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Buying your first home? You can fund your downpayment through the Home Buyers’ Plan, which allows you to withdraw money tax-free from your RRSP. Keep reading for all the info.

According to the Canadian Real Estate Association, the average home price in Canada is expected to hit a record $620,400 in 2021, making it even more difficult for Canadians to come up with the required 5% down payment on a home of their own.

If this sounds like your financial situation, you have a few options. First, you could tough it out and save up the money, but that option could take several years. Another option is to have money gifted to you by your parents. A monetary gift is becoming an increasingly popular way to save enough money for a home down payment, but not everyone can raid the Bank of Mom and Dad.

Finally, you could borrow money from your RRSP to fortify your down payment savings. Now, we know what you’re thinking – isn’t RRSP money locked in, and don’t I have to pay tax on it if I withdraw it early?

The answer to those questions is yes – normally, withdrawing money early from your RRSP will result in tax penalties. However, two government programs let you withdraw money from your RRSP tax-free, and one of them is called the RRSP Home Buyer’s Plan.

What is the Home Buyers’ Plan?

The Home Buyers’ Plan is a government program that allows those buying their first home to withdraw up to $35,000 from their RRSP to use as a down payment on a home. If you’re purchasing a home with someone who is also a first-time homebuyer, you can both access the Home Buyer’s Plan for a combined total of $70,000. The Home Buyer’s Plan isn’t a grant. Instead, it’s a loan from you to you, and because it’s a loan, you will need to pay it back to yourself over 15 years.

Pros and Cons of RRSP Home Buyers’ Plan

Should you tap into the RRSP Home Buyers’ Plan? The answer isn’t easy, but weighing the pros and cons can help you decide:


  • Contributions to your RRSP are tax-sheltered, and you can take advantage of that tax-free growth.
  • There is a two-year grace period before you must pay back your loan over a 15-year term.
  • There is no maximum payback limit, so you can pay back the entire loan immediately if you’d prefer.
  • The Home Buyer’s Plan lets you take an interest-free loan from yourself.
  • You can lower your taxable income by claiming the RRSP contributions, which decreases your tax burden.


  • The money you withdraw is not debt in a traditional sense, but it’s still a loan from yourself and must be paid back within 15 years.
  • The loan is interest-free, but you are losing out on the potential for compound interest if that money would’ve otherwise been invested for your future.
  • The window of time that you can apply for the Home Buyers’ Plan is small, so you’ll have to be very organized.
  • If you time your withdrawal poorly, you could lose out on a lot of tax-sheltered investment growth.

Who Can Apply?

There are several restrictions to who can apply for the Home Buyers’ Plan:

  • You must be a first-time homebuyer, which means you can’t have owned a home within the previous four years. There are some exceptions for people with disabilities.
  • You can only withdraw money that has been in your RRSP for 90 days or more. Keep this restriction in mind if you plan to use a large windfall for your down payment.
  • You must have entered into a written agreement to buy a specific home. General mortgage pre-approval is not enough.
  • You must use the home as your principal residence; income properties are not eligible.
  • You can still apply for the Home Buyers’ Plan if you’ve already purchased a home, but it must have been in the past 30 days.
  • You must be a resident of Canada.

Withdrawing from Your RRSP Under the Home Buyer’s Plan

Withdrawing money under the Home Buyers’ Plan isn’t as simple as asking your bank to make the transfer. Going that route will most certainly result in you getting dinged at tax time. Instead, you’ll need to download the T1036 Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP form on the Canada Revenue Agency Website. The form is available as a print-out or as a fillable/savable option, and you’ll need one form per RRSP. So, if for example, you have money saved in an RRSP savings account and an RRSP investment account, and you plan to withdraw from both, you’ll need to fill out and submit two forms.

The form itself is only a single page and has two sections, Area 1 and Area 2. Area 1 is filled out by you, the homebuyer. Once that section is complete, give the form to your financial institution, and they will complete Area 2 and take care of moving your money to your desired account. This process may take several days, so it’s important to be prompt.

Once the money is in your account, you can use it for your home’s down payment. Then, either immediately or near tax time, your financial institution will issue you a T4RSP form, which confirms how much you withdrew from your RRSP under the Home Buyers’ Plan. When you file your taxes for the year you made your withdrawal, you’ll use this form to ensure no tax is withheld on your withdrawals.

Don’t forget that you have to make your withdrawal within 30 days of taking title of the home. After that, you are not eligible for the Home Buyers’ Plan.

Important Reminder: the 90 Days Rule

Keep in mind that any money that has been in your RRSP for 90 days or less is not eligible for the Home Buyers’ Plan. So, for example, if you’ve been contributing $1,000 per month to your RRSP, $3,000 of your total balance is not eligible for withdrawal under this program.

Second, keep in mind that some mutual funds have their own rules about how soon you can withdraw money after it’s been invested. For maximum flexibility, we recommend choosing a robo advisor like Wealthsimple, which has no such restrictions. Or if you prefer to go the DIY investment route, a discount brokerage like Questrade is a great choice.

Start investing with Questrade and get $50 in free trades!

Repaying the Home Buyers’ Plan

The Home Buyers’ Plan is a loan from yourself, and like all loans, you have to pay it back. Two years after you withdraw money from your RRSP under the Home Buyers’ Plan, you must start repaying your loan to yourself. You have 15 years to pay back the loan. For example, if you borrowed $35,000 under the Home Buyers’ Plan in 2020, then in 2022 you would have to start repaying your RRSP at a rate of at least $2,333 per year.

To repay the loan, make contributions to your RRSP, and at tax time, designate a portion of those contributions as your Home Buyers’ Plan repayment. You can also choose to pay your loan back at a faster rate by designating a bigger portion of your RRSP contributions as loan repayment.

Once you start repaying your Home Buyers’ Plan withdrawal, your repayment will be reflected on your Notice of Assessment, so it is easy to keep track of how much you have left to repay.

For those looking to (re)build their retirement savings, we recommend opening an investing account with a robo advisor. A robo advisor like Wealthsimple can develop a customized portfolio that suits your risk tolerance and financial goals.

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What Happens if You Don’t Repay the Home Buyers’ Plan?

When you withdraw money for your house down payment under the Home Buyers’ Plan, it’s with the understanding that you’ll pay the money back to your RRSP over the 15-year repayment term. During that time, you must repay at least 1/15 of the borrowed balance every year.

If you don’t make a repayment, that money is considered RRSP income and will be taxed accordingly. That amount will reduce what’s left owing on your Home Buyers’ Plan loan. We strongly recommend that you prioritize repaying your Home Buyers’ Plan loan since not repaying it will result in income tax owing at tax time.

Saving for a Home Down Payment in an RRSP

You could also choose to save money for your down payment in an RRSP savings account, which would allow you to claim an RRSP deduction and result in an income tax refund but wouldn’t impede your progress on saving for retirement.

If you plan to go this route, it’s better to save for your home down payment in an RRSP high-interest savings account instead of an investment account. This is because the time until you need the money (known as your investment horizon) is too short to invest the money in stocks. If the market dipped, you wouldn’t have time to recover your losses before it was time to withdraw the money to purchase your first home. A TFSA might also be a better choice, as you can withdraw the money tax-free at any time, for any purpose. To get the best bang for your buck, we recommend signing up with one of the best online banks in Canada because they tend to offer higher interest rates and low (or no) fees.

