What Exactly Is the RRSP Home Buyers’ Plan?

The Home Buyers’ Plan (HBP) is a Canadian government initiative that allows eligible first-time home buyers to borrow from their own RRSP savings — without triggering income tax — to fund the purchase or construction of a home.

Essentially, it functions like an interest-free loan from your future self. You get to access your retirement savings now, when you really need it, and repay it gradually over time.

As of 2024, the withdrawal limit has increased to $60,000 per person, meaning couples can access up to $120,000 combined. These funds can be used for your down payment, closing costs, or even construction-related expenses, giving you more financial breathing room when entering the housing market.

The HBP is geared primarily toward first-time home buyers — but that definition is a little more flexible than you might think.

To qualify, you must:

• Be a Canadian resident at the time you withdraw from your RRSP and up until the home is purchased or built.
• Be considered a first-time buyer, which means you haven’t owned a home — or lived in a home owned by your spouse or partner — during the four calendar years prior to the withdrawal.
• Plan to live in the home as your principal residence within one year of purchase or completion.
• Have a signed agreement to buy or build a qualifying home.

There’s also an important exception: if you’re buying or building a home for a relative with a disability, you may qualify even if you’ve owned a home before. And if you’ve previously used the HBP but fully repaid your balance, you may be eligible to use it again.

The maximum you can withdraw under the HBP is $60,000 per individual.

For couples, that means a total of $120,000 can be accessed tax-free — a significant amount that could easily cover your down payment in many Canadian cities outside Toronto and Vancouver.

That said, there are a few conditions:

• The funds must have been in your RRSP for at least 90 days before withdrawal.
• You must complete the withdrawal within the same calendar year or by the following January.
• You need to use CRA Form T1036 to start the withdrawal process through your RRSP provider.

Once approved, your provider will issue a T4RSP slip that documents the amount withdrawn. You’ll need this for your tax return the following year — but remember, the withdrawal itself won’t be taxed, as long as you repay it properly.