The Home Buyers’ Plan is one of Canada’s best programs for first-time home buyers, allowing you to use your retirement savings to get into the housing market. This guide has everything you need to know about using and repaying the HBP.
What is the Home Buyers’ Plan?
The Home Buyers’ Plan is a federal program that allows eligible Canadians to withdraw funds from their Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home without paying taxes on the withdrawal. The government program effectively provides an interest-free loan from your own retirement savings, which must be repaid over a 15-year period.
The key features of HBP include:
- Maximum withdrawal of $60,000 per individual (increased from $35,000 as of April 16, 2024)
- Couples can withdraw up to $120,000 combined (if both qualify)
- Tax-free withdrawal if all conditions are met
- 15-year repayment period
- No interest charges on the borrowed amount
Eligibility Requirements
First Time Home Buyer Definition
To qualify for the HBP, you must be considered a first-time home buyer, which means you cannot have owned a home that you occupied as your principal residence during the four-year period. This period begins on January 1 of the fourth year before the withdrawal year and ends 31 days before your withdrawal date.
For example, if you plan to withdraw on July 15, 2025, you cannot have owned and lived in a home between January 1, 2021 and June 14, 2025.
Core Eligibility Criteria
You must meet all of the following conditions to qualify for HBP:
Residency: You are a Canadian resident at the time of withdrawal and remain a resident until the home is purchased or built.
Written Agreement: You have a written agreement to buy or build a qualifying home (a pre-approved mortgage does not satisfy this requirement).
Principal Residence: You intend to occupy the home as your primary residence within one year of purchasing it or completing its construction.
Timing: You will buy or build the qualifying home by October 1 of the year following your first withdrawal. For example, if you make your first HBP RRSP withdrawal on June 1, 202,5, you must buy or build your qualifying home by October 1, 2026. If you don’t purchase or build the home by this deadline, you must cancel your HBP participation.
Ownership Restriction: You cannot own the qualifying home for more than 30 days before making the withdrawal.
Important Exceptions
Disability Exception: If you or a related person with a disability is purchasing the home, the first-time buyer requirement does not apply. The person with the disability must be entitled to the disability tax credit, and the home must be better suited to their needs or more accessible than their current residence.
Relationship Breakdown: Following a separation or divorce, you may qualify even if you don’t meet the first-time buyer requirement, provided you have been living separate and apart for at least 90 days due to a marriage or common-law partnership breakdown. You must dispose of the previous principal residence within two years of the HBP withdrawal unless you’re buying out your former partner’s share.
Re-participation: You can use the HBP more than once if your previous HBP balance has been fully repaid by January 1 of the year you make a new withdrawal.
Let’s look at an example of how to re-participate in the HBP.
Suppose you made a withdrawal of $30,000 from your RRSP under the Home Buyers’ Plan in 2008 to buy your first home. You started repaying the amount two years later as required (in 2010), and repaid about $2,000 per year (1/15th of the withdrawal).
By January 1, 2026, you have fully repaid the $30,000 you withdrew in 2016.
Since your previous HBP balance is fully repaid by January 1 of 2026, you become eligible to make a new withdrawal under the Home Buyers’ Plan in 2026 up to the maximum withdrawal limit (currently $60,000). You can therefore use the HBP program again in 2026 to withdraw money from your RRSP for the purchase of another qualifying home.
Qualifying Homes
A qualifying home must be located in Canada and may include single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, apartments and shares in a co-operative housing corporation, provided the shares provide an equity interest (not just tenancy rights). Both newly constructed homes and existing properties qualify under the HBP program.
How to Withdraw Funds Under the HBP
The 90-Day Rule
RRSP contributions must remain in your account for at least 90 days before you can withdraw them under the HBP. If you withdraw contributions made within the 89 days immediately before your withdrawal, those contributions may not be tax-deductible.
Important Calculation: The restriction applies only to the specific RRSP account from which you’re withdrawing. For contributions to be fully deductible, the value of that RRSP after the HBP withdrawal must be at least equal to the contributions made during the 89-day period.
Let’s look at an example of the 90-day rule.