The Verdict: Should You Use the Home Buyers’ Plan?

The RRSP Home Buyers’ Plan is an excellent way to increase the size of your down payment. The downside of withdrawing money from your RRSP is that you’ll miss out on the compound interest that could be accumulating for retirement, especially if you never repay the loan or take the full 15 years to repay it.

It’s not a good idea to permanently raid your retirement fund in favour of homeownership. So, if you doubt your ability to make RRSP contributions and repay it at least at a rate of 1/15 per year, think twice about using the Home Buyers’ Plan.

Ultimately, we can’t emphasize enough the importance of prioritizing your retirement savings, whether it’s in a TFSA or RRSP. For RRSPs, our top choice for a robo advisor is Wealthsimple: their competitive pricing combined with personalized portfolio planning makes it a great option for those motivated to build up an investment portfolio. Now is a great time to sign up because Wealthsimple is offering Young and Thrifty readers an exclusive deal: get a $100 cash bonus open and fund your first Wealthsimple Invest account (min. $1,000 initial deposit).

All being said, if you’re confident in your ability to pay back your Home Buyers’ Plan withdrawal promptly, then it can be a good option to increase your home down payment.

Article comments

Al says:

Hi Sean, I was in the same situation as you. I did not know how to answer 8b) . But after looking into the form I noticed that after answering question 7, you are expected to jump to ‘Part B – Fill out this part to make a withdrawal from your RRSP under the HBP’.

Sean says:

Hi! Thank you for this article! Question about the actual form. I am a single person, never married, no dependents. Question 8b) reads: “Have you been living separate and apart from your spouse or common-law partner because of a breakdown of your marriage or common-law partnership for a period of at least 90 days at the time
of the withdrawal, and began living separate and apart in the year of the withdrawal or in the four preceding calendar years?” Can I just leave that question BLANK because neither “Yes” nor, “No”, logically work.

Gaurav says:

I’m a first time home buyer and have my house closing on 03/30/2021. An RRSP contribution of $10K completes 90 days on 03/21/2021
Would it be considered by the lender and generally how long it takes to withdraw/ amount gets credited to the account
Thank you!

Adam says:

If I want to come up with a down payment on a house, can I borrow from my RRSP (under the HBP) and a family member? Or would lenders consider this as too much borrowed funds to justify the mortgage?

Aimee says:

Hi Robb, I made a request for rrsp hbp withdrawal Dec 29, 2020. The issuer processed my withdrawal Dec 31, 2020. I didn’t expect them to process that fast. I indicated in the HBP CRA form that my required withdrawal date is for Jan 7, 2021 because my notary date is January 29, 2021… I Now, I am in dilemma because the issuer marked in their file that the trade date settlement was Dec 31st 2020. When I checked online history, the issuer removed all the RRSP money. However, the RRSP money is not yet in my bank account.

Now, my question is, do you know when they will consider my withdrawal date? I didn’t get the RRSP money yet because they didn’t deposit it in my bank account. But I don’t like that the transaction history in my file was Dec 31st 2020… I read in the RRSP HBP rule that I can withdras anytime as long as same calendar year.

Do they count the withdrawal on the day the issuer settled the closing Dec 31st 2020 or on the day I officially signed the bank that I withdraw the money (which I plan this January 7, 2021)?

Thank you in advance for any info. I am having panic attacks because the issuer rushed it very fast for 2020 despite me indicating in the form I need it. For January 7, 2021…

Whats the implication for my HBP taxation 2020?

Varun says:

Hi Robb, If my total contributions are $15000 but the current market value lets say, is $16000 ($1000 increase), then how much can I withdraw, assuming all the contributions are more than 89 days old. How does the current market value impact the withdrawals?

Robb Engen says:

Hi Varun, you can withdraw up to the market value (assuming all of your contributions are 90+ days old and you stay within the $35k limit).

Yadwinder Beri says:

me , my wife are not eligible for HBP as household income is more than 1,20,000.
Can I still buy it just on my name to take advantage of the HBP program. My income is less than 1,20,000 which makes me eligible.

If yes my spouse can stay in the same house of course but will she hold any rights to the property

Robb Engen says:

HI Yadwinder, there are no income requirements to qualify for the Home Buyers’ Plan. Check the federal government’s website for more information on eligibility requirements: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html

Rasika says:

Hi there! I am planning to purchase a pre construction townhome in the next few weeks, that won’t be ready to be occupied until 2022. Can I take out money from my RRSP under the first time home buyers plan now to use towards the initial payments that are due within the next few months?

Robb Engen says:

Hi Rasika, this would be problematic. The HBP rules state that you must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it.

Richy says:

Hi Robb,
I want to withdraw 35,000 from my investment account with Questrade. Money has been invested in multiple instruments ETFs/Stocks. Can I withdraw it all for HBP.

Robb Engen says:

Hi Richy, as long as you qualify for the Home Buyers’ Plan then you can withdraw up to $35,000 from your RRSP.

Kyla says:

Hello! I just have a question regarding the HBP I haven’t quite found an answer for.

Me and my fiance are planning on buying a house together next year, with both of our names on the mortgage and title. Our finances are currently separate and will remain as such in the foreseeable future.

Will I still be able to use the HBP given that:
– He owns the apartment he currently lives in.
– We have not lived together at all; I live at a condo my parents own.

Or will the fact that we’ll both be on the title not allow me to use HBP?

Robb Engen says:

Hi Kyla, you would be able to use the Home Buyers’ Plan but your fiance would not. If you were both eligible first time home buyers then you could each access up to $35,000 (or a total of $70,000) for a down payment.

Robb Engen says:

Hi Carrie, your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

Ant says:

I have a corporation, which I have used to max out my RRSP (via a bonus paid directly to the RRSP).

If I were to do this, could I pay back the $35,000 using pre-tax money from the corporation (eg $7000 bonus paid directly into the RRSP each year from the corporation).

Benefit being an expense at the corporation level, where I am the sole shareholder.

Or, would the money have to be repaid post-tax


Carrie says:

Hi just wanna ask if i can avail the hbp or can I get a loan from my rrsp even I just started my rrsp last February 2020?were planning to buy a house this coming month.

Andrea says:

Hi, Thank you for the interesting article. If, for example, i have 50’000 $ in my bank account, and withdraw 35’000 $ from my RRSP , could i only put 30’000 $ as downpayement (as opposed to the full 85’000$ that would be on my bank account)? Thank you

Robb Engen says:

Hi Andrea, if you’re planning to make the $35,000 withdrawal under the HBP then you would need to use the full amount for the down payment. Your other bank account balance would not factor into that equation.

Richard says:

Great article! I have a question about the repayment however.

Say I have $20K sitting with my employer GRSP and I am closing later this month (Sept 2020). My RRSP has also been maxed out each year including this year.

Can I withdraw that $20K from my employer GRSP and then immediately pay it back the same year (2020) via a contribution? I’m trying to do this as this is the only way to withdraw funds from the GRSP without tax implications from selling. They do not allow me to transfer these funds to Questrade as long as I’m actively employed and I’m trying to purchase different investments not available with my employer. Thoughts?

