The Canadian government offers the Home Buyers’ Plan (HBP), allowing first-time homebuyers to withdraw RRSP funds to purchase a principal residence. If you are not sure if this is a good option, let’s connect for a quick chat to run through your current situation.

How does RRSP work for first-time homebuyers?

Homebuyers that have never been registered on title as property owners can elect to withdraw up to $35,000 from their RRSP to use as the down payment on a home purchase. If two first-time homebuyers are purchasing a home together, each buyer can access the $35,000 amount.

The process is straightforward. Applicants must complete a Form T1036 – Home Buyers’ Plan (HBP) Request to withdraw funds from an RRSP. Once completed, present it to the Financial Institution administering your RRSP. It takes approximately five business days for your bank to deposit the funds into your account.

How long do you have to repay RRSP for first-time homebuyers?

You have 15-years to repay the money to your RRSP account. The payments can start two years after the initial withdrawal. Payment can be made all at once, or you can put money back each year (i.e. at income tax refund time). An outstanding balance at the end of the 15-years is counted as income in year 16.

Are there RRSP first-time home buyer disadvantages?

The most significant disadvantage is that there is no income tax benefit on the repayments. It is not treated as a contribution. This is because the income tax benefit was received on the initial RRSP contribution.

Another disadvantage is that funds cannot be withdrawn from locked-in RRSP accounts—for example, an employer-based RSP.

For more information, please email or book a no-obligation consultation.

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