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The Home Buyers’ Plan (HBP)

Hoping to buy your first home but need a financial boost? Many first-time buyers feel similarly. Thankfully, the Canadian government wants to help you achieve your goal of homeownership and offers a variety of solutions.

Launched in 1992, the popular Home Buyers’ Plan, commonly known as the HBP, is a program specifically tailored for first-time home buyers.

The Home Buyers’ Plan (HBP)


What is the Homeownership Plan?

By definition, the HBP or Home Buyer’s Plan is a measure that allows you to borrow from your own Registered Retirement Savings Plan (RRSP). These withdrawals are non-taxable!

Before 2009, the RRSP deduction limit for a single person was $25,000. Fortunately, the federal government acknowledged the rising cost of living (as we all have) and raised the limit. Now, the limit is $35,000 for a single borrower and up to a combined $70,000 if you are withdrawing from a joint RRSP with your significant other. The amount withdrawn from your RRSPs is to be repaid over 15 years, to alleviate the pressure of its reimbursement.

Please note the HBP is intended for single individuals or couples who are buying their first home. Though under specific circumstances, it is possible to utilize the HBP more than once in your lifetime. When hoping to withdraw a second time, you must have completed the repayment of your previous HBP withdrawal – which makes sense! Other conditions apply.

Who is eligible for the HBP?

Not everyone is eligible for the HBP. Your eligibility depends on the characteristics of your purchase and your client-profile. It is imperative to note that the property purchased with the help of the HBP must become your principal residence. Therefore, properties that you will occupy part-time (e.g.: cottage or country house) are ineligible for this government program. Additionally, after you withdraw the funds, the property is eligible if it was built or purchased no later than October 1st of the following year.

If you wish to withdraw money from your RRSPs, one of the following situations must apply:

  • You are buying a property for the first time in your life;
  • You did not own a principal residence during the 4 years preceding the HBP;
  • If you have already utilized the HBP
  • it must be reimbursed in full and on time;
  • You have signed a promise to purchase for an eligible home and it will become your principal residence within a maximum of 12 months.

N. B.: Notably, it is possible to withdraw from your RRSPs in the case of a divorce or separation without waiting a four-year period, during which you’d typically be free of owning a principal residence. The deadline for this operation is 90 days.

Additionally, exceptional circumstances allow you to borrow from your RRSPs. This is the case when :

  • You have a disability (e.g. you use a wheelchair) and need to buy a home adapted to your needs;
  • A loved one of yours is disabled and wish to acquire a residence for them.
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The conditions

Do you meet the eligibility criteria? Fantastic! You may now begin withdrawing from your RRSPs with peace of mind. This withdrawal process must respect the following criteria :

Of course, you must in fact have the savings in your registered retirement savings plan. The government requires that the funds you wish to allocate to this operate, be in your account for at least 90 days prior to their withdrawal.

Ready to withdraw those funds? Make yourself a cup of tea and fill out the Canada Revenue Agency form T1036. You’ll then provide this form to your RRSP issuer, who must complete a portion of it as well.

The withdrawal of funds must be processed no later than 30 days following the purchase of your new property. If you exceed this deadline, you are no longer eligible for the HBP program. Withdrawals must be made within the same calendar year. Lastly, the law prohibits you from withdrawing funds from an RRSP belonging to someone else, (but that would never have crossed your mind, would it?)

You are free to withdraw money from two RRSP accounts, assuming they are both yours, (unless it is a group or closed-end RRSP), not exceeding the $35,000 limit. Once again, if you are a couple, the total withdrawal limit from your respective RRSPs must not exceed $70,000.

You must commit to reimbursing your RRSP account entirely within 15 years.


Reimbursing your RRSP account

The first repayment is made in the second year following the withdrawal. For example, if you make an HBP withdrawal in 2023, repayments begin in 2025. Typically, you must pay at least 1/15 of the amount withdrawn each year to remain on schedule.

The Canada Revenue Agency will send you a statement of your RRSP account each year. The report will summarize :

  • The sum you reimbursed throughout the year;
  • The remaining sum you must reimburse;
  • Amounts to be paid
  • if any
  • from your DB (Specified Pension Plan)
  • PRPP (Group Registered Pension Plan)
  • or RRSPs for the following year’s repayments.

If for any reason you partially or completely miss an annual refund, you must report the unpaid portion on your tax return. This non-payment or incomplete refund will be reflected on the CRA’s annual statement of account.

If you have the desire and the means, you can increase your annual payments to exceed the minimum required repayment. It’s up to you!

The benefits

What are the benefits of homeownership?

There are many advantages to using the HBP to buy your first home. First of many, the Home Buyers’ Plan makes it easier to buy your first home if you have already contributed enough to your RRSPs.

The amount withdrawn from your RRSPs can be used to optimize your mortgage file by providing a larger down payment. Ultimately, a couple can provide an additional $70,000 of down payment or $35,000 per single buyer.

Naturally, the larger your down payment, the smaller your mortgage loan – and in turn, the less your monthly payment will be. Additionally, by combining your savings with the HBP as a down payment, you may avoid otherwise mandatory CMHC mortgage insurance should your down payment exceed 20% of the home’s purchase price. In short, it’s worth exploring this option!


At the end

The Home Buyers’ Plan is useful to optimize your mortgage file and negotiate a competitive offer overall. Don’t have an RRSP yet? You can benefit from the HBP through the RRSP loan.

In any case, allow our team to accompany and advise you. Our team has the right solution for you!


Within the Distinction team, we have tailored solutions for you: