RRSP Home Buyers' Plan (HBP)

The Home Buyers’ Plan has been helping Canadians buy their first home since 1992. It allows you to borrow from your own RRSP to fund your down payment — tax-free at the time of withdrawal — as long as you repay it over time. Combined with the FHSA, the HBP gives first-time buyers access to a significant pool of tax-advantaged savings.

How It Works

The HBP lets you withdraw up to $60,000 per person from your RRSP to buy or build a qualifying home. The withdrawal is not taxed at the time you take it out, but unlike the FHSA, this is not free money — it is an interest-free loan from your own retirement savings that you must repay over the next 15 years.

Think of it as borrowing from your future self. You get to use your RRSP savings now for your down payment, but you are required to put that money back into your RRSP over the following years. If you do not repay on schedule, the missed amounts are added to your taxable income.

Key Rules for 2026

• Maximum withdrawal: $60,000 per person (this was increased from $35,000 in the 2024 federal budget — a significant boost)
• Repayment period: 15 years, starting 2 years after the year of your withdrawal (the 2024 budget also extended the grace period from 2 years to 5 years for withdrawals made between January 1, 2022, and December 31, 2025 — check current rules for your specific withdrawal date)
• Minimum annual repayment: 1/15th of the total amount withdrawn per year
• Consequences of missing a repayment: The amount you should have repaid gets added to your taxable income for that year

Repayment Example

You withdraw $60,000 in 2026:

• Repayment begins in 2028 (2 years after withdrawal year)
• Annual repayment: $60,000 / 15 = $4,000 per year
• You must contribute at least $4,000 to your RRSP each year and designate it as an HBP repayment on your tax return

Year	Minimum Repayment	Remaining Balance
2028	$4,000	$56,000
2029	$4,000	$52,000
2030	$4,000	$48,000
…	…	…
2042	$4,000	$0

What happens if you miss a repayment?

If you only repay $2,500 in a given year instead of the required $4,000, the $1,500 shortfall is added to your taxable income for that year. At a 30% marginal tax rate, that means an unexpected tax bill of $450. The shortfall does not reduce your future repayment obligations — you still owe $4,000 per year going forward, and the missed amount is simply treated as taxable income.

Caution

The HBP repayment is essentially a forced RRSP contribution for 15 years. Make sure you factor this $4,000/year obligation into your post-purchase budget. Many new homeowners are surprised by tight cash flow after buying — between the mortgage, property taxes, maintenance costs, and then the HBP repayment on top of it all, the numbers can add up quickly. Plan for this from day one, not as an afterthought.

What Counts as a Qualifying Home

A qualifying home under the HBP includes a wide range of property types:

• Houses — detached, semi-detached, rowhouses, townhouses
• Condominiums — including loft conversions and stacked townhomes
• Mobile homes — as long as they are on a permanent foundation
• Apartments in multi-unit buildings — duplexes, triplexes, fourplexes, and apartment buildings
• Shares in a co-operative housing corporation — this covers co-op housing
• Homes under construction — you can use HBP funds for a home you are building, but it must be completed by October 1 of the year after withdrawal

The home must be located in Canada and must be intended as your principal place of residence within one year of purchase or completion.

What Does NOT Qualify

• Recreational properties or cottages (unless it will be your principal residence)
• Homes outside Canada
• Investment properties that you do not intend to live in
• Timeshares

The 90-Day Rule

This is a critical timing rule that catches many buyers off guard: your RRSP contributions must be in the account for at least 90 days before you can withdraw them under the HBP.

Example: You contribute $30,000 to your RRSP on March 1 specifically for the HBP. You cannot withdraw those funds until at least May 30 (90 days later). If you find a home and need to close on April 15, those funds are not available yet.

This rule exists to prevent people from making a contribution, immediately claiming the tax deduction, and then withdrawing the money the next day. The CRA wants the funds to actually be “in” the RRSP for a meaningful period.

Tip

Plan your RRSP contributions well in advance of your expected purchase date. If you think you might buy in the spring, make your RRSP contributions no later than January. In fast-moving markets where you might need to close quickly, having your RRSP funds seasoned for 90+ days avoids a stressful timing problem. Many experienced buyers make their RRSP contributions at the start of the year to ensure the 90-day clock has run by the time they find a home.

The Tax Deduction Advantage

One of the valuable aspects of the HBP is that you get a tax deduction when you contribute to your RRSP, even if you plan to withdraw the funds later under the HBP. Here is what that looks like in practice:

Example: Amara contributes $12,000/year to her RRSP for 5 years

• Total contributed: $60,000
• Marginal tax rate: 33%
• Annual tax savings from deduction: $12,000 x 33% = $3,960
• Total tax savings over 5 years: $19,800

Amara effectively saves $60,000 for her down payment while getting $19,800 back in tax refunds. She can invest those refunds, put them toward closing costs, or add them to her emergency fund.

The catch, of course, is that she must repay the $60,000 to her RRSP over 15 years. But in the meantime, she has used the tax system to accelerate her down payment savings significantly.

HBP vs. FHSA: Key Differences

Feature	HBP (RRSP)	FHSA
Maximum amount	$60,000 per person	$40,000 per person
Tax deduction on contribution	Yes	Yes
Tax-free withdrawal	Yes (but must repay)	Yes (no repayment)
Repayment required	Yes, over 15 years	No
90-day holding rule	Yes	No
Investment growth tax treatment	Not taxed at withdrawal (if repaid)	Not taxed at withdrawal
If you don’t buy a home	Funds stay in RRSP for retirement	Transfer to RRSP or withdraw (taxed)

The FHSA is the superior tool because of the no-repayment feature. But the HBP gives you access to a much larger amount ($60,000 vs. $40,000) and lets you leverage existing RRSP savings. The optimal strategy is to use both accounts together for maximum impact.

Common Mistakes with the HBP

1. Forgetting the 90-day rule. Contribute early. Do not wait until you have an accepted offer to start putting money into your RRSP for the HBP.

2. Not designating repayments properly. When you make your annual HBP repayment, you must designate the RRSP contribution as an HBP repayment on your tax return (Schedule 7). If you forget, the CRA treats it as a regular RRSP contribution, and the missed HBP repayment gets added to your income.

3. Underestimating the repayment burden. $4,000/year for 15 years is $333/month — on top of all your other expenses as a new homeowner. Build this into your budget before you buy.

4. Withdrawing more than you need. Just because you can withdraw $60,000 does not mean you should. Only withdraw what you need for your down payment. The less you withdraw, the smaller your annual repayment obligation.

5. Not using the tax refund strategically. Your RRSP contribution generates a tax refund. Reinvest that refund into your FHSA, TFSA, or use it for closing costs — do not just spend it.

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Next: FHSA + HBP Combined Strategy