The Home Buyers' Plan (HBP) is a program through the Canada Revenue Agency (CRA) that allows eligible first-time homebuyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plan (RRSP), to be used toward a down payment on the purchase of a home.
You can take advantage of the tax deductions that RRSP contributions provide while saving for a down payment on your home. Then, you can withdraw the funds tax-free and use them toward a home.
There's a little catch, however: you'll need to pay the money back at a later date.
How much can you withdraw under the Home Buyers' Plan?
Under the HBP, you can withdraw up to $60,000 from your RRSP to put toward a down payment on a qualifying home. If your spouse or common-law partner also qualifies, they can withdraw up to $60,000 from their own RRSP — for a combined maximum of $120,000.
There are a few important rules to keep in mind about the withdrawal amount:
89-day holding period — the funds must have been in your RRSP for at least 89 days before you can withdraw them under the HBP.
Multiple withdrawals allowed — you can make more than one withdrawal in the same calendar year, as long as you don't exceed the $60,000 limit.
Own accounts only — you can only withdraw from RRSPs in your own name, not from a spousal RRSP that belongs to your partner.
How does the Home Buyers' Plan work?
The first step is contributing to an RRSP. Next, you'll need to meet some criteria to qualify for the HBP. Here are the basic criteria:
Canadian residency — you must be a Canadian resident.
First-time buyer status — generally, you have to be a first-time buyer or meet one of the exceptions (more on that below). If you already own a home, you're not eligible for the HBP. You'll need proof that you're actually building or buying a home. One exception: you can use the HBP if you're helping a related person with a disability purchase their primary home. A person with a disability refers to someone who is entitled to a disability amount and has a Disability Tax Credit Certificate T2201 on file with the CRA.
Previous HBP balance — if you've already participated in the HBP, you need to have a zero balance on that account before participating again.
Occupancy requirement — you must intend to occupy the qualifying home as your principal place of residence within 1 year of buying or building it.
Who is eligible for the Home Buyers' Plan?
To participate in the HBP, you need to meet several eligibility requirements set by the CRA. Here are the key conditions.
The first-time home buyer rule
You are considered a first-time home buyer if you have never purchased a home. If you live in the home your spouse purchased, you would not be considered a first-time homebuyer.
The four-year rule
You can become eligible for the HBP if you do not own a home — or live in a home purchased by your spouse — for 4 calendar years. For example, if you and your spouse split up (or you sell your home) and you move to a rental, you would be eligible to participate in the HBP 4 calendar years after you move out of the house.
Any previous HBP balance must be paid in full before you can participate a second time.
Qualifying after a relationship breakdown
Going through a separation is hard, and knowing your options can help. The HBP is normally for first-time buyers, but if you’re separating from your spouse or partner you may be able to use it even if you currently own a home — or have been living in one your partner owns.
You may qualify to participate in the HBP after a relationship breakdown if all of the following are true:
You’re living separate and apart from your spouse or common-law partner because your relationship has broken down.
By the date of your withdrawal, you’ve been living separate and apart for at least 90 days.
You started living separate and apart no earlier than the fourth calendar year before the year of your withdrawal (for a 2026 withdrawal, that means 2022 or later).
What happens with the home depends on your situation — pick the one that applies to you:
Leaving the home: If you own a share of it, you must sell that share or transfer it to your former partner by the end of the second calendar year after the year of your withdrawal (for a 2026 withdrawal, by December 31, 2028).
Staying in the home: You can use the HBP to buy your former partner’s share of it. The buy-out must happen no earlier than 30 days before your withdrawal and no later than September 30 of the year after your withdrawal.
Either way, you can’t make an HBP withdrawal if the home you’re currently living in is owned and occupied by a new spouse or common-law partner.
Using the Home Buyers' Plan for a second home
The HBP is intended for the purchase or construction of your primary residence, or the primary residence of a related person with a disability. You cannot use the HBP for a second home or rental property.
If you previously owned a home, you would have to meet the eligibility criteria, follow the four-year rule, and have paid back any previous HBP balance before you could use the program again.
How to withdraw RRSP funds under the Home Buyers' Plan
To withdraw funds tax-free as part of the HBP, you need to fill out form T1036. Submit this form to your financial institution to let them know your intention to withdraw funds. It's not possible to withdraw the money from your RRSP and then claim it was part of the HBP afterward, so make sure to do it in the right order.
