Home Buyers’ Plan (HBP): What You Need to Know

Home Buyers’ Plan (HBP): What You Need to Know

The Home Buyers’ Plan (HBP) is a valuable program that lets first-time home buyers access their Registered Retirement Savings Plan (RRSP) savings to fund their home purchase — without paying taxes on the withdrawal upfront.

How Much Can You Withdraw?

You can take out up to $35,000 tax-free from your RRSP. If you’re buying with a spouse or partner who also qualifies, you both can withdraw up to $35,000 each, potentially giving you $70,000 to put toward your down payment.

Who Qualifies?

• You must be a first-time home buyer — meaning you haven’t owned a home in the previous four years.

• The property you’re buying must be intended as your principal residence within one year of purchase or completion if you’re building a home.

Repayment Rules

The HBP isn’t a free loan — it’s a withdrawal that you’ll need to pay back into your RRSP over a 15-year repayment period.

• Repayments start the second calendar year after your withdrawal.

• Each year, you need to repay at least 1/15th of the amount you withdrew.

• If you miss a repayment or pay less than the required amount, the difference is added to your taxable income for that year.

Important Details to Keep in Mind

• You must have the funds in your RRSP for at least 90 days before you withdraw them.

• You can only participate in the HBP once every four years.

• The home you buy or build must be in Canada.

• If you don’t end up buying the home or it doesn’t become your primary residence within the required timeframe, the withdrawal is treated as taxable income.

Why Use the HBP?

Using the HBP can give your down payment a nice boost without having to save the entire amount outside your RRSP. It’s especially helpful if you’ve been disciplined about saving for retirement but need cash now for your home.

Just remember, you’re borrowing from your future savings, so it’s important to budget for repayments to avoid tax penalties later on.