The Home Buyers’ Plan lets you withdraw up to $60,000 from your RRSP tax-free to buy your first home. The trade-off: you must repay it over 15 years. Here is exactly how it works, when it makes sense, and how to maximize the benefit.
How the HBP works
| Step | Detail |
|---|---|
| 1. Contribute to your RRSP | Funds must be in the RRSP for at least 90 days before withdrawal |
| 2. Withdraw up to $60,000 | Fill out Form T1036 — your RRSP issuer releases the funds with no withholding tax |
| 3. Buy or build a qualifying home | Must have a written agreement; must intend to occupy as principal residence within 1 year |
| 4. Repay over 15 years | Starting the second calendar year after withdrawal; 1/15 per year minimum |
Eligibility requirements
| Requirement | Detail |
|---|---|
| First-time home buyer | Have not owned a home lived in as principal residence in the withdrawal year or 4 preceding years |
| Spouse rule | Your spouse/common-law partner must also not have owned a home you lived in during that period |
| Canadian resident | Must be a Canadian resident at withdrawal and at time of purchase |
| Written agreement | Must have a signed purchase agreement or building contract before withdrawal |
| 90-day rule | RRSP contributions must be in the account for at least 90 days before HBP withdrawal |
| Intent to occupy | Must intend to live in the home as your principal residence within 1 year of buying or building |
| Disability exception | First-time buyer requirement is waived for persons with disabilities or anyone buying for a related disabled person |
The 90-day rule: why it matters
You cannot contribute to your RRSP and immediately withdraw under the HBP. The funds must sit for at least 90 days.
| If You Plan to Buy In | Contribute to RRSP By |
|---|---|
| April 2026 | January 2026 (at latest) |
| July 2026 | April 2026 |
| October 2026 | July 2026 |
Strategy: If you have not been contributing to your RRSP, start early. Making a lump-sum contribution 90+ days before your expected closing date ensures the funds are eligible.
Tax bonus: The RRSP contribution gives you a tax deduction in the contribution year, then you withdraw it tax-free under the HBP. You effectively get a tax deduction for money you use as a down payment.
Repayment schedule
Repayment begins the second year after the year of withdrawal and lasts 15 years.
Example: $60,000 withdrawal in 2025
| Year | Minimum Repayment | Cumulative Repaid |
|---|---|---|
| 2025 | $0 (withdrawal year) | $0 |
| 2026 | $0 (grace year) | $0 |
| 2027 | $4,000 (1/15 of $60,000) | $4,000 |
| 2028 | $4,000 | $8,000 |
| … | $4,000/year | … |
| 2041 | $4,000 | $60,000 |
How repayment works
- Make an RRSP contribution during the year (or within 60 days of year-end)
- On your tax return (Schedule 7), designate the contribution as an HBP repayment
- The designated amount reduces your HBP balance — it does NOT give you an additional RRSP deduction
Critical distinction: When you make an RRSP contribution, you choose whether to:
- Claim it as a regular RRSP deduction (reduces taxable income), OR
- Designate it as an HBP repayment (reduces your HBP balance, no tax deduction)
You cannot do both with the same contribution dollar.
What happens if you miss a repayment
| Scenario | Consequence |
|---|---|
| Miss the full $4,000 repayment | $4,000 is added to your income and taxed at your marginal rate |
| Partial repayment ($2,500 of $4,000) | $1,500 shortfall added to your income and taxed |
| Repay more than the minimum | Reduces future required repayments (excess applied to HBP balance) |
Example: Your required repayment is $4,000. You contribute $2,000 to your RRSP and designate it as HBP repayment. The remaining $2,000 is added to your T1 income. At a 33% marginal rate, that costs you $660 in extra tax.
Is the HBP worth it?
When HBP makes sense
| Situation | Why |
|---|---|
| You have a large RRSP balance | $60,000 sitting in RRSP that would otherwise be locked away |
| You are disciplined about repayment | Will consistently make the $4,000/year repayment for 15 years |
| You would not otherwise have enough for the down payment | HBP bridges the gap to 5% or 20% down |
| Your RRSP is invested conservatively | Opportunity cost of withdrawal is lower if funds are in GICs/savings |
When HBP may not be ideal
| Situation | Why |
|---|---|
| Your RRSP is invested in high-growth assets | Withdrawing $60,000 from a portfolio earning 8%+ means giving up significant compounding — those funds would be worth $130,000+ in 10 years |
| You will struggle with repayments | Missed repayments are taxed — it becomes an expensive forced RRSP decumulation |
| You have enough down payment without it | No reason to disrupt your RRSP growth if you don’t need the funds |
| You are in a low tax bracket | The initial deduction has less value; you might be in a higher bracket when the missed-repayment income is taxed |
Opportunity cost example
| Scenario | $60,000 Left in RRSP (8% return) | $60,000 Withdrawn via HBP |
|---|---|---|
| After 10 years | $129,535 | $60,000 repaid to RRSP over 15 years (no growth during repayment years) |
| After 15 years | $190,304 | Fully repaid but years of lost compounding |
| Estimated opportunity cost | — | ~$50,000–$80,000 in lost growth |
The HBP is essentially an interest-free loan from your future self. The question is whether the benefit of buying now (building equity, avoiding rent increases) outweighs the lost compounding.
HBP + FHSA: the maximum strategy
| Source | Individual Max | Couple Max |
|---|---|---|
| FHSA (tax-free, no repayment) | $40,000 + growth | $80,000 + growth |
| RRSP HBP (repay over 15 years) | $60,000 | $120,000 |
| Combined | $100,000+ | $200,000+ |
Priority order:
- FHSA first — tax deduction AND no repayment required (strictly better than HBP for the first $40,000)
- HBP second — use for additional down payment funds beyond FHSA
- TFSA third — no deduction but fully flexible, tax-free withdrawal
Step-by-step: making an HBP withdrawal
Step 1: Confirm eligibility
Verify you (and your spouse, if applicable) meet the first-time buyer definition.
Step 2: Ensure 90-day seasoning
Check that your RRSP contributions have been in the account for at least 90 days.
Step 3: Complete Form T1036
Fill out the Home Buyers’ Plan Request to Withdraw Funds form. Your RRSP issuer will need this to release the funds without withholding tax.
Step 4: Submit to your RRSP provider
The provider releases the funds directly to you. No tax is withheld (unlike a regular RRSP withdrawal).
Step 5: Complete the purchase
You must buy or build a qualifying home by October 1 of the year following the withdrawal. If you do not, the withdrawal must be repaid to RRSP or included in your income.
Step 6: Report on your tax return
The withdrawal appears on your T4RSP. Report it on your tax return and claim the HBP exemption (Schedule 7).
Common questions
Can you use HBP for a rental property? No. The property must be intended as your principal residence.
Can you use HBP more than once? Yes, if your HBP balance from a previous participation is zero and you meet the first-time buyer criteria again (haven’t owned a home you lived in for 4+ years).
Can you withdraw from a spousal RRSP? Yes, but the funds must have been in the spousal RRSP for at least 90 days, and the contributor (not the annuitant) must not have contributed in the 89 days before withdrawal.
What if the home purchase falls through? You have until October 1 of the year after withdrawal to complete a qualifying purchase. If you cannot, return the funds to your RRSP by December 31 of that year to avoid taxation.