Home Buyers' Plan (HBP) Explained

The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw funds from their RRSP to purchase or build a qualifying home without paying tax on the withdrawal. It is one of the most popular programs for Canadians saving for a down payment.

How Much You Can Withdraw

As of 2024, you can withdraw up to $60,000 from your RRSP under the HBP (increased from $35,000). If you are buying with a spouse or partner who also qualifies, each person can withdraw up to $60,000 from their own RRSP, for a combined total of $120,000.

Eligibility Requirements

To participate in the HBP, you must:

• Be a first-time home buyer — you (and your spouse) did not own a home that you occupied as your principal residence in the four calendar years before the withdrawal year
• Have a written agreement to buy or build a qualifying home
• Be a Canadian resident at the time of withdrawal and when you acquire the home
• Intend to occupy the home as your principal residence within one year of buying or building it

An exception to the first-time buyer rule exists for individuals eligible for the Disability Tax Credit or those buying a home for a related person with a disability.

RRSP Contribution Timing

Funds must have been in your RRSP for at least 90 days before you withdraw them under the HBP. Contributions made within 90 days of a withdrawal may not be deductible for that year.

The Withdrawal Process

1. Complete Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP
2. Submit the form to your RRSP financial institution
3. The institution releases the funds without withholding tax
4. You must buy or build the home by October 1 of the year following the withdrawal

Repayment Rules

The HBP is an interest-free loan from your RRSP to yourself. You must repay the withdrawn amount over a period of 15 years, starting the second year after the year of withdrawal. A temporary relief measure extended the start of repayment for recent participants — check the CRA for the latest details.

Each year, you must repay at least 1/15 of the original withdrawal amount. If you repay less than the required minimum in any year, the shortfall is added to your taxable income for that year.

Example: If you withdrew $60,000, your minimum annual repayment is $4,000 ($60,000 / 15). If you only repay $2,500 in a given year, the $1,500 shortfall is included as RRSP income on your tax return.

Designating Repayments

Repayments are made as regular RRSP contributions, but you must designate them as HBP repayments on your tax return (Schedule 7). If you do not designate a contribution as an HBP repayment, it is treated as a regular RRSP contribution instead.

You can always repay more than the required minimum in any year. Extra repayments reduce the outstanding balance and the minimum for future years.

Using HBP with FHSA

First-time buyers can use both the HBP and the FHSA for the same home purchase. This means you could potentially combine $60,000 from your RRSP (HBP) with $40,000 from your FHSA for a total of $100,000 in tax-advantaged down payment savings — or $200,000 as a couple.

Common Pitfalls

1. Missing the October 1 deadline to acquire the home — the withdrawal becomes taxable income
2. Forgetting to designate repayments — the contribution becomes a deduction instead of reducing your HBP balance
3. Not meeting the 90-day rule — last-minute RRSP contributions may not be deductible
4. Ignoring the repayment schedule — missed payments add to your taxable income

Sources

• CRA — Home Buyers’ Plan
• CRA — Form T1036