RRSP Home Buyers' Plan: How First-Time Buyers Can Access Up to $60,000 Tax-Free

Did you know you may be able to use your RRSP savings to help purchase your first home without paying tax on the withdrawal?

For many first-time homebuyers in Niagara, saving for a down payment is one of the biggest challenges.

Fortunately, the Canadian government's Home Buyers' Plan (HBP) may help make homeownership more achievable.

Here's what you need to know.

What Is the Home Buyers' Plan?

The Home Buyers' Plan allows eligible buyers to withdraw up to $60,000 from their Registered Retirement Savings Plans (RRSPs) to purchase or build a qualifying home.

If you're buying with a spouse or partner and you both qualify, you could potentially withdraw a combined $120,000 tax-free!

The money must eventually be repaid to your RRSP, but the program provides flexibility to help you purchase your home sooner.

Who Qualifies?

Generally, you must:

• Qualify as a first-time homebuyer under the program's rules.

• Have a written agreement to purchase or build a qualifying home.

• Meet Canadian residency requirements.

• Intend to occupy the property as your principal residence within one year.

• Have no outstanding HBP balance at the beginning of the withdrawal year if you've previously participated.

You may still qualify even if you've owned a home before, provided you meet the applicable four-year

first-time buyer rules. Certain exceptions also apply.

How Does Repayment Work?

You generally have 15 years to repay the amount withdrawn into your RRSP.

For qualifying first withdrawals made between 2022 and 2028, repayments begin in the fifth year after withdrawal.

For example, if you withdraw $60,000 in 2026:

• Your first required repayment year would be 2031.

• Your initial minimum annual repayment would be approximately $4,000.

• You can repay the money earlier if you wish.

If you don't make your required annual repayment, the unpaid amount is generally added to your taxable income for that year.

Can You Combine the HBP With Other Programs?

Absolutely!

Eligible first-time buyers can use the Home Buyers' Plan alongside the First Home Savings Account (FHSA).

The FHSA allows eligible individuals to contribute up to $8,000 annually, subject to available contribution room, with a lifetime limit of $40,000.

Unlike the HBP, qualifying FHSA withdrawals do not need to be repaid.

Combining these programs could make a substantial difference toward your down payment.

Important Things to Remember

Before withdrawing RRSP funds, consider the following:

• Withdrawals reduce your retirement savings until the money is replaced.

• RRSP contributions made within 89 days before withdrawal may be subject to special deduction rules.

• You must follow the program's eligibility and withdrawal requirements.

• Future repayments should fit comfortably within your household budget.

To request a withdrawal, you'll generally need to complete CRA Form T1036 and submit it to your RRSP issuer.

I recommend speaking with a mortgage professional or financial advisor before proceeding.

My Advice to First-Time Buyers

Don't assume homeownership is out of reach before exploring your options.

Programs like the RRSP Home Buyers' Plan and FHSA can help make that first purchase more achievable.

The key is understanding what's available and planning ahead.

Thinking About Buying Your First Home in Niagara?

Whether you're just beginning to save or you're ready to start looking, I'd be happy to help you navigate the buying process and connect you with trusted mortgage professionals.

Your first home may be closer than you think!

Laurie Zizian | REALTOR®
RE/MAX Niagara Realty Ltd.

Call or Text: 905-651-1716

Email: lzizian@remaxniagara.ca

Contact me today for a complimentary first-time homebuyer consultation.

Helping Niagara buyers make confident real estate decisions since 2003.