Suppose you plan to make an HBP withdrawal on June 1, 2026. To have your contributions eligible for withdrawal under the HBP without losing the tax deduction, you must have made your RRSP contributions by at least March 3, 2026 (which is 90 days before June 1, 2026).
Any contributions made after March 3, 2026 and before your withdrawal date (June 1) would not meet the 90-day requirement and thus may not be eligible for the tax deduction.
However, if you had an existing RRSP balance before March 3, 2026, and it was at least equal to the amount of recent contributions made within those 89 days, you could still withdraw without losing the deduction on the earlier contributions. This means if you had $60,000 in your RRSP on March 3, 2026, and you contributed $10,000 on April 15, 2026, you could still withdraw $60,000 on June 1, 2026, using the funds contributed more than 90 days ago while preserving your tax deduction status for those earlier funds.
Withdrawal Process
Here is the step-by-step process for the HBP withdrawal:
Step 1: Complete Form T1036 – Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP.
Step 2: Fill out Area 1 of the form to confirm your eligibility.
Step 3: Send the completed form to your RRSP issuer, and they will complete Area 2.
Step 4: Your RRSP issuer will process the withdrawal without withholding tax (for amounts up to $60,000).
Multiple Withdrawals
You can withdraw from multiple RRSPs, but all withdrawals must be in the same calendar year as your first withdrawal, or in January of the following year. Any withdrawals after January will be considered a new participation.
Let’s look at an example of multiple HBP withdrawals.
Suppose you make your first HBP withdrawal from one RRSP on March 15, 2026. Under the program rules, you can make additional HBP withdrawals in the same calendar year (2026) or by January 31, 2027. For example, you can withdraw on August 10, 2026 (in the same calendar year as the first withdrawal), or on January 25, 2027 (in January of the following year).
Any additional withdrawals you make after January 31, 2027, will be considered a new participation. It will start a new 15-year repayment period and be subject to new HBP rules.
Withdrawal Restrictions
You cannot withdraw from locked-in RRSPs, group RRSPs and RRSPs that don’t allow HBP withdrawals based on their terms. Also, any funds withdrawn over $60,000 will be subject to withholding tax and must be reported as income on your tax return.
HBP Repayment: The 15-Year Journey
When Repayment Starts
Original Rule: Repayment starts in the second year after the year you made your first withdrawal.
Temporary Extension: For withdrawals made between January 1, 2022 and December 31, 2025, repayment will start in the fifth year after your first withdrawal. This temporary relief measure gives you more time to settle into homeownership before repayment begins.
For withdrawals made on or after January 1, 2026, repayment begins in the second year after the year you made your first withdrawal.
Timeline Examples:
| Withdrawal Year | Repayment Begins In | Applicable Rule |
| 2021 and earlier | 2023 | 2-year grace period |
| 2022–2025 | 5 years after withdrawal | 5-year grace period (temporary) |
| 2026 onward | 2 years after withdrawal | 2-year grace period |
Repayment Amount
Your annual minimum repayment is 1/15th (6.67%) of the total amount you withdrew. The 15-year repayment period runs regardless of whether you make payments each year.
For example, if you withdraw $30,000 under the Home Buyers’ Plan (HBP) in 2026, your repayment schedule will start in 2028, which is the second year after the withdrawal year. You need to repay a minimum of $2,000 per year ($30,000/15) starting from the 2028 tax year.
If you miss a repayment in any given year, that amount will be added to your taxable income for that year. You can also choose to repay more than the minimum in any year, which will reduce future required payments.
How to Repay
Here’s the step-by-step process to make HBP repayment:
Step 1: Make contributions to your RRSP, PRPP (Pooled Registered Pension Plan), or SPP (Specified Pension Plan) in the year the repayment is due or within the first 60 days of the following year.
Step 2: Designate all or part of your contributions as an HBP repayment when filing your tax return.
Step 3: Complete Schedule 7 (RRSP, PRPP and SPP Contributions and Transfers and HBP and LLP Activities) and attach it to your income tax return.
Note that repayments do not use up your RRSP contribution room, and repayments do not generate tax deductions. You can designate more than the minimum amount if you wish. You can also repay to any RRSP account, not necessarily the one you withdrew from.
