Saving for retirement is a step in the right direction towards a financially secure future. But as RRSPs are viewed as long-term investments, they can also come in handy for big investments that you want to make right now, i.e. a new house.

How to use the Home Buyers’ Plan

In Canada, you can use funds from your Registered Retirement Savings Plans (RRSP) to help buy a new home. The Home Buyers’ Plan (HBP) is a program set up by the Government of Canada that allows first-time home buyers to withdraw up to $25,000 from their RRSP(s) to use towards a down payment for their first home, tax-free.

If you are purchasing the home with your spouse, you can both withdraw $25,000 each from your accounts under the Home Buyer’s Plan. This means you could possibly have up to a total of $50,000 towards your first home, reducing your mortgage amount and payments.

The HBP can be very beneficial when buying your first home. But in order to ensure the withdrawals are tax-free, there are a number of conditions and requirements: 

You must be a first-time home buyer, and a Canadian resident

To participate in the Home Buyers’ Plan (HBP), you must be a first-time home buyer and a resident of Canada at the withdrawal time. You are considered a first-time home buyer if you, and your spouse, haven’t owned and occupied a primary residence for at least four years before the date of the RRSP withdrawal.

You must close within one year

In order for your RRSP withdrawal to qualify for the HBP and to be used tax-free towards a down payment, the home must be purchased or built within one year once the withdrawal is made.

You must repay the amount within 15 years

You have up to 15 years to repay the amount you withdrew starting the second year after you made the withdrawal. Each year, you must pay a minimum of 1/15 of the withdrawn amount. For example, if you withdrew $15,000, then each year you would have to pay back $1,000 to your RRSP. If you skip a payment, then the payment amount will be counted as income and you will have to pay taxes on it. The Canada Revenue Agency (CRA) will send you an annual statement outlining how much you are required to pay that year, the date you are required to pay it by, as well as your remaining unpaid balance.

Restrictions of the Home Buyers’ Plan

  • Any RRSP contributions made less than 90 days before the withdrawal date cannot be used towards the HBP.
  • You cannot own the house more than 30 days before the withdrawal is made.
  • Only the person who owns the RRSP can withdraw funds to use towards the HBP.

Tools that can help you own your first home

The HBP has the potential to accelerate your savings and put you in a better position to buy your next home. But the fine print can get tricky, especially if this is your first home and you’ve never entered an agreement like this before. For more information on how the HBP works, timeframes, and restrictions, visit the the CRA website or speak to your financial advisor.

One thing’s for sure, if you’re a first-time home buyer currently in the market for a mortgage, RATESDOTCA can easily provide you with the best mortgage rates across the market. With these tools, owning your first home can become a reality before you even know it.

This post has been updated.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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