In 2024, the federal government raised the Home Buyers' Plan (HBP) withdrawal limit from $35,000 to $60,000 — a 71% increase that gives first-time buyers a significant boost. If you've been diligently contributing to your RRSP, here's how to put that money to work on a down payment.
What is the Home Buyers' Plan?
The Home Buyers' Plan (HBP) is a federal program administered by the Canada Revenue Agency (CRA) that allows first-time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) — completely tax-free — to put toward the purchase or construction of a qualifying home.
Unlike a regular RRSP withdrawal, where you'd owe income tax on the full amount withdrawn, the HBP is structured as a loan to yourself. You have 15 years to repay the funds back into your RRSP, interest-free.
$60,000Maximum individual withdrawal
$120,000Combined limit for couples
15 yearsTo repay funds to your RRSP
0%Tax on withdrawal (if repaid)
The 2026 Update: What Changed?
The federal government raised the HBP limit from $35,000 to $60,000 per person as part of Budget 2024, with the change taking effect for withdrawals made on or after April 16, 2024. As of 2026, this higher limit is fully in effect.
Additionally, for Canadians who experienced a breakdown of marriage or common-law partnership after 2019, the government re-opened HBP eligibility even if they were not technically a "first-time" buyer by the traditional definition — an important exception to know about.
đź’ˇ
Couple advantage: If you're buying with a partner, and both of you qualify as first-time buyers, you can each withdraw up to $60,000 — giving your household up to $120,000 combined toward a down payment.
Do You Qualify? Eligibility Requirements
Before you make a withdrawal, confirm you meet all the following conditions:
1
You must be a first-time home buyer
This means you (and your spouse or common-law partner, if applicable) have not owned and occupied a home as a principal residence at any time during the preceding four calendar years.
2
You have a written agreement to buy or build
You must have a signed purchase agreement or construction contract. The home must be your principal residence within one year of buying or building it.
3
Your RRSP contributions are seasoned for 90 days
Funds must have been in your RRSP for at least 90 days before you withdraw them under the HBP. Last-minute contributions won't be eligible.
4
You are a Canadian resident
You must be a resident of Canada at the time of the withdrawal and when you buy or build the qualifying home.
5
The home qualifies
The property must be located in Canada and be a single-family home, semi-detached, condo, townhouse, mobile home, or share in a co-operative housing corporation.
How to Make Your HBP Withdrawal: Step by Step
The process is straightforward, but there are important timing and paperwork requirements to get right.
1
Download and complete Form T1036
This is the CRA's Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP form. You'll need one form per RRSP account you're withdrawing from. Download it at canada.ca.
2
Submit to your RRSP issuer
Bring the completed form to your bank, credit union, or investment platform (TD, RBC, Questrade, Wealthsimple, etc.). They will process the withdrawal and release the funds without withholding tax — provided it's under $60,000.
3
Report the withdrawal on your tax return
Your RRSP issuer will issue a T4RSP slip showing the HBP withdrawal. You must report it on Schedule 7 of your T1 return. No tax is owed on the amount, but the reporting is mandatory.
4
Use the funds toward your home purchase
The home must be acquired before October 1 of the year following the withdrawal year. Plan your timing carefully around your closing date.
Understanding the Repayment Rules
The HBP is structured as an interest-free loan from your own RRSP. You don't have to start repaying right away, but missing repayments has a real tax cost.
| Rule | Detail |
|---|
| Repayment start | Two years after the year of your first HBP withdrawal. For example, if you withdrew in 2025, repayments begin in 2027. |
| Repayment period | You have 15 years to repay the full amount, in annual installments. |
| Annual minimum | 1/15th of the total amount withdrawn each year. On a $60,000 withdrawal, that's $4,000/year. |
| If you miss a payment | The missed amount is added to your taxable income for that year — effectively treated as a regular RRSP withdrawal. |
| Repaying early | Allowed and encouraged. You can make larger contributions to reduce the outstanding balance faster. |
| How to repay | Contribute to your RRSP and designate the contribution as an HBP repayment using Schedule 7 at tax time. Do NOT claim it as an RRSP deduction — it's a repayment, not a new contribution. |
⚠️ Important: An RRSP contribution made within the 90-day period before your HBP withdrawal will not count as repayment — and it may not be deductible either. Time your contributions carefully.