Robb Engen says:

Hi Richard, if you withdraw $20k from your RRSP then it will be considered taxable income for the year. In fact, any withdrawals from your RRSP are immediately subject to withholding tax. If you withdraw up to $5,000, the withholding tax rate is 10%; if you withdraw between $5,001 and $15,000, the withholding tax rate is 20%; and if you withdraw more than $15,000, the withholding tax rate rises to 30%.

So, if you withdraw $20,000 you’ll only receive $14,000 because your bank will withhold 30% of the balance for taxes.

A better way to think about your group RRSP is that as long as you’re getting an employer matching contribution it doesn’t really matter what type of investment you have to hold (yes, even high MER mutual funds). The match more than makes up for the high fees. Then, when you leave your employer, just transfer the funds over to a discount brokerage platform like Questrade and buy the investments you want.

Mike says:

If you withdraw 20,000 for down payment on your first home let’s say this is 8% down and then after the money is already in your account you find out that you are approved for financing with only 5% down can you use the remains 3% to pay down debt such as a credit line? Or will there be penalties for any money not used specifically for down payment.

Robb Engen says:

Hi Mike, you need to follow the HBP rules and use the money for a downpayment. I’d avoid doing anything that could make your HBP withdrawal ineligible.

Gene says:

Hi there, I only have $10,000 in my RRSP, can I take a loan of $25,000 from my RRSP as first time Home Buyer’s Plan? Do I need to contribute up to $25000 before I can avail the HBP?

Robb Engen says:

Hi Gene, no – you can only withdraw what you have available in your RRSP. You can withdraw less than the $35k maximum (i.e. the $10k you have). Keep in mind any contributions you make must be in your RRSP for at least 90 days to be available under the HBP rules.

Ping says:


If I had purchased (and sold) the home within the last 4 years but did not use the HBP, can I use it for the home that I am about to purchase?

Robb Engen says:

Hi Ping, I’m afraid not. The rules are specific and it needs to be for your first home.

Jay says:

Actually, It does not have to be your first home to be eligible.

from Gov of Canada webpage:
“You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.”


Scott says:

Regarding the 90 day period, is the amount you are eligible to withdraw based on the market value prior to the 90 day period or your book value, the amount you’ve contributed. Prior to 90 days I had 35700 in my fund. I had contributed 34000 up to that point. During covid, my fund dropped to 25000. It has since rebounded to 33000 and I’ve purchased 3000 worth during that time putting the total at 36000. I’m planning on withdrawing 35000 for a down payment. How much am I eligible to withdraw. 35000 or 33000, the rebound amount without the recent deposits.

Robb Engen says:

Hi Scott, you should be able to withdraw $35k. The issue is around the deductibility of your contributions within the 90 day window. According to the rules, your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

Tammy says:

I’m confused a little. So I use some of the money in my rrsp to add to my down payment. I pay back 1/15 a year for 15 years. Once I have paid back my own money do I get the money put back into my original rrsp that I took the money out originally? How and what happens?

Robb Engen says:

Hi Tammy, think of the HBP like making a loan to yourself from your RRSP. You pay it back over 15 years. Making those payments is easy, though. Just make regular RRSP contributions – this could be to the same existing RRSP account or another account held at another bank or investment firm. Then, when you file your taxes, declare all or a portion of your RRSP contributions as “HBP repayments”. You won’t get a tax deduction for this amount.

Ryan Archibald says:

Good day. Can the amount borrowed from the rrsp be used for anything else other than a down payment? For instance, can it be used to make a needed renovation? My timeline could be too short for the down payment, so thinking of how else it could be used after the 90 days.

Robb Engen says:

Hi Ryan, unfortunately not. Here is the criteria:

– you must be considered a first-time home buyer.
– 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 HBP 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.

Gary Monteiro says:

Or if you prefer to go the DIY investment route, a discount brokerage like Questrade is a great choice….this part I am not sure of…Questrade doesnt let you trade in stocks within your RRSP..you can only invest in their mutual funds

Carmen says:

One of the question in the form is “Does the person buying or building the qualifying home intend to occupy it as his
or her principal place of residence no later than one year after buying or building it?
If you are acquiring the home for a related person with a disability or helping a
related person with a disability acquire the home, you must intend that the related
person with a disability occupy the home as his or her principal place of residence”

I am currently planning to buy a presale that will be complete in two years (2021). Does that mean I am not qualify as it will not be my residence yet after a year of buying because it is not complete?

Lisa Jackson says:

Hi Carmen,

This is a question to ask your real estate lawyer. There’s more info about the Home Buyers’ Plan here: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

Good luck!

eric says:

Great article! Question if anyone knows, if i have carried forward RRSP contributions do I have to claim them all first in order to use the HBP? Or can I keep them as unused still to claim the tax in the future and still access the funds for an HBP? Thanks!

moneyhelp says:

If I have 2 RRSP accounts, one personal (Questrade) and one defined matching contribution plan through work (Manulife).

If I were to use some money from my personal RRSP account AND some money from my work RRSP, when I make my automatic defined contributions through my work, does my defined contributions and my employer matching contributions count towards the HBP payback amount to only the RRSP from my work or does it get split evenly to both my work and personal RRSP accounts?

I realize this may sound confusing so let me use an example. Let’s say I were to take $10K from my personal RRSP and $15K from my work RRSP for the HBP. I understand that after 1 year I am required to start paying back 1/15th each year. Since I am already enrolled in my employers defined contribution RRSP, does this amount that I contribute and my employer matches go back to words the $15K I withdrew from the work RRSP or does it get evenly split with my personal RRSP?

How does one financial institution account for the other?


ps. There isn’t an option to be notified if someone replies, how do I ensure I get notified or do I simply keep revisiting the same page?

knydz says:

I would like to put in some of my down payment funds to my RRSP. However, I don’t have much contribution room available, say I only have 10,000 room this year based on last year’s income. Is it possible to pre-purchase my next years’ contribution limit of another 10,000 (assuming my 2018 income will be the same as last year) so I can put in a total of 20,000 and withdraw later on under HBP? Will this be considered as an over-contribution?
Thanks in advance for your help.

Kyle says:

That’s getting into some pretty fine details of the HBP – I’d consult the CRA on that one K.

Efi says:

Hi Kyle, I have got a few questions as well. I was doing my research in buying a house and come up with a HBP. Don’t have much money to make up the down payment. But I want to use the advantage from HBP. Went to financial advisor (trainee) and told me that I can put as low as $200 just to open the RRSP wait 90days and you & your wife can withdraw 25 grand each. I just opened RRSP account with $200 on March 23,2018 as she say. 1) Could me and my wife withdraw 25 grand each just by depositing $200 in RRSP and wait 90 days? 2) My wife is having a baby girl in 10 days and soon will be on EI benefit, can she with draw the money while she is on EI? 3) Our savings are way to low now on this year if Gods grace we get the RRSP loan from HBP total of $50000, how is the acceptance rate for us to get a mortgage?

Sorry for the odd questions but I needed your advice. Thank you in advance.

Kyle says:

Hello Efi – You can only borrow what you put into your RRSP. So you would have to wait 90 days after you put in 50K in order to take out 50K. The bigger question you need to ask yourself is if you should be buying a home right now if the only downpayment you have is $200 Efi. I suggest downloading our free home purchase guide for more info.

