How does the Canada Home Buyers’ Plan work?

The Home Buyers’ Plan is designed to allow Canadians to purchase their first home with funds from a Registered Retirement Savings Account (RRSP). Buyers can also qualify if they have not owned a home in the past four years. The basic rules are simple: borrow up to $35,000 per RRSP account and repay it over 15 years to avoid tax on the withdrawal. You can use the funds to purchase a qualifying home for yourself or for a related person with a disability. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them.

Certain conditions must be met in order to be eligible to participate in the Home Buyers’ Plan, including the following:

  • You must be considered a first-time home buyer. You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouseor common-law partner owned.
  • You must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability
  • You must be a resident of Canada when you withdraw funds from your RRSPs under the Home Buyers’ Plan and up to the time a qualifying home is bought or built
  • You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence
  • In all cases, if you have previously participated in the Home Buyers’ Plan, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other Home Buyers’ Plan eligibility conditions.

Budget 2019 extended access to the Home Buyers’ Plan in order to help Canadians maintain homeownership after the breakdown of a marriage or common-law partnership. In this situation, certain further eligibility conditions must be met. These new measures take effect for withdrawals made after 2019.

Questions about the Home Buyers’ Plan? Contact one of our sales representatives for more information how to use your RRSP for a down payment on a new or resale home.