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Do you want to buy or build your first home? Why not use your RRSPs under the Home Buyers' Plan (HBP) to finance the down payment on the purchase price?¹ Introduced in 1992, the HBP is a program that enables you to withdraw up to $60,000 from your RRSPs ($120,000 for a couple) to finance the purchase or construction of a qualifying new or used home to be used as your principal place of residence, without having to pay tax on the amount withdrawn.

Who can benefit from the HBP?

To take advantage of this program, you must be considered a first-time home buyer and be a resident of Canada at the time of your RRSP withdrawal, until the purchase or construction of the qualifying home is completed.²

In addition, you may be eligible for a non-refundable tax credit of up to $2,653 as a Quebec first-time home buyer, or $1,500 if you live elsewhere in Canada.

If you are a couple, some rules determine your eligibility. To see if you qualify for the HBP, visit the Canada Revenue Agency website.

Remember that the property for which you wish to use the HBP must be your principal residence and you must live there during the year following the beginning of the withdrawal. The funds you can use for the HBP must be deposited in your RRSP at least 90 days before the withdrawal.

Is it possible to use the HBP more than once?

You can be considered a first-time home buyer again and benefit from the HBP if you or your current spouse or common-law partner have not owned a home for four years.⁴ For example, if you sold your previous home, in which you were living and paid off your first HBP in full, if applicable, you can use the HBP five years later to buy a new home.

If you were a previous homeowner and experienced a marital or common-law relationship breakdown, you may be able to use the HBP to buy out your former spouse's or common-law partner's share, even if you don't qualify as a first-time homebuyer, as long as you have been living separately from your former spouse or common-law partner for at least 90 days as a result of the marriage or common-law relationship breakdown.⁵

How do you withdraw your RRSPs under the HBP?

To make an eligible withdrawal, simply decide on the amount, without exceeding the authorized limit, and complete this form: Canada Revenue Agency T1036 Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP.

Give the completed form to your financial institution to proceed to the next step.

What about repayment of the amounts withdrawn?

You must repay the full amount withdrawn over a maximum of 15 years. Each year, you will have to repay 1/15 of the amount withdrawn. If you withdrew $30,000, you would have to repay $2,000 per year. Your HBP balance will then be reduced by the minimum annual repayment amount.⁶ Amounts not repaid in a year must be included on your tax return for that year. To find out when and how to start repaying your loan, visit the Government of Canada site.

Good to know: The amounts you repay each year are different from regular RRSP contributions and should be allocated using Schedule 7.

This form should be attached to your yearly federal income tax return, indicating which amounts are your HBP repayments and which are new contributions deducted from income.

Don’t have enough money to use the HBP?

RRSP financing could be a good option. You can also use RRSP financing⁷ if you don't have the money to use the HBP. For example, if you take out a $35,000 RRSP loan in January or February and contribute that amount to your RRSP by March 1 of the same year, you could generate substantial tax savings.⁸ When you want to take advantage of the HBP, 90 days after your RRSP contribution, simply withdraw the $35,000 and repay your loan. You can always use the tax savings you've earned.

Depending on your situation, the HBP could be a very advantageous option for homeownership. Feel free to talk to your advisor, who will be able to guide you through the process.

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