Shawn says:

Got a few questions. Apologize if they are silly.
Currently the market value of our RRSP is 18k (Tangerine Mutual funds). We are considering wether to put in another 6-7 k now and hopefully buy a first time home 4-5 months from now.

1) For the HBP, is the money withdrawn based on the book value or the market value of the mutual fund in the RRSP?

2) So next year do we get a tax refund for the 6-7 k we contribute even though we use the HBP option?



Kyle says:

Not silly questions at all Shawn. 1) The money is the market value. 2) You would get the tax refund back when you filed your taxes next year (you missed the RRSP deduction deadline to “backdate” the contributions to 2017. Yes, you would get that tax return despite using the HBP.

Harry says:

Great Information here .Thank you so much. I have a question/Scenario too if somebody can please answer the following .
I want to buy a home with a partner/Friend and use that as an investment property by renting it out. I will be using my regular savings and not using any RRSP amount towards the down-payment of this investment property. I wont be residing in that home i.e. it will not be my primary residence at all.
Now I have some savings in my RRSP and want to use it to to buy a home for myself alone using the first time HBP plan. Will I be eligible for the First time home buyer plan as the second home I will buy for my self will be my Primary residence ?

Kyle says:

No, my understanding is that you could not Harry. If you did it in the reverse order then I think you’d be ok – but if you’ve purchased a property before my interpretation (Again, not a CRA pro) is that you’d be ineligible for the HBP at that point.

Harry says:

Great Information here. My question/Scenario if somebody can please answer the following .
I want to buy a home with a partner/Friend and use that as an investment property by renting it out. I will be using my regular savings and not using any RRSP amount towards the down-payment of this investment property. I wont be residing in that home i.e. it will not be my primary residence at all.
Now I have some savings in my RRSP and want to use it to to buy a home for myself alone using the first time HBP plan. Will I be eligible for the First time home buyer plan as the second home I will buy for my self will be my Primary residence ?

Kyle says:

To the best of my knowledge the answer is no Harry. If your name has been associated with any home purchase before you are out. You should be able to pull it off if you purchase the homes in reverse order though.

Jeremy says:

Good day, thank you for all of the information. I used the HBP back in June of 2017 to purchase a home. My “intent” was always to turn this into our forever home. More recently I had come across a job offer in another city (5 hour commute) with better overall conditions of pay (still within the same company). The new position would require me to rent an apartment – and eventually I would love to purchase another home and rent the top floor of the house purchased with the HBP. I work 10 of 4 off and travel to this property every second weekend.
The simple answer would be to contact CRA and advise of the situation. Do you happen to have any insight or experience to share in this scenario?

Kyle says:

I don’t Jeremy – sorry.

Ray says:

Great blog..thx.. if you want to rent to own can you use this plan?
Also, if u don’t need the tax reduction of RRSP contributions, a TFSA might be a great option to save for home purchase.. if you currently rent, probably your mortgage and your payback of HBP would be about the same as what u paid for rent before u buy..just thinking about it..

Kyle says:

You cannot do rent-to-own with this as far as I know Ray. And you are correct, if you can’t make use of the RRSP tax considerations, you’re better off saving that room and using your TFSA.

Dev says:

Part 2 of 2

3. If I have to declare all $25k in respect to question 2. above, would it be smarter for me to only contribute an amount I need to bring me into the lower tax bracket come tax time?

4. Note: I’m not totally sure if I correctly understand how I would be affected at tax time. I get that any RRSP contributions are deducted off your annual income for that year. But is it worth it to contribute more into an RRSP if you are already in the lowest tax bracket?

I am not a high earner and my annual salary is say $55k/yr for this example.

I sincerely apologize for all the questions and thank you to anyone who helps in advance.

Much appreciated,

Kyle says:

No need to apologize for questions Dev! That’s what this sort of site is about right? It’s hard to answer “if something is worth it”. Instead, all I can do is show the benefits. At 55K you’re probably better off saving the contribution room (check out our TFSA vs RRSP article), but if you really really want the tax return (see this updated tax table: http://agtax.ca/cra/2017-canada-tax-brackets) then maybe it’s “worth it” to you at this time. You would be using RRSP contribution room to get back a fairly minor amount of tax money however. The boost to your housing down payment savings will be fairly minor, but maybe that’s an ultra-high priority to you right now for some reason? Like I said, I wouldn’t advise anyone to rush into the house market right now.

Dev says:

Part 1 of 2

Hi all,

First time poster here, just found this website and I am enjoying reading through the articles and discussions. Thank you Kyle and Justin.

I have a question that relates to “CJ’s” post much earlier in terms of “last minute” so to speak RRSP contributions.

I am looking at buying my first home. Over the years I have always made sure to max out my TFSA contributions but unfortunately, due to some poor advice (and lack of research/understanding on my part as well) I have not contributed ANYTHING to my RRSPs.

At this time I have more than enough savings and other investments to put $25k into my RRSP (immediately) to take advantage of the HBP.

My timeline is obviously over 90 days until buying a home…

1. Would dumping $25k into an RRSP, right now, all at once be worth it?

2. If I wanted to withdraw all $25k under the HBP would I have to declare all $25k in RRSP contributions come tax time or am I able to carry forward any unused contributions that don’t benefit me based on this years income?

Kyle says:

You may want to contact a real estate lawyer that is super confident in their answer here Dev, but to the best of my knowledge, you would absolutely have to declare the contributions come tax time (and why wouldn’t you? Isn’t that the whole point of using your RRSP – to get access to the tax deferment provided by your tax return?). In order to answer #1, the real question is do you need the tax deferment of the RRSP to supercharge your downpayment savings? It sounds as if you have a solid chunk ready to go now. Perhaps if you’re not in a super high marginal tax rate it makes sense to save the contribution room? I wouldn’t be in a rush to get into this housing market!

Heather says:

Is it better to pay back the minimum requirement of the HBP, or should I make larger payments and pay it back quicker?

Kyle says:

It’s really just your own money that you’re paying back to yourself Heather – so only you as the lender can answer that!

hemjal says:

Hey Kyle

Thanks for this wonderful clarification on the RRSP. it is really helpful.

Needed to understand the 30 days window better. You mentioned that it should be 30 days from possession. does that refer to after closing of the house is done and I moved to the house? or is it considered 30 days from when I signed POA?

Here is scenario

I bought a house on 25th March with closing date of 26th may or may be couple of days later.

I have my RRSP done on Feb 28th, according to 90 day rule I will be only qualified on or after 28th May. And my closing / possession of house is on 26th may

Can I withdraw my RRSP amount or after 28th May?

Kyle says:

From everything I’ve read, May 28th would be the first you can use it Hemjal.

Nancy says:

Great article.
You indicated a repayment of the HBP the year following withdrawal…..you are actually given an additional year grace with repayment starting 2 calendar years later. ie. withdrawal in 2012, start to repay 2014.

Idrish says:

I bought the house using HBP. I came back in apartment after a month due to some family issues and rented the house. What are the consequences ?
Thank you


Kyle says:

Pretty sure that’s going to be considered an illegal use of the HBP and you’ll be hit with a penalty Idrish.

Sita says:

I hope you can help me:
I am renting in Vancouver and bought a condo in July 2016 in Surrey, BC with loan from RRSP under HBP. Since July 2016, I rented my condo for one year. Now I don’t wish to move to my own place and I want to rent it out. By doing this, I have come to know that I will not fulfil the condition of principal residence under HBP. My question is, can I cancel the HBP and deposit the amount borrowed. Is there any penalty. What will the last date to deposit the borrowed amount in order that it should not become my income. Thanks.

