RRSP Home Buyers’ Plan (HBP): How It Works & Eligibility in Canada

Thinking of buying your first home in Canada? You’ve probably heard about the RRSP Home Buyers’ Plan (HBP) — a government-backed way to dip into your retirement savings tax-free to make that down payment dream a little more real. But how exactly does it work? Who qualifies? And what’s the catch when it comes to paying it back?

Let’s break it all down in plain English so you can decide if the HBP is the right move for your homebuying journey.

What Is the RRSP Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan (HBP) lets first-time homebuyers in Canada withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) — or $120,000 for a couple — without paying income tax on it. The idea is simple: you “borrow” from your own retirement to buy a home, then gradually pay yourself back over 15 years.

The money can be used for a down payment, closing costs, or construction expenses if you’re building a qualifying home.

Here’s the kicker: you don’t need to start repaying for two years (or five, in some cases — more on that below).

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Who Is Eligible for the HBP?

To qualify for the HBP, you must:

• Be a Canadian resident
• Be a first-time homebuyer, meaning you haven’t owned (or lived in a home owned by your spouse/common-law partner) in the past four years
• Be buying or building a principal residence in Canada
• Have a signed agreement to purchase or build
• Intend to live in the home within one year of buying/building

Exception: You can also use the HBP if you’re buying for a relative with a disability, even if you’re not a first-time buyer.

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How Much Can You Withdraw With the HBP?

As of 2024, individuals can withdraw up to $60,000 from their RRSP under the HBP. Couples can each withdraw up to $60,000, for a combined $120,000.

To be eligible, the money must have been in your RRSP for at least 90 days before withdrawal.

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How Does the Home Buyers’ Plan Work?

Here’s how to use the HBP in real life:

1. Fill out CRA Form T1036 (“Home Buyers’ Plan Request to Withdraw Funds”)
2. Submit it to your RRSP provider – they’ll process your withdrawal and send you a T4RSP slip for tax reporting
3. Buy or build your home before October 1 of the following year
4. Start repaying after 2 years (or after 5 years, if you qualify for the COVID-era extension)

You can make multiple withdrawals — just make sure they all happen in the same calendar year and the January following it.

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Repaying Your RRSP Under the HBP

The repayment schedule is pretty simple:

• You have 15 years to repay your RRSP
• Repayment starts 2 years after you withdraw
• You must repay at least 1/15 of the amount per year
• Missed payments get added to your income and taxed that year

Let’s say you withdraw $60,000. That’s a minimum of $4,000 repayment per year. You can always repay more to reduce future obligations.

Temporary relief alert: If you withdrew under the HBP between Jan 1, 2022, and Dec 31, 2025, your repayment grace period is 5 years instead of 2.

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Pros and Cons of the RRSP Home Buyers’ Plan

Here’s the real talk:

Pros:

• You’re borrowing from yourself, interest-free
• You can boost your down payment
• Repayments are flexible as long as you meet the minimums

Cons:

• You must already have RRSP savings
• Your retirement growth slows down while that money is out
• Missed repayments become taxable income
• Not everyone qualifies — first-time buyer status is required

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How Does the HBP Compare With Other Savings Programs?

Let’s compare it with the TFSA and the new FHSA (First Home Savings Account).

Program	Contribution Limit	Withdrawal Tax	Repayment?	Notes
HBP	Based on RRSP limits	Tax-free (if repaid)	Yes – 15 years	Must repay or it’s taxed
TFSA	$7,000/year (2024)	None	No	Flexible, no home link
FHSA	$8,000/year, $40,000 lifetime	None	No (if used for first home)	First-time buyers only

You can actually combine the HBP with the FHSA for more buying power.

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Can You Cancel the HBP?

Yes, but only in special cases:

• If you don’t buy or build the home by the deadline
• If you become a non-resident
• If there’s a relationship breakdown and the property wasn’t transferred/sold

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Additional Support for First-Time Buyers

Besides the HBP, you may also qualify for:

• GST/HST New Housing Rebate (on pre-construction homes)
• Home Buyers’ Tax Credit (up to $1,500)
• First Home Savings Account (FHSA) – a great supplement
• Provincial & municipal programs – rebates vary across Canada

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Frequently Asked Questions

How much can I withdraw under the HBP?
Up to $60,000 per person. Couples = $120,000 total.

Can I use the HBP and FHSA together?
Yes — they’re separate programs and can be combined.

When do I start repayments?
2 years after withdrawal (or 5 years with temporary relief).

What happens if I don’t repay on time?
Any unpaid amount for that year becomes taxable income.

Can I reuse the HBP?
Yes, but only if your first HBP is fully repaid and you meet the other conditions again.

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Final Thoughts

The HBP can be a powerful tool if you’re sitting on RRSP savings and need help making your first home more affordable. But it’s not a freebie — you’re borrowing from your future, and you’ll need to plan for repayment.

Still, with careful budgeting, pairing the HBP with other programs like the FHSA, and the right mortgage strategy, it can get you into your first home sooner than you thought.

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