Home Buyers' Plan 2026: The $60,000 RRSP Withdrawal for Your First Home
Key Takeaways
- 1Understanding home buyers' plan 2026: the $60,000 rrsp withdrawal for your first home is crucial for financial success
- 2Professional guidance can save thousands in taxes and fees
- 3Early planning leads to better outcomes
- 4GTA residents have unique considerations for inheritance planning
- 5Taking action now prevents costly mistakes later
Quick Summary
This article covers 5 key points about key takeaways, providing essential insights for informed decision-making.
Priya and Raj, both 31 and renting in Mississauga, had been saving diligently for their first home. Between two RRSPs and two FHSAs, they had accumulated $280,000 in registered accounts. By strategically using the Home Buyers' Plan and their FHSAs, they accessed $200,000 tax-free for their down payment — $120,000 from RRSPs and $80,000 from FHSAs — turning what seemed like an impossible GTA housing market into a reality.
The $60,000 HBP: A Game-Changer for First-Time Buyers
The Home Buyers' Plan withdrawal limit was increased from $35,000 to $60,000 per person — a 71% increase. For couples, this means $120,000 in tax-free RRSP withdrawals for a home purchase. Combined with the FHSA, the total tax-free amount available for home buying now reaches $200,000 for a couple.
How the Home Buyers' Plan Works in 2026
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) without paying tax on the withdrawal. The withdrawn amount must be repaid to your RRSP over 15 years, making it essentially an interest-free loan from your own retirement savings.
2026 Home Buyers' Plan Key Rules:
- •Maximum withdrawal: $60,000 per person (increased from $35,000)
- •Couple maximum: $120,000 combined ($60,000 each from own RRSPs)
- •90-day rule: Funds must be in your RRSP for at least 90 days before withdrawal
- •Repayment period: 15 years, starting the second year after withdrawal
- •Annual repayment: 1/15th of total withdrawn (e.g., $4,000/year on $60,000)
- •Eligibility: First-time buyer (no home ownership in prior 4 calendar years)
- •Occupancy requirement: Must live in the home as principal residence within 1 year
The 90-Day RRSP Seasoning Rule
One of the most important — and most frequently misunderstood — rules of the HBP is the 90-day requirement. Money must be sitting in your RRSP for at least 90 days before you withdraw it under the HBP. If you contribute and withdraw within 90 days, you lose the RRSP tax deduction for that contribution.
Planning Tip: The 90-Day Timeline
If your home closes on July 15, 2026, you need to have your RRSP contribution deposited by April 16, 2026 at the latest (90 days before). If you are planning to contribute the maximum and then withdraw, work backward from your expected closing date. Many buyers set up automatic monthly RRSP contributions starting well in advance to avoid any timing issues.
Step-by-Step HBP Withdrawal Process
- 1.Confirm eligibility: Verify you (and your spouse, if applicable) meet the first-time buyer definition — no home ownership in the past 4 calendar years
- 2.Ensure 90-day rule is met: Check that your RRSP contributions have been deposited for at least 90 days
- 3.Complete Form T1036: Fill out the “Home Buyers' Plan Request to Withdraw Funds from an RRSP” form
- 4.Submit to your financial institution: Your bank or brokerage processes the withdrawal with no withholding tax
- 5.Buy or build your home: You must have a written agreement to buy or build before October 1 of the year following withdrawal
- 6.Occupy as principal residence: Move into the home within one year of purchase
The 15-Year Repayment Schedule
The HBP is not a free withdrawal — it is an interest-free loan from your RRSP that must be repaid over 15 years. Your repayments start in the second calendar year after the year you made the withdrawal. Each year, you must repay at least 1/15th of the total amount withdrawn.
