Glossary
Home Buyers' Plan (HBP)
A federal program that lets a first-time home buyer withdraw money from an RRSP to put toward a down payment on a qualifying home in Canada..
The Home Buyers' Plan (HBP) is a federal program that lets a first-time home buyer withdraw money from an RRSP to put toward a down payment on a qualifying home in Canada, then repay the amount to the RRSP over time. It is administered by the Canada Revenue Agency (CRA).
How the withdrawal works
Because an ordinary RRSP withdrawal is taxable, the HBP creates an exception: money taken out under the plan is not included in your income for the year and no withholding tax is applied at the source. The trade-off is that the amount becomes a debt to your own RRSP. Repayment is spread over a set period, with minimum annual instalments beginning in the second year after the withdrawal. Any portion you fail to repay on schedule is added to your taxable income for that year.
Funds generally must have been held in the RRSP for a minimum period before the withdrawal, so a last-minute top-up may not count. You and your spouse or common-law partner may each withdraw under the HBP if you both qualify, which can materially increase the down payment available.
Who qualifies
You must be a Canadian resident and count as a first-time home buyer for HBP purposes. In practice, that means you have not owned a home you occupied as a principal residence, and neither has your spouse or common-law partner, during the lookback period defined in the rules. The property must be in Canada and must be intended as your principal place of residence within one year, and you must have a written agreement to buy or build.
Withdrawal limits are set by the federal government and have changed over time, so confirm the current maximum on the CRA website before relying on any figure.
HBP or FHSA?
| Feature | Home Buyers' Plan | FHSA |
|---|---|---|
| Source of funds | Money already in an RRSP | Dedicated registered account |
| Repayment | Repaid to the RRSP over a set period | Not required to be repaid |
| Tax treatment | Not taxed if repaid on schedule | Contributions deductible; qualifying withdrawals tax-free |
Many buyers combine the First Home Savings Account (FHSA) with the HBP. Well before closing, it is worth confirming how much of your down payment each source can supply.
Why it matters to borrowers
RRSP savings are often the largest pool of money a first-time buyer has, so the HBP can move a purchase from out of reach to feasible. A larger down payment lowers the mortgage balance, may reduce the loan-to-value ratio, and can affect whether mortgage default insurance is required.
It is not free money. The withdrawal is a loan from your own retirement savings, and the repayment schedule is mandatory. Review the full picture in the first-time home buyer programs guide and estimate your numbers with the down payment calculator.
Frequently asked questions
Do I pay tax on an RRSP withdrawal under the Home Buyers' Plan?
No tax is withheld at the source and the withdrawal is not included in your income, provided you repay it on the required schedule. If you miss a scheduled repayment, the missed amount is added to your income for that year and taxed at your marginal rate. Repayments are made with after-tax dollars and do not create a new RRSP deduction.
Can my spouse and I both use the Home Buyers' Plan?
Yes. If each of you qualifies as a first-time home buyer under the rules, each may withdraw from their own RRSP, which can roughly double the amount available for a down payment. Each person is responsible for repaying their own withdrawal on schedule. Confirm the current maximum with the CRA before you plan around it.
What happens if I do not repay the Home Buyers' Plan on time?
The CRA adds the unpaid amount to your income for that year, so it becomes taxable at your marginal rate. You can generally repay more than the annual minimum to reduce future obligations. Designating repayments correctly on your tax return matters, so verify the current requirements with the CRA.
Sources
Related terms
- First Home Savings Account (FHSA) — A First Home Savings Account (FHSA) is a registered federal account that lets a first-time buyer save for a home with deductible contributions and tax-free qualifying withdrawals.
- Down Payment — A down payment is the portion of a home's purchase price a buyer pays upfront, reducing the amount borrowed through a mortgage.
- First-Time Home Buyer Incentive — A federal shared-equity program that reduced the mortgage a first-time buyer needed by contributing part of the down payment in exchange for an equity share in the home.
- Closing Costs — Closing costs are the one-time fees, taxes, and charges paid on top of a home's purchase price, separate from the down payment.
- Land Transfer Tax — A provincial tax on transferring property title, paid by the buyer at closing and calculated as a percentage of the purchase price.