A Comprehensive Guide to Canada’s RRSP Home Buyer’s Plan

Here is a comprehensive guide on Canada’s RRSP home buyer’s plan; it will help you with all you need to know about HBP.

Another Canadian government program aimed at making it simpler for first-time house buyers to realize their goals of property ownership is the Home Buyer’s Plan. Read on to learn more about the Canada RRSP Home Buyer’s Plan.

Key Takeaway

  • Learn about home buyer’s plan
  • Who is eligible for a home buyer plan
  • How does a home buyer plan work
  • How to apply for a home buyers plan.
home buyer's plan

What does a home buyer plan mean?

The Home Buyers’ Plan, or HBP, enables Canadian homebuyers to raise their down payment by taking up to $35,000 ($70,000 for couples) out of their registered retirement savings plan, or RRSP. Participants in the HBP may also use it to purchase or construct a residence for a family member who has a disability.

If you use the HBP and repay the money you borrowed on time, you can access your RRSP tax-free.

Who is qualify for the Home Buyer’s Plan?

To be eligible for the Home Buyer’s Plan, you must meet the following requirements:

  •  Be a resident of the Canadian
  • Have an RRSP with enough funds to withdraw from.
  • You must be a first-time home buyer. According to the Government of Canada’s website, you are considered a first-time home buyer if you “did not occupy a house that you owned or that your current spouse or common-law partner owned” in the four years preceding your participation in the HBP.
  •  Be a repeat buyer who is buying or developing a house for a disabled relative.
  •  Aim to utilize the house as your primary residence within a year of developing or purchasing it.
  •  Have a documented agreement to buy or build a home for oneself or a disabled relative.
  • Make plans to buy an eligible type of residence in Canada. Most types of residences, including condos and apartments, are eligible. Co-op housing is not typically eligible; however, there may be some exceptions.

Despite the fact that the Home Buyers’ Plan is meant for first-time home buyers, participants can apply to utilize it again if they have repaid the money they drew from their RRSP and meet all of the other HBP eligibility requirements.

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How does Home Buyers’ Plan work?

You can withdraw up to 35,000 dollars from your RRSP without paying any withholding taxes if you are eligible for the Home Buyers’ Plan. Couples may withdraw $35,000 each, for a total of $70,000.

Your RRSP money must remain in the account for at least 90 days before it can be withdrawn under the HBP. You have until the first of October of the year after your withdrawal to buy or develop a home.

You must also withdraw from your RRSP within 30 days of receiving the title to your new property. All HBP withdrawals must be completed within one calendar year.

You can learn more from the video below:

How to apply for a Home Buyers’ Plan

To begin the application process for the Home Buyers’ Plan, download and complete form T1036, ‘Home Buyers’ Plan (HBP) Request to Withdraw money from an RRSP.’ You must complete Area 1. Area 2 is completed by the financial organization that holds your RRSP.

Your RRSP provider will then deposit the money into the account of your choice. In addition, the banking institution will send you a T4RSP slip. This slip will indicate the amount you took from your RRSP and will act as documentation for your tax return the following year.

A Comprehensive Guide to Canada’s RRSP Home Buyer’s Plan

Participants in the Home Buyers’ Plan are given 15 years to repay the money they withdrew from their RRSP. The minimum yearly repayment amounts are calculated by dividing the amount you withdrew by the loan’s 15-year amortization period.

For instance, your minimum annual repayments would be $2,333 ($35,000 / 15) if you drew the entire $35,000 permissible amount. Two years after your initial withdrawal, the first installment is due.

You pay back the HBP by adding the specified sum to your RRSP by the designated time each year. A Home Buyers’ Plan account statement is enclosed with participants’ notices of assessment by the Canada Revenue Agency.

The HBP statement shows how much you’ve already paid back and how much you still owe.

You are permitted to pay off more than you owe, which will lower your total yearly payments. The repayment of the HBP does not count against your annual RRSP deduction limits.

If you are unable to repay the requisite amount in any of the years following ones RRSP withdrawal, the difference is considered RRSP income for that year and is taxed by the CRA.

Can I cancel a Home Buyers’ Plan?

In general, you cannot cancel your HBP participation, although there are several exceptions, such as:

  • You or your disabled relative did not complete the purchase or construction of a house by October 1 of the year after the withdrawal date from your RRSP.
  • Prior to buying the house, you stopped residing in Canada.

If you decide to terminate the Home Buyer’s Plan, you must fill out form RC471 Home Buyers’ Plan (HBP) Cancellation and submit it to the CRA along with proof of a refund to your RRSP and a letter outlining your reasoning.

Pros and Cons of the Home Buyers’ Plan


  • If you repay your funds on time, the HBP operates like an interest-free loan.
  • The HBP can raise your down payment by $35,000, making it easier to acquire a mortgage and buy your first home.


  • If you don’t already have thousands of dollars in your RRSP, the HBP won’t benefit you much.
  • If you do not make yearly payments, the Canada Revenue Agency will tax your RRSP withdrawals.
  • Reducing your RRSP balance means foregoing tax-free investment/savings growth.


The House Buyers’ Plan is an excellent approach to saving for your first home. To minimize any unwanted financial difficulties, it is critical that you understand all of the conditions before enrolling in the program. In fact, I recommend checking with a professional financial advisor to see whether this plan is suited for you and how to maximize its benefits.


Is the Home Buyers Plan worth it?

The RRSP Home Buyer’s Plan is a great method to boost your down payment. The disadvantage of withdrawing funds from your RRSP is that you will lose out on the compound interest that may be accruing for retirement, especially if you never repay the loan or take the full 15 years to repay it.

Do you have to pay back the home buyer’s plan?

You will still be required to make payments in the subsequent years until the balance is zero. The yearly Home Buyers’ Plan (HBP) Statement of Account, which the CRA will provide with your notice of assessment or reassessment, includes any additional payments you made.

How do you get money out of a Home Buyers Plan?

Fill out the Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw money from an RRSP, to withdraw money from your RRSPs under the HBP. This form must have to be filled out for each withdrawal. After completing Area 1 of Form T1036, return it to your RRSP issuer.

What happens if you don’t pay back HBP?

This means that depending on your tax rate that year, you will wind up paying a tax penalty on the HBP payment amount you did not repay. And depending on the amount owed annually and your tax bracket that year, it may mean paying hundreds of dollars more in taxes that year.

How much can I borrow from my RRSP to buy a house?

Your annual RRSP withdrawal limit is $35,000 per calendar year. Additionally, spouses or partners may take up to $70,000 in total ($35,000 each calendar year). Your RRSP must hold the borrowed money for at least (90) days before you can withdraw it. Take your money out no later than 30 days following the closing.

About Author

home buyer's plan
Precious Ejimofor
My name is Precious Ejiofor, I am a professional self motivated, dependable writer and editor, with over 4 year of experience in writing for variety of business and platforms. I am able and capable to write on any kind of topic.
Specifically, I focus on producing persuasive and compelling contents that is thoughtful, prominent, and engaging.

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