Kyle says:

You’ll definitely have to pay the money back Sita, but I’m not sure what the penalty will be or the deadlines. When you’re getting that specific with information it’s always best to contact the CRA directly.

Sophia says:

Hi Kyle,

I hope you can help me. I’m aware of how the home buyers program works but have a question with regards to timeline. My boyfriend and I purchased a new build condo this month (feb 2017) we have paid our first 5% deposit. We have 3 more deposits. The last deposit is due on closing proposed April 2018) the third deposit is due in 1 year (feb 2018) My boyfriend and I want to both contribute $15,000 to our RRSPs, but we cannot put them both towards the last deposit as $30,000 is more than the deposit. Can I take my $15,000 out in Feb 2018 for a payment of a deposit and my bf take his $15,000 out in April 2018 or whenever the condo closes? Obviously we can’t be sure it will close in April but I hope it will close that year. Just trying to figure out if their is a timeline to acquire the home from the date of withdrawal of the money or if a contract with said schedule is sufficient.

Kyle says:

I believe your proposed timeline would work Sophia, but I’ve never dealt first hand with this type of situation before. Best to ask the CRA directly (I wouldn’t just go with what my real estate agent says).

Kirk says:

Hey @Dustin, like you I am in an employer match RRSP program. My contribution is in pre-tax dollars and they adjust the income tax deduction to account for the RRSP contribution.

Without HBP, this would result in zero tax owing and zero refund at the end of the year. With HBP, it means I didn’t pay tax on $1333 (1/15 of $20K) of income, and thus have tax owing.

I make up the difference with a one time contribution in February. Not a huge deal, but something to remember.

Maria says:

Thanks Kyle.

If I’m understanding this right, if I add the $1667 as income during my mat leave, does this mean I don’t have to pay that amount back since it’s added as income? Or is it just deferred and I stretch out the loan for another year?

My work tops up my pay to a 100% for the first 6 months. In this case my income will definitely go down, but we are using savings to supplement the loss for that year. If I decide to go back to work part time, can I just add the $1667 as income for the duration I’m part time? (Thereby not ever actually “repaying” myself?)

Kyle says:

That is my understanding Maria – that the $1,667 would count as earned income for that year, just as if you had withdrawn it from your RRSP.

Maria says:

Hi Kyle,

I’ve been reading your blog and it has definitely been very informative! Thanks for putting everything in simple terms for those of us who never took a financial course in school. (But hey, I know what the difference is between a parallelogram vs a rhombus)

Here goes my scenario/question:

I took out $25k from my RRSP for my first home 3 years ago and have been paying it back. My question is, what are the pros and cons of paying the entire $25k back immediately rather than dragging out the “loan” for 15 years? I personally hate debt and hate knowing I have this $25k loan (even though it’s to myself, interest free).

I have no personal debt other than my mortgage (cars paid off, no credit card debt). My husband and I are also planning to have a baby this year, so not having that $1667 payment would be helpful when I have another financial commitment (aka our baby). I realize I can put this chunk of money towards my mortgage as well, but I’d like to be rid of my $25K “debt” first so I can gear future earnings towards paying down the mortgage/supplementing maternity leave.



Kyle says:

Hey Maria, the only real pro/cons when it comes to paying yourself back are basically the same pro/cons for investing in your RRSP at any point. If you were to put in the whole amount today it would have that much longer to grow as opposed to a little at a time over the next 12 years. To be honest, if you’re going to be going on mat leave soon, I’m not sure what your income would be, but you might even be ok with just not paying the loan amount back one or two years that you may have a low income – as it would just be added to your taxable income amount with no other penalty.

TJ says:

Thanks for the reply, Kyle. You are right, time to save – it will be interesting to see what the future holds for this Vancouver housing market. I have no choice but to wait on the sidelines so that is what I’ll do. Regards, TJ

TJ says:

Hello again,

Using the RRSP under HBP I will have my 5% down payment as required for the mortgage. However, after speaking with a real estate agent, I am informed that it strongly recommended that around 5% of the purchase price of the home be placed on “deposit” when an offer is submitted/accepted. My understanding is that the deposit would be lost if I walked away from the deal. When the deal is completed, the deposit amount is placed on the mortgage which turns into a down payment. This “deposit” amount… can it be from the HBP RRSP or is the deposit separate money from the HBP RRSP down payment?

My understanding is that I may need to come up with a deposit separate from my HBP down payment? If so, can the deposit come from an unsecured line of credit?



Kyle says:

As far as I’m aware TJ that deposit amount should be able to come from your RRSP. I know that initial 5% is not supposed to be borrowed – however a lot of brokers will look the other way on that. All of that being said, I think you’d be in better shape not having to make mortgage payments plus pay down an unsecured LOC you’ll be getting hit with a high-interest rate on. Are you really sure you want to purchase a house right now TJ? Sounds like you could use a little more time to build up a nest egg and wait for the market to cool off?

TJ says:


I have a question about the HBP. Scenario: I’ve contributed $20,000 to the RRSP and through investing have a market value of $25,000. I sold the investment in the RRSP and my RRSP cash value is the $25,000. Would I be able to use the $25,000 for HBP or is it only funds that I’ve contributed ($20,000)?

If I am able to use the $25,000, do I have to wait the 90 days of when I sold my investments in the RRSP or is the 90-day wait period on the contribution dates?



Kyle says:

You are definitely able to use all $25,000 TJ, and it’s 90 days from the contribution date from everything I’ve heard.

Robert says:

Hey thanks for posting this article. One thing though, there is one item you should revise as it is not accurate. This article says you must be a Canadian citizen to participate but actually you only need to be a Canadian resident to participate as per the information on the CRA’s website. There is even information there about what happens if you are no longer a resident while in the process of repaying the funds. Please update as this article scared the hell out of me because I suddenly though I could not use the funds in my RRSP because I am a permanent resident and not a citizen. Thanks.

Ahsan says:

Hi,I have a question regarding RRSP withdrawal that I did house buying deal on July 11th but my home possession is on Oct 28th.Can I withdraw money in October tax free because it is more than 30 days (from July 11th).Can you please help answer?

Kyle says:

Best to contact the CRA about this specific situation Ahsan.

Ben says:

Hi Kyle,

First off, really big fan of your site. I have learned so many valuable things from it already and visit it regularly since recently finding it.

Now, I’ve been advised by someone at TD that the money withdrawn from an RRSP for the HBP can only be used towards the down payment and must be paid back over 15 years but with no specific minimum amount per year. He also said that repayments are not tracked and therefore are also still tax-deductible. However, from reading this page and comments, it seems these things are largely inaccurate.

It seems that:
a) as long as qualifying conditions are met, you can use the money for other things such as renovations or furnishing;
b) minimum of 1/15 of amount withdrawn must be paid back per year (in order to not be counted as additional income); and
c) repayments to the HBP are tracked and are not tax-deductible.

Do I have this right? And how does a) work in terms of withdrawing the money, is it transferred to my chequing account first (for example) and then I would pay the down payment from my chequing account? And how does c) work, when you contribute to your RRSP in years following, do you identify what amount is to pay back the HBP and what amount is separate from this?