Early and Excess Repayments
You can repay more than the minimum annual amount or make early repayments without penalty. Any excess payments reduce your future minimum required payments.
Let’s look at a detailed example of excess payment (more than the required annual minimum amount).
Suppose you withdrew $30,000 from your RRSP in 2021 under the Home Buyers’ Plan. Your repayment schedule starts the second year after the withdrawal year, so your first required repayment year is 2023. By 2026, after 3 years of repayment (2023, 2024 and 2025), the balance before the 2026 payment is $24,000 ($30,000 – ($2,000 x 3 years)).
If you pay the $2,000 required plus an extra $4,000 in 2026, your total payment that year is $6,000. The $6,000 payment reduces your HBP balance from $24,000 to $18,000 ($24,000 – $6,000).
After the 2026 payment, 11 years remain (15 total years – 4 years paid). The new minimum annual repayment from 2027 onward is the remaining balance divided by the remaining years: $18,000/11 = 1,636.36. This is lower than the original $2,000 annual repayment. So by paying $4,000 extra in 2026, you reduce your future required payments from $2,000 to $1,636.36 per year for the remaining 11 years.
Advantages of Early Repayment
By repaying early, the amounts you put back into your RRSP start growing tax-deferred again immediately. This accelerates the recovery of your retirement nest egg while still benefiting from compounded growth inside the plan, which you lose during the withdrawal period.
Repaying early also reduces your outstanding HBP balance and future mandatory annual repayment amounts. This reduces the risk of not meeting your required repayments in later years, which would otherwise be added to your taxable income and increase your tax burden.
Considerations of Early Repayment
When you repay your HBP withdrawal by contributing back to your RRSP and designating those contributions as HBP repayments on your tax return, these repayments are not treated as regular RRSP contributions for tax deduction purposes. This means you do not get a tax deduction for your repayments to your RRSP under the HBP system. While your repayment prevents the withdrawn amount from becoming taxable income, the contributions used specifically as repayments do not reduce your taxable income like regular RRSP contributions. Essentially, you are putting money back into your retirement savings without an immediate tax benefit on repayment.
Since HBP repayments do not generate tax deductions and effectively restore funds you previously withdrew, it may be financially smarter to first prioritize maximizing contributions to tax-advantaged accounts like the Tax-Free Savings Account (TFSA) or new, unused RRSP contribution room. Both of these can provide immediate or future tax benefits.
Interest-Free Loan Benefit Is Lost When Repaying Early
The HBP is an interest-free loan from your own retirement savings, where you defer taxes on the amount withdrawn but must repay it over time. When you make repayments, especially early or lump-sum payments beyond the minimum, you are paying back that interest-free loan sooner.
While early repayment reduces your future repayment obligations and risks, it also means you lose the benefit of using those funds interest-free for a longer period. Money you repay early goes back into your RRSP and starts growing tax-deferred again, but you lose the cash flow advantage of borrowing it interest-free for a longer duration. So consider your cash flow, investment opportunities, and whether early repayment fits your overall financial plan, balancing the opportunity cost of repaying early with the value of using your money elsewhere.
Tracking Your HBP Balance
The CRA tracks your HBP balance. They send you an annual statement showing your remaining HBP balance, total repayments made to date and the minimum required repayment for the following year.
You can view your current HBP balance through CRA My Account online service, your Notice of Assessment (or Notice of Reassessment), or by calling the CRA at 1-800-959-8281.
Missed Payments and Tax Consequences
If you don’t repay the minimum required amount in any given year, the shortfall is added to your taxable income for that year. The repayment schedule continues regardless, and you’ll still owe the remaining balance.
For example, if your required repayment is $2,000 but you contribute only $500 to your RRSP and designate it as an HBP repayment, you must include $1,500 of income on your tax return for that year. The tax you pay depends on your marginal tax rate.
The missed payment won’t simply disappear. The clock continues to tick down through the 15-year period regardless of whether you make payments. This means you can face significant tax consequences if you consistently miss payments.