HBP vs. FHSA: Which Should You Use?
Since 2023, Canadians have had access to the First Home Savings Account (FHSA) — a new registered account that blends RRSP and TFSA features. Both accounts can be used toward a first home, and many buyers are asking which is better.
| Feature | HBP (via RRSP) | FHSA |
|---|
| Contribution limit | Up to $60,000 (from existing RRSP) | $8,000/year, $40,000 lifetime |
| Tax deduction | Original RRSP contributions were deductible | Annual contributions are deductible |
| Repayment required? | Yes — over 15 years | No repayment required |
| Withdrawal tax | Tax-free (if repaid as per HBP rules) | Tax-free (no conditions) |
| Best for | Those with an existing RRSP balance | Those starting to save now |
🏆
Smart strategy: Use both. Max out your FHSA contributions first (up to $40,000 lifetime, no repayment) and then use the HBP to tap your existing RRSP for additional funds. This gives you access to up to $100,000 per person — plus your TFSA savings.
Maximizing Your Down Payment: A Practical Example
Let's say Maria and Javier are a couple buying a home in Toronto for $750,000. Here's how they could use available programs:
| Source | Maria | Javier |
|---|
| FHSA (max) | $40,000 | $40,000 |
| HBP RRSP withdrawal | $60,000 | $60,000 |
| TFSA savings | $25,000 | $25,000 |
| Combined down payment | $250,000 (33% of purchase price) |
A 33% down payment eliminates the need for CMHC mortgage insurance, saves thousands in insurance premiums, and results in a significantly smaller mortgage — lowering monthly payments for years to come.
Frequently Asked Questions
Can I use the HBP if I owned a home more than 4 years ago?
Yes. The "first-time buyer" test looks back only four calendar years. If you haven't owned a principal residence during that window, you qualify — even if you owned property before that.
What happens to my HBP balance if I die or become a non-resident?
If you leave Canada, the full outstanding HBP balance becomes taxable income in the year you emigrate. In the event of death, the outstanding balance is included in the deceased's final return, unless a surviving spouse or partner takes over the balance.
Can I withdraw from a spousal RRSP?
Yes, but with conditions. You can withdraw from a spousal RRSP for the HBP as long as you are the annuitant (account holder) — not just the contributor. Both the annuitant and the contributor must meet eligibility requirements.
Can I use the HBP for a home I'm building myself?
Yes, as long as you have a written construction agreement and the home will be your principal residence within one year of completion.
What if I don't end up buying a home after withdrawing?
If you withdraw funds but do not buy a qualifying home by October 1 of the year after the withdrawal, you must re-contribute the full amount back to your RRSP by that same date — otherwise the full amount becomes taxable income.
Is the new $60,000 limit retroactive for past participants?
No. The higher limit only applies to withdrawals made on or after April 16, 2024. If you participated in the HBP previously and have an outstanding balance, your repayment terms remain based on your original withdrawal.
Key Takeaways
The Home Buyers' Plan remains one of the most effective tools available to first-time buyers in Canada. Here's a quick summary of what to remember in 2026:
The withdrawal limit is now $60,000 per person ($120,000 per couple). There is no tax owed on the withdrawal, provided you repay it within 15 years. Funds must have been in your RRSP for at least 90 days before withdrawal. Use Form T1036 to initiate the withdrawal, and report it on Schedule 7 of your tax return. For maximum impact, combine the HBP with the FHSA — together they can put over $100,000 per person toward your first home.
Disclaimer: This article is for general informational purposes only and does not constitute financial, tax, or legal advice. Eligibility rules and program details may change. Consult a licensed financial advisor or tax professional before making RRSP withdrawals or home-buying decisions. Always verify current rules at
canada.ca.
Comments
Post a Comment