Thanks in advance.

Kyle says:

Thanks for the encouragement Ben! Unfortunately either your advisor isn’t very good at communicating or is quite wrong. There is definitely a minimum amount per year and repayments are not tax deductible – you’re essentially just paying yourself back on the loan you gave. You got the tax deduction when you initially made the contributions. As far as I’m aware, you can use HBP for renovations as long as you meet all of the other regulations. As far as the logistics of it, I’d talk to a real estate lawyer and/or an accountant on that one just to make sure it was done was done in the easiest way possible as far as record-keeping for the CRA.

Bruno says:

Thanks Kyle. I’ve been killing myself over this matter for the last little while but after reading your response and talking to others it seems that you are correct. I will be looking at paying back taxes and maybe some penalties. I have always conducted myself with the utmost integrity and I am not going to stop now. Lesson learned though. I am never putting my trust and confidence in someone else without doing extensive research beforehand. Thanks again!

Kyle says:

Overall, you probably learned this lesson quite a lot cheaper than many others have Bruno. Good luck going forward!

Bruno says:

Hi Everyone – I am in a terrible predicament. While I take full responsibility for my issue I will preface it by saying I was the victim of very poor financial advice and also some declining health.

With this said, it appears that I did not accurately report/repay my HPB over the last couple of years. It’s a long convoluted story. So rather than bore you with the details I want to get right the point and ask what I am fearing is the worst possible situation:

If I failed to repay my HPB what are the implications? Am I facing jail time? I failed to pay as a direct result of some misinformation I was provided. I owe about $15000 and do have the means to repay it now and easily so but how much penalty can I expect to pay back?

I am out of work and have been for several years. My wife is keeping things together and we are surviving on her income.

I could dip into a savings account and deplete it entirely to pay back my obligations to the CRA but am worried about facing jail time or facing heavy penalties which would crush us financially.

Your help would be very much appreciated. Please no personal attacks. God knows I’ve been kicking myself in the head for weeks for my naivety and total ignorance over this matter.


Kyle says:

Hello Bruno. You should definitely contact the CRA immediately. I am no expert, but I would say there is 0% chance of jail time. To be honest, I think the most probably outcome is that you will simply have to report the income for each of the years you’ve paid it. From everything I’ve read, whatever your HBP payment was supposed to be, it will be counted as annual income (since it no longer receives the HBP benefit). I would call the CRA and describe exactly what happened. My best guess is that you will owe some money in back taxes.

Rizwan says:

I have invested in RRSP. Can i only withdraw the contributed portion or the investment gain as well before 90 days.

Kyle says:

Before 90 days? It has to be at least 90 days from my understanding.

Bill says:

Hi Kyle,

I have a quick question I’m hoping an expert can clarify regarding HBP repayment.

If one leaves the country and becomes non-resident (as I plan to in March), you can either repay your balance via RRSP within 60 days, or declare the owing balance as income on line 129 of your final tax return.

If I understand correctly, it would be advantageous for me to do the latter. So when I file my final Canadian tax return next year, I’ll have two months of employment income, then claim the balance (~10k) as RRSP income. At that point CRA and I are square.

Is that interpretation correct?



Kyle says:

That is how I would interpret it Bill. I would still try to contact the CRA just to be safe though. Good luck!

Matt says:

What happens if I don’t pay it back; can they really track it?


Andrew says:

Hey guys,

Hoping you can help me.

I currently have $25k with Investors Group in an RRSP. I want to consolidate my banking and would like to move this to my main bank CIBC.
My girlfriend and I bought a new house build that is closing on August 21st (today is July 3). I plan to use my $25k RRSP as part of HBP.

Question #1 – Timing should be ok? I have a month and a half….
Question #2 – I know the RRSP contribution needs to be in the account 90 days prior to the withdrawal from HBP….does a transfer (in kind) within 90 days to another account/institution count??? ie. Should I just leave them with Investors Group and withdraw them there, then close account and open one at CIBC?

Thanks in advance. Love this site!

Kyle says:

Whoa… this is pretty detailed Andrew. I looked around and couldn’t find anything definitive on it for you. With a complicated situation like this one I would directly contact the CRA and speak to an expert on the HBP because of the added complexity. Also, you might want to google “Investors Group Review” and then see what we’ve written on this site before…

Alan says:

One thing should be clarified here, you have to be a Canadian Resident, not necessarily a Canadian Citizen to take advantage of the HBP. (Gooooo PR’s)

Kyle says:

Correct! Good point Alan.

Dan says:

Fantastic article. I was hoping someone could help answer a question…My wife and I are planning on using our combined RSP ($25,000 each) for the HBP, however we just put the money in the account April 1st, 2015. We found a place we love and it has a 90 day possession on it because there are renters in it (Alberta rule). Would we be able to use the $50,000 we put in April 1st, 2015 under the HBP, if the possession date is not for another 90 days?

Kyle says:

I don’t think so Dan. Maybe you could make a handshake deal with the seller to buy the house when your 90 days are up?

Heidi says:

Hi there,
I’m wondering where the money goes that we have repaid on our HBC. My husband and I have almost finished paying it back but we have never received any separate paperwork from the bank or the government regarding where the funds are. Also, are we allowed to make a withdraw from the funds we have repaid in order to pay down some unwanted debt?
Thanks in advance.

Kyle says:

Hi Heidi. The short answer is that you need to talk to your RRSP account manager at your banking institution. The money you’re repaying should be going right back into your RRSP and if you’re not choosing investments for it someone is either investing it on your behalf (probably not) or it’s just sitting there in cash. I’m not sure on the specifics, but I’m fairly certain that you could withdraw the funds when they are all paid back, but it’s not recommended. You’ll take a significant tax hit on them if you take them out early, so unless that debt is at a relatively high interest rate I’d considering leaving the RRSPs alone.

CJ says:

Hi I have an odd question relating to the Home Buyers Plan.

My wife and I are looking at buying our first house. We have approx. 25K each in TFSA’s and we each have an RRSP account with very little in it.

We talked to a broker at TD and he mentioned the Home Buyers Plan and how it could get us $10,000. He wasn’t very clear about where this money was coming from, which is why I decided to look it up – and that led me here.

Now my wife and I are debating each moving the money from our TFSA over to an RRSP (and waiting 90 days before purchasing a home) but I’m still not quite sure how this all works and I have a few questions.

Firstly – We arrived home from Australia early April, so our yearly income from 2014 will be significantly lower than that from 2015. Does it matter when we transfer our money into an RRSP (end of 2014 or March 2015)?

From what I understand we get to choose the year that we use our RRSP contributions. If we chose to use them for our 2015 tax return than we would get that money at the end of the tax season which would be April 2016? And also if we chose to use them for our 2014 tax return we would be getting significantly less (since our annual income was much lower). Do we even have a choice what year to use them if we are using the Home Buyers Plan?

I think I am slightly confused how the RRSP works in relation to the Home Buyers Plan. – When and how do we get that extra money?

It seems that the HBP is moreso meant for people who have a large chunck of their money already put away into RRSPs. It seems silly for us to move the majority of our money from a TFSA into an RRSP and have to wait 90 days – but if it gets us an “interest free loan” for 15 years then it does seem worth it to me as we will likely be needing more money now (put a larger down payment, save a ton of money on mortgage payments over 25 years, not to mention extra money to furnish our new home).