Using Excess RRSP Contributions for HBP Repayment
If you over-contribute to your RRSP beyond your contribution limit, you can designate the excess as an HBP repayment to avoid the 1% monthly penalty on over-contributions. The over-contribution must not exceed your remaining HBP balance.
Cancelling Your HBP
When You Can Cancel
You may need to cancel your HBP participation under one of these scenarios:
- You didn’t buy or build a qualifying home by the deadline
- You became a non-resident before purchasing the home
- Your circumstances have changed and you no longer plan to buy
Cancellation Process
Here’s the step-by-step process to cancel the Home Buyers’ Plan.
Step 1: Make a cancellation payment to your RRSP equal to the total amount you withdrew by the due date.
Step 2: Fill out Form RC471 (Home Buyers’ Plan – Cancellation) or write a cancellation letter including the reason for cancellation and your personal information (Your legal name, address and Social Insurance Number). Sign the letter and attach the RRSP contribution receipts.
Step 3: Submit the form/letter to the CRA within 60 days after the cancellation payment due date.
Cancellation Deadlines
The deadline depends on your situation. If you didn’t buy the home, the deadline is by December 31 of the year after the year you made the withdrawal.
For example, if you made a withdrawal under the Home Buyers’ Plan (HBP) in 2026 but didn’t buy the home, the deadline to repay the full amount you withdrew would be by December 31, 2027 (the year after the year you made the withdrawal). If you don’t repay by this date, the amount withdrawn will be added to your taxable income for 2027, and you’ll owe income tax on it.
Special Situations
Non-Residents
If you become a non-resident after buying your home, you can continue to make HBP repayments. However, you must repay the full HBP balance before filing your tax return for the year you became a non-resident, or within 60 days of becoming a non-resident (whichever is earlier).
If you become a non-resident before buying the home, you must repay the entire withdrawal amount by the cancellation deadline to avoid taxation.
Death of HBP Participant
Upon the death of an HBP participant, the outstanding HBP balance must generally be included in the deceased’s income for the year of death. However, the balance can be transferred to a surviving spouse or common-law partner using Form RC98 (Election to transfer the HBP or LLP balance at time of death). The surviving spouse assumes the repayment obligations and can continue to make repayments over the remaining years.
Couples and Multiple Participants
Each person in a couple can participate in the HBP separately, up to $120,000 combined ($60,000 each). Each person must meet the eligibility requirements independently, complete their own T1036 form, and repay their own HBP balance separately.
Your spouse or common-law partner’s homeownership history affects your eligibility for the RRSP Home Buyers’ Plan (HBP) “first-time homebuyer” status. The rule is: you’re only considered a first-time homebuyer if, during the four years before your withdrawal, neither you nor your current spouse or common-law partner owned and occupied a home as a principal residence. If your spouse owned a home during the four-year period, you are not considered a first-time homebuyer unless you are legally separated or divorced.
If you are separated or have had a marital breakdown and meet CRA’s definitions (generally living separate and apart for at least 90 days). In that case, you may re-qualify for HBP as a first-time buyer, even if a home was jointly owned or occupied recently.
HBP vs. First Home Savings Account (FHSA)
Canada now offers two programs to help first-time buyers: the HBP and the newer FHSA. Both can be used for the same home purchase.
Key Differences
| Feature | HBP | FHSA |
| Maximum Amount | $60,000 per person | $40,000 lifetime limit |
| Tax Treatment | Loan requiring repayment | Tax-free withdrawal (no repayment) |
| Contribution Room | Uses existing RRSP savings | $8,000 annual contribution limit |
| Repayment Required | Yes – over 15 years | No |
| Tax Deduction | On initial RRSP contribution only | On contributions |
| Impact on Retirement | Reduces retirement savings temporarily | No impact if properly used |
| Timing Flexibility | Can access existing RRSP immediately | Requires planning in advance |
Strategic Considerations
Use FHSA when:
- You’re planning ahead (not an immediate purchase)
Since FHSA allows annual contributions up to $8,000 and has a lifetime contribution limit of $40,000, it’s great for buyers in the early stages of saving for their first home. The account can remain open for up to 15 years, so you have time to build your savings gradually. This long-term flexibility is for those who want to save systematically before buying a home, unlike the Home Buyers’ Plan (HBP), which draws from existing RRSP funds for an immediate need.
