The federal government’s Home Buyers’ Plan (HBP) is a program for first-time home buyers in Canada. Through it, you can withdraw existing funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a home, either for yourself or for a family member with a disability.

What you need to know as a first-time home buyer in Canada

The Home Buyers’ Plan allows first time home buyers to use a portion of the money they’ve contributed toward their RRSP for a down payment on a home – the withdrawn money will need to be paid back over 15 years into an RRSP account. If you do not make your annual HBP minimum payment, the minimum amount is added to your taxable income for that year.

In 2024, the withdrawal limit was increased to $60,000 per individual from $35,000. This means that, where both spouses have an RRSP, a couple can withdraw up to $120,000 with this plan.

Normally, funds withdrawn from a Registered Retirement Savings Plan (RRSP) are included in your overall income and are subject to tax. However, withdrawals from an RRSP that meet all applicable HBP conditions are not considered income and are not taxed at the time of HBP withdrawal. This is because at least 1/15 of the total amount is due every year and any shortfall in this repayment is added towards RRSP income and becomes taxable.

Recent changes to the HBP also extend the amount of time first-time home buyers have to start repaying their RRSP from two, to five years, for those who make withdrawals between January 1, 2022 and December 31, 2025.

Who qualifies as a first-time home buyer in Canada? Check your eligibility

To be eligible to participate in the Home Buyers’ Plan, certain conditions must be met.

You must:

1. Be a resident of Canada at the time of application and up to the time the home is bought or built
2. Be a first-time home buyer under the Income Tax Act (Canada)
3. Have a written agreement to buy or build a home – either for yourself or for a person with a disability who is related to you
4. Use the home as your principal residence within 1 year of buying it
5. Reside in Canada when the funds are withdrawn
6. Have closed on a home purchase within the last 30 days

Something to note, even if you or your spouse have previously owned a home, you may still be considered a first-time home buyer. This is because you are considered a first-time home buyer if, in a four-year period, you did not occupy a home that you, your current spouse, or common-law partner owned.

For instance, if you bought a house and lived in it as your primary residence until 2020. Later, in 2021, you started renting it out. By 2025, you could qualify as a first-time homebuyer. This is because for the past four years (2021-2024), you did not reside in your home.

There are other factors to consider when it comes to eligibility for the Home Buyers’ Plan, including buying or building a home for a related person with a disability or what happens in the case of separation from your partner.

Find out more about eligibility by booking a consultation with one of our tax experts.

Participating in the Home Buyers’ Plan

If you meet the eligibility criteria and have entered into an agreement to purchase your first home, the next step is to fill out the Home Buyers’ Plan request form (Form T1036) ahead of your closing date. Additionally, you’ll want to review your RRSP investments to make sure that they are eligible for withdrawal.

It is important that you understand your bank’s requirements ahead of requesting the withdrawal (e.g., time needed to sell investments) to avoid delays. It is also important to know that Home Buyers’ Plan withdrawals must be completed in the same calendar year.

Once the money is withdrawn from your RRSP and deposited in your account, you can use it toward your down payment. Make sure to factor in time to get all of your down payment funds together ahead of your closing date.

The withdrawn funds need to remain in your RRSP for a minimum of 90 days before being withdrawn. You can make a withdrawal from the plan up to 30 days after your closing date. Beyond this timeframe, you are ineligible to withdraw funds under the Home Buyers’ Plan, though your bank might still permit it.

Repaying the withdrawn funds

The funds you withdraw must be paid back into your RRSP over a period of 15 years. At least 1/15 of the borrowed amount must be re-contributed every year.

To repay, make contributions to your RRSP, and at tax time, designate the relevant portion of your contributions as your Home Buyers’ Plan repayment.

You can repay more than the required minimum in any given year. Your Notice of Assessment can help you keep track of how much you owe. If you repay less than the minimum amount in a year, the difference is considered to be RRSP income and is taxed at your marginal tax rate.

All things considered

The Home Buyers’ Plan is a great interest-free option for first-time home buyers looking to use the funds toward a down payment. To ensure that this is the right plan for you, request a consultation from one of our tax consultant so you can make informed decisions and avoid tax penalties.