ARGH, sorry for the wall of text but this is all confusing me. Any insight would be great. Thanks!


Kyle says:

Hey CJ, that is an interesting quandary. Here is my first solution – request a better broker from TD (one that can explain what he is talking about). That’s what you’re paying him for right? I assume the the mythical 10K in “found money” that he is referring to is the fact that if you transfer that 25K you have into an RRSP it might generate a 10K tax return depending on what your marginal tax rate was in 2014. I’m not sure how that tax situation works to be honest as far as what year you would claim the contribution in, you’ll have to ask an accountant about that. Hypothetically what you could do is take your 25K put it in the RRSP, wait a few months, use that money as the HBP, then take the tax return and add it your downpayment/furnishing your new home.

Michelle E says:

Hi CJ – I doubt you’re going to see this, but just in case. I have the exact same question as you – is it worth it to transfer money from my TFSA to an RRSP to get that rebate and how does it work with claiming the deductions. Did you ever get an answer on that? Please let me know as I can’t find an answer to this question anywhere!

Tax fraud says:

“You don

Susan says:

Actually it isn’t tax fraud. In the Home Buyer’s Plan publication on the CRA webstie (http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html#P459_51058) under Chapter 3: Other Rules you should know.

I quote,
“Use of funds withdrawn for other purposes

As long as you buy or build a qualifying home, and you meet all the applicable conditions to participate in the HBP, you can use the funds you withdrew under the HBP for any purpose.”

On another unrelated matter, this article is pretty spot on except for one of the eligibility requirements. You don’t have to be a Canadian citizen, you have to be a Canadian resident (holding a Permanent Resident (PR) status)

Kyle says:

Thanks for the update Susan!

Ashley says:

Can you buy a house with the HBP and rent it out after you have lived in it? Or rent it out for a couple months and then move into to after those couple months ?

Kyle says:

I don’t see why not Ashley. Can’t say I’ve ever known someone that did though.

Scratch that Ashley. I did some research on it and you are not able to rent it. I would assume the powers that be would see it on your tax return right?

Milli says:

If you have an RSP, but you haven’t had it long enough (about 3 years) to have accumulated $25,000 can you still use it for the HBP?

Kyle says:

Yes, you definitely can Milli. $25K is just a maximum.

Cayla says:

I am curious about one thing. My boyfriend just bought his first house. We decided that in a year we would like to buy another house together. He did not use any RRSPs for his house. I however would like to use mine when the time comes and a friend of mine said I wont be able to if I choose to buy with him because he is no longer a first time home buyer, only I am. Does anybody know if I would still be able to use my RRSPs for a house we would buy together?


Kyle says:

Sorry Cayla, if you live in that house with your boyfriend it would disqualify you from using the HBP. If you live separately, do not buy this house with him, and then purchase the next house completely on your own, then I think you would be in the clear. That’s the only scenario that this would work though.

J says:

It’s 15 years to repay on the hbp, not 10. And I just moved into my first purchased home in June 2013, all I had to bring to the bank was proof of my rrsp balance. It was as good as cash in a savings account, as I had none of that. Do make a note however that your rrsp balance can only be pulled out under the hbp if it’s been in your rrsp account for minimum 90 days(might be 89 days). What you need to do though is contact your rrsp provider and varify that you are able to withdrawal under the hbp. Some rrsp’s are locked in and cannot be used for the hbp.

J says:

I should also point out that I went through a mainstream bank for my mortgage(that I was not a member of). I did not go to a high-risk “we’ll give a mortgage to anyone!” establishment.

matt says:

Here is my scenario and I would appreciate advice. We plan on buying a home in 2 years and are in the process of saving a deposit. My work matches 40% of my RRSP contributions, so I was thinking of boosting my RRSP contributions instead of just saving in a savings account for the next 2 years as it’s an instant 40% gain on the money. I know I can’t use the employer portion for the HBP but I don’t mind having extra RRSP money saved.

I’m worried that I am overlooking something obvious that makes this a bad plan… Also when we apply for a mortgage does the RRSP HBP money hold the same power as regular cash savings?

Kyle says:

Hi Matt,

I think it’s a sound plan overall. Getting that employer match is so key in the long run.

In terms of applying for the mortgage and RRSP money being like cash, that I’m not sure about. It would likely depend on the rest of your finances and the lender to some degree. On the one your down payment with the RRSP money will be all up front and act exactly as cash. On the other hand, you now have to pay that back over the next 10 years so that will affect your cash flow. Consequently, depending on everything else some lenders might be worried about that. I’d ask Rob McLister or another mortgage expert about that one.

jamie says:

quick scenario question.

i have agreed to buy a home. it was listed as an immediate possession and sits empty. i have a large dollar amount in my RRSP that will not hit 90 days until June 19th, 2013. it is now April 27th 2013. so i have to wait 60 days for possession.

or do i….?

if my bank was willing to provide me with a loan to act as the down payment and i move my possession date from June 28th to May 28th, couldn’t i repay the loan on June 19th with the money from my HBP-RRSP and therefore be in my new home a month earlier?

Teacher Man says:

To be honest Jamie this is a very technical question and the potential for a pretty negative tax hit exists if this is implemented properly. I would get ahold of someone at the CRA that specializes in the specifics of applying the HBP.

Veronica says:

The CRA only requires you to be a Canadian resident. For this purpose, the notion of “residency” in the Income Tax Act applies. You are a resident if you spend more than 183 days in a calendar year in Canada.

So, this has some consequences: you may not qualify even if you are a Canadian citizen (for instance, you live abroad).

On the other hand, permanent residents and individuals who are residents in Canada (such as international students, temporary visas) qualify for the plan.

Please refer to http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-11e.pdf at page 8.

Dustin says:

My employer pays into my rrsp monthly and I recently bought a home last year. Does my employer contribution count toward as repayment toward money I used out of my rrsp to purchase the home?

Vern says:

Has anyone used an RRSP loan to boost the RRSP accounts before using the HBP? My wife and I are close to having what we need for a downpayment in our RRSPs abd I’d like to use a RRSP loan to max out our accounts at $25,000 each. When we withdraw under the HBP we’ll pay off the RRSP loan and reap the benefit of a nice tax refund (which will help for first time homebuyers). What I need help with is the order in which to do the process. Should I move the loan money into the RRSP accounts before getting a mortgage preapproval or afterwards? I know the contribution most be in there for 90 days but what if we find a house before the 90 days? Any help is really appreciated

young says:

@Vern- The mortgage preapproval isn’t related to the HBP, you can tell them you are planning to use the HBP but until you actually buy the house/ transfer the money you won’t be needing the HBP (well, in my experience anyways).

According to the CRA:
“You have to buy or build the qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1 of the year after the year of the withdrawal”

So you can use the RRSP loan, wait 90 days, withdraw the money in 2012, and then buy the house. But this has to be done before Oct 1 next year (if you are buying before Oct 1 next year).

Hope that makes sense 🙂

Then you will repay the RRSP HBP in 2014 provided that you bought the home in 2012.

But you will have an loan to pay off for borrowing money for the RRSP.

