortgage size or eliminating the need for CHMC mortgage insurance.

What is the Home Buyers' Plan?

The HBP is a government program that allows eligible individuals to withdraw funds from their RRSPs to buy or build their first home.
The maximum withdrawal amount is $60,000 per individual (as of April 16, 2024)
Both members of a couple can participate, potentially allowing for a combined withdrawal of up to $120,000.

Eligibility:

You will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that either you owned or jointly-owned, or your current spouse or common-law partner (at the time of the withdrawal) owned or jointly-owned.

You haven’t lived in a home you owned in the current or previous 4 calendar years
You must be a Canadian resident.
You must have a written agreement to purchase or build a qualifying home.
The home must be your principal place of residence, or the principal place of residence for a related person with a disability within one year of purchase

Withdrawal Rules

Funds must have been in your RRSP for at least 90 days before withdrawal.
Withdrawals require the T1036 form—one form per RRSP account.
Withdrawals must take place within 30 days of the home’s closing date.

Repayment Terms

You must repay the amount over 15 years, starting from the second year after your first withdrawal.
For withdrawals made between Jan 1, 2022 and Dec 31, 2025, repayment starts after 5 years.
Repayments can be made annually, and the minimum repayment is 1/15th of the total withdrawn amount
Failure to make the required repayments will result in the missed amount being added to your taxable income for that year.

Additional Considerations:

You can combine HBP withdrawals with First Home Savings Account (FHSA) withdrawals for the same purchase, provided you meet all eligibility requirements.
You can use the HBP more than once, as long as your previous balance is fully repaid and you're still eligible.
Repayment contributions do not reduce your taxable income like regular RRSP contributions.
Funds from locked-in or group RRSPs are typically not eligible for HBP withdrawal.
Any portion of the withdrawals from your RRSPs under the HBP that exceed $60,000 will have to be reported as income on your income tax and benefit return for the year you received it. In addition, your RRSP issuer will have to withhold tax on the amount in excess at the time of the withdrawal.

More Information

For more information about the RRSP Home Buyer’s Plan:

CRA’s RRSP Home Buyer's Plan website

I recommend consulting with a financial advisor or tax professional to determine if the HBP is the right choice for your specific situation. Contact me if you would like a referral or would like to start looking for your first home.