Getting ready to purchase your first home? If so, you should know about the Home Buyers Plan (HBP), in Canada. This program, created by the Canadian Federal Government, is designed to help you free up your RRSP savings to use towards your home. With an allowable $25,000 withdrawal limit, you can remove money tax-free from your RRSP savings easily, and slowly pay it back on a 15-year repayment plan. It’s the best way to get access to the equity you need to get you into a home sooner. To find out if you are eligible for the program, read on.

Everything You Need to Know About the Home Buyers Plan


To be eligible to participate in the HBP you will need to meet all the following criteria:

  1. Be a Canadian resident at the time you make the withdrawal
  2. Be entitled to receive payments from the RRSP to withdraw the funds
  3. Qualify to purchase a home
  4. Have a written agreement to buy a qualifying home or to build a qualifying home
  5. Will use the house as your primary place of residence for a minimum of one year
  6. You or your spouse/common-law partner cannot have owned the home for more than 30 days before the withdrawal
  7. Have no balance from a previous HBP
  8. Have not owned a house as your principal residence within the last four years.

There may be additional criteria or restrictions in specific cases, so talking to a professional mortgage lender is a must.

Eligible RRSPs

Not every type of RRSP will be eligible for the Home Buyers Plan. Your issuer can help you better understand whether your plan is eligible, but locked-in RRSPs and group plans are generally not part of the program.

Eligible Homes

Most homes are eligible under the HBP. However, if you wish to purchase a cooperative (co-op) housing unit, then the rules will differ. Talking to a mortgage and financial professional will help you learn more.

Withdrawing Money

The withdrawal process is easy. All you need to do is complete the Canada Revenue Agency T1036 form online. Once you have filled out the applicable area (Area 1), you will need to bring the form to your RRSP issuer who will complete the remaining section (Area 2). The funds will then be released to you tax-free. Just remember to file the T4RSP form you will receive during tax time. If you do not report your withdrawal, you will face tax penalties.

Repayment Plan

Starting the second year after your withdrawal, you will be required to pay a portion of the withdrawal amount back into your RRSP every year. You must pay the minimum but can also pay more into the RRSP if you like, as long as it does not exceed your yearly contribution amount. If you are unable to make the payment, you will need to declare the amount on your tax forms as RRSP income and will need to pay the applicable taxes.

If you need assistance or have more questions, you can always reach out to us at The Financial Form; we are always available to assist you with your mortgage and home purchasing needs.

Have questions? Contact us!