Key Takeaway

The Home Buyers’ Plan (HBP) allows eligible first-time home buyers in Canada to withdraw up to $35,000 from their RRSP tax-free to use as a down payment. You must repay the withdrawn amount over 15 years, starting the second year after withdrawal. The HBP can reduce your immediate cash needs when buying a home, but failing to make annual repayments means those amounts are added to your taxable income for that year.

What Is the Home Buyers’ Plan?

The Home Buyers’ Plan is a Canadian federal program administered by the Canada Revenue Agency that lets you borrow from your own Registered Retirement Savings Plan to finance the purchase of a qualifying home. According to the Canada Revenue Agency, the HBP enables you to withdraw funds that would normally be locked in your RRSP until retirement, without paying tax on the withdrawal at the time (CRA, 2026).

Unlike a regular RRSP withdrawal, which triggers immediate taxation, an HBP withdrawal is tax-free as long as you meet the eligibility criteria and repay the amount within the required timeframe. The program recognizes that saving for both retirement and a first home simultaneously can be challenging, especially in high-cost housing markets like Toronto and Vancouver.

Why the HBP Matters

Coming up with a down payment is one of the biggest barriers to homeownership in Canada. For an insured mortgage (down payment under 20%), you need at least 5% of the purchase price. On a $500,000 home, that is $25,000. For many Canadians, the RRSP represents a pool of savings that can bridge that gap without needing to liquidate other investments or borrow at high interest rates.

The HBP also preserves the tax advantage you received when you made your RRSP contributions. You claimed a deduction when you contributed, the funds grew tax-sheltered, and you avoid paying tax when you withdraw under the HBP. As long as you repay the amount on schedule, you maintain your retirement savings trajectory.

The program works alongside other federal initiatives like the First Home Savings Account (FHSA), which allows tax-deductible contributions and tax-free withdrawals for a first home purchase. Many buyers use both the FHSA and HBP together to maximize their down payment.

How the HBP Works

Eligibility

To qualify for the HBP, you must be a first-time home buyer, defined by the CRA as someone who has not owned a home that was your principal residence in the four-year period beginning January 1 of the fourth year before the withdrawal and ending 31 days before the withdrawal date. If you are buying with a spouse or partner, they must also meet the first-time buyer test unless they are purchasing the home for the benefit of a related person with a disability.

The home must be located in Canada, and you must intend to occupy it as your principal residence within one year of purchase or construction.

Withdrawal Limits and Process

You can withdraw up to $35,000 from your RRSP under the HBP (as of 2026; confirm current limits on the CRA website before acting). If you are buying with a spouse or common-law partner, each of you can withdraw up to $35,000 from your own RRSP, for a combined total of $70,000.

The funds must have been in your RRSP for at least 90 days before withdrawal to be eligible. This rule prevents last-minute contributions solely to benefit from the HBP. You must receive all withdrawn funds in the same calendar year, and you must buy or build the home no later than October 1 of the year following the year of withdrawal.

Read also: RRSP Home Buyers’ Plan: A Complete Guide for First-Time Buyers in Canada

Repayment

Repayment begins the second year after the year you made the withdrawal. For example, if you withdrew funds in 2026, your first repayment is due in 2028. You have up to 15 years to repay the full amount. The annual minimum repayment is 1/15 of the total withdrawn amount, though you can repay more in any year.

You repay by contributing to your RRSP and designating the contribution as an HBP repayment on your tax return (Schedule 7). If you do not make the minimum annual repayment, the CRA adds that amount to your taxable income for the year.

Example

Sarah withdrew $30,000 from her RRSP in January 2026 to buy a condo in Calgary. Her minimum annual repayment starting in 2028 is $2,000 ($30,000 divided by 15). In 2028, she contributes $2,500 to her RRSP and designates $2,000 as an HBP repayment and $500 as a regular RRSP contribution (which she can deduct). She has 14 years remaining to repay the balance of $28,000.

If Sarah misses a repayment in a given year, that $2,000 is added to her taxable income, and her repayment schedule remains unchanged for the remaining years.

Important Considerations

The HBP reduces your RRSP balance at a time when compound growth matters most. Withdrawing funds in your 30s means those funds miss decades of potential tax-sheltered growth, as discussed in foundational texts such as Principles of Finance. If you do not repay on schedule, you lose contribution room permanently, because the missed repayment is treated as income, not as a new contribution that rebuilds room.

The HBP works best when you have accumulated RRSP savings for other reasons and homeownership becomes an opportunity. It is less effective if you contribute to your RRSP solely to use the HBP, because the 90-day waiting period and the repayment obligation can negate much of the benefit.

Provincial programs and tax credits may also apply. For instance, the First-Time Home Buyers’ Tax Credit (federal) and land transfer tax rebates (in some provinces) can reduce your upfront costs further.

Conclusion

The Home Buyers’ Plan is a flexible tool that helps first-time buyers in Canada access their own retirement savings to fund a home purchase without immediate tax consequences. It requires discipline to repay on schedule and careful planning to avoid permanently reducing your retirement savings. Before using the HBP, compare it to other options like the FHSA, high-interest savings accounts held in a TFSA, or gifted down payment funds from family. Consult a Certified Financial Planner or mortgage specialist to determine whether the HBP fits your personal situation, especially if you are balancing retirement contributions, mortgage affordability under the stress test, and long-term financial goals.

Disclaimer: This article provides general educational information about the Home Buyers’ Plan and does not constitute personalized financial, tax, or legal advice. Contribution limits, eligibility criteria, and tax rules are subject to change. Confirm current rules on the CRA website and consult a qualified financial adviser or Chartered Professional Accountant for advice tailored to your circumstances.