- You want to avoid repayment obligations
Unlike the HBP, where withdrawals must be repaid to your RRSP over 15 years, FHSA withdrawals for qualifying home purchases are completely tax-free with no repayment requirements. Once you withdraw your savings (including investment gains) to buy your home, there is no obligation to repay the money, making the FHSA simpler and less risky in terms of long-term commitment.
- Your post-purchase budget will be tight
If you expect your budget to be constrained after purchasing your home, FHSA offers peace of mind by eliminating future repayment obligations. You don’t have to worry about allocating after-tax income annually to repay borrowed funds (as with HBP), easing financial pressure during the critical post-purchase years.
- You want a true tax-free benefit
The FHSA provides a unique combination of tax advantages. Contributions are tax-deductible (similar to RRSP contributions), investment income grows tax-free inside the account, and withdrawals used for a first home purchase, including earnings, are not taxed at all.
Use HBP when:
- You need access to funds immediately
If you need a large sum of funds quickly (e.g. to make a down payment on a home), the HBP can provide those funds without triggering taxes at withdrawal. You can act quickly without waiting to accumulate the full down payment.
- You have substantial existing RRSP savings
If you have $80,000 in your RRSP across multiple accounts over several years, and you plan to buy your first home but only need a $60,000 down payment. The HBP allows you to withdraw up to $60,000 interest-free, leveraging your savings without depleting your entire RRSP.
- You’re comfortable with repayment obligations
The HBP requires you to repay the withdrawal over 15 years, starting two years after the withdrawal. If you’re confident in your future income stability and comfortable with making annual repayments (which can be flexible and above the minimum), the program can be a useful bridge to homeownership.
Combine both HBP and TFSA when:
- You need maximum down payment assistance
Buying a home often requires a large down payment. Both the HBP and FHSA offer tax-advantaged ways to save or access funds, but the maximum amounts are limited. By using both programs, you can access up to $100,000 (HBP $60,000 + FHSA $40,000), which can increase your purchasing power or reduce your mortgage needs.
- You qualify for both programs
To use both, you must meet the eligibility requirements. The HBP requires you to be a first-time home buyer (no ownership in the past 4 years) and have sufficient RRSP contributions ready for withdrawal without tax penalties. The FHSA also targets first-time buyers, offering tax-deductible contributions and tax-free withdrawals for home purchases.
If you meet both eligibility criteria, you can withdraw funds from your RRSP via the HBP and withdraw savings from your FHSA without penalty.
- You’ve been saving in both accounts
Many buyers have contributed to their RRSPs over the years and have recently started saving in their FHSA accounts, which launched more recently. Combining your existing RRSP savings (eligible for the HBP) with FHSA contributions lets you use all your available resources.
The FHSA has annual contribution limits ($8,000 per year) and a lifetime maximum of $40,000, while your RRSP contribution limit is 18% of your earned income up to the maximum annual limit.
Advantages and Disadvantages of Using the HBP
Advantages
Immediate Access to Funds
The HBP allows you to withdraw up to $60,000 (per eligible individual) from your RRSP to put towards the purchase of your first home or a home for someone with a disability without immediate tax consequences. This means you get quick access to a large amount to use as your down payment without having to save the cash outside of your RRSP.
For example, Jane has $50,000 in her RRSP and wants to buy her first home. Through the HBP, she withdraws $50,000 tax-free to use as a down payment. This immediate access helps her get a mortgage and buy the home sooner than if she had to save separately over many years.
Interest-Free Loan
Unlike a traditional loan, the HBP withdrawal is essentially borrowing from yourself. There’s no interest charged on the amount you withdraw as long as you follow the repayment schedule. The amount must be repaid into your RRSP over 15 years, but you avoid paying interest or fees as you would with a bank loan.
For example, Mark withdraws $60,000 through the HBP. Over the next 15 years, he repays it to his RRSP each year without paying any interest. If Mark had taken a $60,000 home loan from a bank at 5% interest, he would have paid significant interest over the years.