You can only withdraw from accounts in your own name. For example, a contributor can't withdraw from a spousal account because the account is in the spouse's name.
A few timing rules to keep in mind:
89-day contribution rule — contributions made within 89 days of the withdrawal are not eligible for withdrawal under the HBP.
30-day usage window — you need to use the money on your new home within 30 days of closing or taking ownership, so make sure not to apply too early.
How to repay the Home Buyers' Plan
The money you withdraw from your RRSP under the HBP eventually needs to be repaid. Think of the HBP as a kind of interest-free loan from yourself. When repayment begins depends on when you withdrew. If your first withdrawal was before January 1, 2022, repayment starts the second year after the withdrawal. Because of temporary repayment relief, first withdrawals made from January 1, 2022 through December 31, 2028 don't have to begin repayment until the fifth year after the withdrawal
Here's what the repayment schedule looks like:
Detail | Requirement |
|---|---|
| Repayment period | 15 years |
| Annual minimum payment | 1/15th of the total withdrawal |
| Repayment starts | Repayment starts in either the second or the fifth year after the year you withdrew, depending on when your first withdrawal was made:<br>– Second year — first withdrawal before January 1, 2022<br>– Fifth year — first withdrawal from January 1, 2022 to December 31, 2028 |
| Extra payments | Allowed — you can repay faster if you choose |
The CRA will send you an HBP account statement with the total amount owing and the minimum payment due. Your HBP account balance is also shown on your Notice of Assessment and your My Account information with the CRA. You can also contact the CRA at 1-800-959-8281 to inquire about your balance.
You'll need to report the repayment on Schedule 7 and submit it with your T-1 General Income Tax Return. It's important to designate RRSP contributions as repayments of the HBP, rather than regular contributions. Contributions made to repay your HBP balance do not affect your contribution room, and you cannot claim the RRSP tax deduction for these repayments.
What happens if you miss a repayment?
If you don't make your required annual repayment, the amount you missed is added to your taxable income for that year. For example, if you withdrew $60,000 and your annual repayment is $4,000, but you only repay $1,000, the remaining $3,000 would be included as income on your tax return.
Missing a repayment doesn't cancel your obligation to repay the rest. You'll still need to continue making your scheduled repayments in future years. If you consistently miss repayments, a larger portion of your original withdrawal ends up being taxed as income — which reduces the overall benefit of the HBP.
How to cancel the Home Buyers' Plan
You may have to cancel your participation in the HBP for the following reasons:
Unable to complete the purchase — you or the related person with a disability were unable to buy or build a qualifying home by October 1 of the year following the date of withdrawal. A related person includes someone related to you by blood, marriage, common-law relationship, or adoption. They do not have to live with you in the same home.
Change in residency — you became a non-resident of Canada before completing the purchase or build of a qualifying home.
To cancel, you must complete form "RC471 Home Buyers' Plan (HBP) Cancellation" and include a letter of explanation and a receipt for the re-deposit of funds. You can deposit the funds into an RRSP in your name.
If you choose not to repay the full amount you withdrew, any funds that are not re-deposited will be treated as a normal RRSP withdrawal, must be declared as income, and will be subject to your marginal tax rate. Cancellation repayment must be made by December 31 of the year after you made the withdrawal.
Advantages and drawbacks of the Home Buyers' Plan
The HBP can be a helpful tool, but it's not the right choice for everyone. Here's what to consider.
Potential advantages:
Tax-free access to your savings — you can withdraw from your RRSP without paying tax on the withdrawal, as long as you repay the amount within 15 years.
Larger down payment — a bigger down payment may help you avoid paying mortgage default insurance, which is required when you put down less than 20%.
No interest on repayment — unlike a traditional loan, there is no interest charged on the amount you withdraw.
Potential drawbacks:
Lost investment growth — money withdrawn from your RRSP is no longer growing tax-sheltered. Over time, this can reduce your retirement savings.
Repayment obligation — you're required to repay 1/15th of the withdrawn amount each year. If you miss a payment, that amount is added to your taxable income.
Contribution timing — contributions should be in your RRSP more than 89 days before withdrawal to stay fully deductible, which requires planning ahead.
Start building toward your first home
The HBP can be a practical way to put your RRSP savings toward a down payment — as long as you understand the eligibility requirements and repayment rules. Whether you're just starting to save or you're ready to make a withdrawal, taking the time to plan ahead can help you make the most of the program.