Sam says:

Hi everyone, got a question… My company offers a matching RRSP program for up to 5%.. I have already saved up enough for a down deposit for my first home (with HBP) ~20%…Question is, is it worthwhile to continue renting for another year and contribute more for the matching rrsp or just buy in the close future?

young says:

@Sam- If you don’t mind me asking, how much do you have for the downpayment? You are allowed up to $25,000. And are you profitable in your RRSP? (given the markets these days, it’s a good question to ask). Secondly, the real estate market is really highly priced right now.. are you willing to take a chance that it won’t go down next year?

Hello fellow blogger! I’m new to blogs but I just wanted to say that I like your blog here on Canadian Rental Properties How To Invest. It kept me reading all the way to the end… And then I went and searched for some more posts after that. 🙂 Keep up the good work, I’m always looking to learn more about Investing Smart, in particular.

Cassie says:

I saved money in my RRSP quite aggressively while I was getting a great employer match (4% automatic, 6% matching), then used $15,000 as a downpayment on a home last year. I’ll probably do the 1/15 payments while I work on paying off some “stupid debt”. Once I’ve got that paid off I’ll probably take care of it over the course of a year or so.

Congratulations on the home purchase 🙂

young says:

@Cassie- Wow, that sounds amazing- your employer matching the RRSP. Yeah, I like the idea of stretching it over 15 years, it’s not very much if you think about it. And if you have lower income for one year (e.g. taking maternity leave/ mature student or something) then you can just not pay that year and it’ll just get added to income.

twentysomethingmoney says:

My entire plan for buying a home, has been based around the Home Buyer’s plan. I’ve been really focused on maxing out my RSP’s each year, to get the 25k, as well as building up a bit more, so I can still keep it compounding… So far its working out really well, just need to find a home to buy soon.

I’m finding now that I’ve met the 25k home buyer amount in my RSP, I’ve switched to focusing on maxing out my TSFA as more ‘disposable’ money for my down payment, so I can earn money (in the stock market), without getting dinged, rather than just having it sit in a savings account.

young says:

@twentysomethingmoney- Yeah, that’s how I felt too. I initially didn’t want to use the TFSA but found that it was so much more easy to take money out from the TFSA than the RRSP (don’t have to send in a home buyer’s plan or meet the conditional time frame that its approved in).

I used it and I am paying back 1/15 every year. 20K was the max 8 years ago. Don’t pay more – take the 15 years. This is a loan that you should drag as long as possible. Anything you decide to pay more doesn’t give anything on your tax return. I put nearly 10K in my RRSP a year now and I only put the minimum to maximize my tax return. Regardless of how much you assign to your HBP plan, it all goes into your RRSP account and should start working for you. So the minimum is enough to maximize your tax return.

I would say that the RRSP investment with a target to use for Home Buyer Plans are the least thought of … If you consider most people have mutual funds with possibly back end fees. Withdrawing them just after 5 years will cost them.

young says:

@The Passive Income Earner- Good to hear you used the HBP too (my fellow Vancouverite). Yeah, I’m going to drag this baby as long as possible (unless my income drops, then it will make more sense to pay off more of it then). Yeah, that’s why its a good idea not to take the whole kitten caboodle out, right? If you leave a few hundred (or whatever minimum it is) in the RRSP account, you won’t be dinged with as much fees, I would think.

DoNotWait says:

Nice post Young!! I like this “plan” as long as the buyer understands that paying back RRSP is necessary. Having a home is good, but planning RRSP is also a must. You have to make sure you’ll be able to pay it back AND even put more in it since you’ve lost a couple of years in savings… But it is interesting to save interests. And, it is your money after all!

young says:

@DoNotWait- Yup! Can’t let the RRSP savings get put to the back burner. So much stuff to save for- RRSP, RESP, TFSA, down payment, wedding, investment properties.. vacations.. the list is endless! 🙁

I’m excited to hear plans like this exist! I’m fresh out of college and I absolutely hate paying rent…I feel like I’m just throwing my money away. I really want to be investing in something that will have a long term value to me, like a home. I’ll need to research this further, but thank you for the introduction!

Taylor says:

I plan to use the HBP for my first home purchase but I’ll have to look into some specific details at the time I make the final decision.

Thanks for the post!

young says:

@Taylor- Yeah, I had thought I was going to take the entire thing out, but I ended not doing so because of so many nit picky details. it’s easier to take it out of ONE RRSP account (not 3 LOL).

I did not use the plan mainly because I didn’t have much in RRSP since I had just started my career.

On the other hand, I am happy I don’t have to worry after a significant sum that has to be repaid on a yearly basis. I hate debt!

young says:

@BeatingTheIndex- I hate debt too! That was one of the things that I didn’t like about the HBP- it’s like debt to myself! Ugh! But it’s not very much, so that’s good.

eemusings says:

NZ recently introduced a retirement savings scheme, which also has a provision for withdrawal for first home buying. You can also get up to $5000 for the govt to go towards your purchase.

I probably will do that, but I won’t withdraw everything. Also, there aren’t any tax benefits that I know of (contributions are taken out of pay post tax, boo!) Sadly, I doubt I’ll have a significant amount in there by the time I’m ready anyway.

young says:

@eemusings- Thanks for letting us know- it’s always interesting to know what goes on in other countries. So how much do you have to contribute to get the $5000 from the government towards your purchase? Hey you never know, eemusings- each little bit counts!

anon says:

Another plus is the psychological element. I used it and am very happy that I did. I saved a ton of money on interest to the bank. Since I only had a small mortgage I felt I could pay it off quickly and worked really hard to do that, plunking down extra money at each year end and paying off the bank in 4 years. Then I took another 3 years and paid back my RRSP (so total 7 years for the RRSP). If I’d been facing a bigger mortgage with the bank, perhaps I’d have been less motivated because such a large figure would have felt discouraging. The smaller chunk made it look easier.

young says:

@anon- Thanks for sharing! Yeah, the RRSP doesn’t seem like such a big chunk to me compared to the mortgage, but it’s still a chunk! Paying off your RRSP self-loan in 7 years is great!

Echo says:

I bought a house before I started contributing to my RRSP (houses were cheap then, like $120k) so I never took advantage of this program.

Did you consciously choose different investments in your RRSP knowing that your time horizon was shorter and you’d need the money? At what point did you decide you were going to use this program?

young says:

@Echo- So jealous- I wish houses were $120K. Those were the good ol’ days. You can’t even get anything for under $220K in Vancouver now- unless it’s 60 W. Cordova…

Hm I was very wishy washy about whether or not I was going to use this program. I didn’t want to lose the compounded interest that I had built up (which in the scheme of things wasn’t very much). No, the investments I chose in my RRSP weren’t exactly “principle protected”.. I had gotten emerging market mutual funds (BRIC) which ended up doing quite well. I also have it in a TD eseries which includes more fixed income investments.

I didn’t actually take all of my RRSP out. I’m in the process of taking my e-series RRSP out but I am finding out that it is more difficult than it looks (more e-series headache..! Not only is it hard to BUY the e-series. it’s hard to take money out when its an RRSP).

jonah says:

So funny to read of home prices of $200K in Vancouver. Have they really risen to in excess of $1M in 5 yrs??

Very thorough. I used this plan on my first home purchase and keep paying it back year after year.

young says:

@Sustainable PF- Are you doing the minimum 1/15 of the amount, or are you hacking away at it at a greater amount?