Larger Down Payment
Access to up to $60,000 from your RRSP increases the amount you can put towards your down payment, which can help you avoid mortgage default insurance premiums (usually required if your down payment is less than 20%) or negotiate better mortgage interest rates due to a larger equity stake in your home.
For example, Emma wants to buy a $400,000 home but only has $30,000 in savings for a down payment. She withdraws $60,000 from her RRSP using the HBP, bringing her total down payment to $90,000 (22.5%). This allows her to avoid mortgage default insurance, saving thousands in premiums.
Flexible Repayment
The HBP requires repayment of your withdrawn amount over 15 years, but you can choose to repay more than the minimum annual amount to reduce your balance faster or make smaller payments if your budget is tight. The flexibility helps you manage your finances as you adjust to homeownership expenses.
For example, Alex withdrew $45,000 from his RRSP. His minimum yearly repayment is $3,000. In years when he has extra cash, he repays $5,000 to reduce his balance faster. If money is tight in one year, he only repays the required $3,000. This flexibility helps him avoid financial stress while meeting repayment obligations.
Disadvantages
Lost Investment Growth
When you withdraw funds from your RRSP under the HBP, those funds are no longer invested and growing tax-deferred in your retirement account. This means you miss out on potential compound growth that could accumulate over many years.
For example, if you withdrew $30,000 from your RRSP to buy a home and the RRSP had an expected annual growth rate of 5%, after 15 years, you could have lost approximately $60,000 in future value by not keeping those funds invested.
Repayment Obligations
You must repay the amount withdrawn in equal installments over 15 years, starting two years after the withdrawal. Repayments are mandatory and users cannot skip them without incurring a penalty.
For example, if you withdrew $60,000, you need to repay at least $4,000 annually. Missing a repayment means the missed amount will be taxed as income.
No Tax Deduction on Repayments
Unlike regular RRSP contributions, when you repay the HBP, these amounts do not generate a tax deduction. You repay with after-tax dollars and receive no tax benefits from the repayment.
For example, you repay $4,000 to your RRSP, but unlike regular RRSP contributions, you cannot claim this $4,000 as a tax deduction on your annual tax return.
No Bankruptcy Protection
The obligation to repay the HBP loan persists even if you declare bankruptcy or have financial hardship. The government expects repayment regardless of personal circumstances. This applies even if you lose your job or declare bankruptcy; you still owe the yearly repayments to avoid taxation on missed amounts.
Tax Reporting Requirements
Year of Withdrawal
In the year you make your first HBP withdrawal, complete Part E of Schedule 7 on your tax return. Report the withdrawal, but do not include it on line 12900 (RRSP income). Attach the T4RSP slip if your financial institution issued one.
Subsequent Years Until Fully Repaid
Every year until your HBP balance is zero, file a tax return (even if you have no income or have declared bankruptcy).
Complete Part B of Schedule 7 to show your HBP balance from your statement of account, minimum repayment amount required, amount you’re designating as HBP repayment, and RRSP contributions you’re claiming as deductions.
Enter the repayment amount on line 24600, but do not include HBP repayments on line 20800 (RRSP deduction). Failure to file Schedule 7 means the CRA will automatically add your minimum required payment to your taxable income.
Conclusion
The Home Buyers’ Plan is a great tool to help you achieve homeownership by using your existing retirement savings. With the increase to a maximum withdrawal of $60,000, it’s more flexible than ever.
But remember, using the HBP means borrowing from yourself. The funds you withdraw will miss years of tax-deferred growth, and you’ll have to repay with after-tax dollars over 15 years without getting tax deductions on those repayments. Missed payments will be taxed immediately and create additional financial stress.
For many first-time buyers, especially those with large RRSP savings, the HBP can be a crucial step for building a down payment. The key to success is to understand the rules, plan carefully, track your obligations and make consistent repayments to avoid tax consequences.
Consider working with a qualified tax consultant to determine if the HBP, FHSA or a combination of both programs is best for you. With proper planning and discipline, the HBP can be a stepping stone to homeownership while preserving your long-term financial security.
