If you already have money in an RRSP, the Home Buyers' Plan (HBP) lets you use it toward your first home without paying tax on the withdrawal. It is one of the main reasons first-time buyers in London and St. Thomas can get to a down payment faster than their savings account alone would allow.
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548 490 4577Who qualifies?
You must be a first-time home buyer: in the previous four calendar years, and in the current year up to 31 days before the withdrawal, you did not live in a home that you or your spouse or common-law partner owned. You need a written agreement to buy or build a qualifying home, you must intend to live in it within a year of buying it, and you must be a Canadian resident. There are exceptions for a marriage or common-law breakdown and for buying a home for a relative with a disability.
What is the 90-day rule?
Money that has been in your RRSP for less than 90 days can still be withdrawn under the plan, but you lose the tax deduction on that contribution. If you plan to top up your RRSP so you can use the HBP, do it at least 90 days before the withdrawal, which in practice means well before your closing date.
How does repayment work?
| Example: one buyer | |
|---|---|
| Withdrawal in 2026 | $60,000 |
| Repayment period | 15 years |
| Minimum yearly repayment | $4,000 |
| First repayment year | 2028 (the second year after the withdrawal) |
| If you skip a year | That year's $4,000 is added to your taxable income |
Your Notice of Assessment shows each year's required repayment. You repay by making an RRSP contribution and designating it as an HBP repayment on your return; it doesn't give you a new deduction. If you withdrew between 2022 and 2025, your repayments start later, in the fifth year after the withdrawal.
Should I use the FHSA or the HBP first?
For most buyers, fill the FHSA first, because an FHSA withdrawal is never repaid. Use the HBP on top of it when you need more for the down payment or want to keep a cash cushion. You can use both for the same home. The trade-off with the HBP is the repayment: $4,000 a year on a $60,000 withdrawal is about $333 a month for 15 years, and it belongs in your monthly budget beside the mortgage.
Timing on a London or St. Thomas purchase
HBP withdrawals are made through your financial institution with CRA form T1036, and you have until October 1 of the year after the withdrawal to buy or build. Ask your bank how long the withdrawal takes and whether the investments in the RRSP need to be sold first. Cashing a GIC early or selling a fund on a bad day can cost more than the timing is worth, so line this up when you start house hunting, not after your offer is accepted.
Frequently asked questions
Can I use the Home Buyers' Plan more than once?
Yes, if you qualify as a first-time home buyer again under the four-year rule and you repaid your previous HBP balance in full by January 1 of the year of the new withdrawal.
Do lenders accept HBP money as a down payment?
Generally yes. Lenders treat it as your own funds. They will usually ask for RRSP statements showing the balance, and then the deposit into your bank account before closing.
What if my purchase falls through after I withdraw?
If you don't buy by October 1 of the following year, the withdrawal generally becomes taxable unless you cancel your participation and return the money as the CRA allows. Talk to your bank and an accountant right away if a deal collapses.