Repayment Example: $60,000 HBP Withdrawal in 2026
- • 2026: Withdraw $60,000 — no repayment required
- • 2027: Grace year — no repayment required
- • 2028-2042: Repay $4,000 per year to your RRSP (15 payments)
- • Missed repayment: $4,000 added to taxable income for that year
- • Extra repayment: You can repay more than $4,000 to reduce future obligations
How to Designate Repayments:
Making an RRSP contribution does NOT automatically count as an HBP repayment. You must designate the repayment on Schedule 7 of your tax return. If you forget to designate, the RRSP contribution counts as a regular contribution (giving you a tax deduction) but the HBP repayment amount is added to your income.
Warning: The Hidden Cost of Not Repaying
If you never repay your $60,000 HBP withdrawal, you will pay income tax on $4,000 per year for 15 years. At a 30% marginal tax rate, that is $1,200 per year or $18,000 total in extra taxes. At a 40% rate, it is $24,000. The HBP only works as a tax-free withdrawal if you actually repay it. Treat the repayment as a non-negotiable expense in your budget.
Planning to buy your first home in the GTA?
Get Free Expert AdviceCombining the HBP with the FHSA: The Ultimate First-Home Strategy
The First Home Savings Account (FHSA) and the Home Buyers' Plan can be used together, creating the most powerful tax-free home buying strategy available to Canadians. For a complete comparison of these two programs, see our Home Buyers' Plan companion guide and our FHSA vs RRSP Home Buyers' Plan comparison.
Combined Tax-Free Home Purchase Amounts (2026):
Single Buyer:
- • HBP withdrawal: up to $60,000
- • FHSA withdrawal: up to $40,000
- • Total tax-free: up to $100,000
Couple Buying Together:
- • HBP withdrawal: up to $120,000 ($60,000 each)
- • FHSA withdrawal: up to $80,000 ($40,000 each)
- • Total tax-free: up to $200,000
Key Difference: FHSA Does Not Require Repayment
Unlike the HBP, FHSA withdrawals for a qualifying home purchase never need to be repaid. The FHSA also provides an upfront tax deduction when you contribute (like an RRSP) AND tax-free growth AND tax-free withdrawal for a home — a triple tax benefit. If you can maximize both the FHSA and the HBP, prioritize FHSA contributions first since they do not create a future repayment obligation.
Strategic Planning for GTA Home Buyers
With average home prices in the Greater Toronto Area exceeding $1 million in many municipalities, the combined HBP and FHSA strategy is particularly valuable. Here is how to maximize your tax-free funds:
3-Year Home Buying Savings Plan (Couple):
- Year 1:Open FHSAs ($8,000 each = $16,000). Maximize RRSP contributions for HBP ($60,000 each target). Begin 90-day clock for any new RRSP deposits.
- Year 2:Continue FHSA contributions ($8,000 each = $16,000, running total $32,000). Continue RRSP building.
- Year 3:Final FHSA contributions ($8,000 each = $16,000, total $48,000). Withdraw $120,000 HBP + up to $48,000 FHSA = $168,000+ tax-free for down payment.
Common HBP Mistakes to Avoid
- •Forgetting the 90-day rule: Contributing to your RRSP and withdrawing within 90 days means you lose the tax deduction on that contribution. Plan your timing carefully.
- •Not designating repayments: Simply contributing to your RRSP does not count as an HBP repayment. You must designate it on Schedule 7 of your tax return.
- •Spousal RRSP confusion: You cannot withdraw from your spouse's RRSP — each person withdraws from their own. If you contributed to a spousal RRSP, the account holder (your spouse) is the one who withdraws.
- •Missing the purchase deadline: You must have a written agreement to buy or build a qualifying home by October 1 of the year after withdrawal. If you withdraw in 2026 and do not buy by October 1, 2027, the full amount is added to your income.
- •Underestimating the repayment burden: A $60,000 withdrawal requires $4,000/year in RRSP repayments for 15 years, on top of your mortgage, property tax, and living expenses. Budget for this before withdrawing.
HBP for Special Situations
Disability Exception
The HBP has a special provision for persons with disabilities. You do not need to be a first-time buyer if you are withdrawing to buy a home that is more accessible or better suited to the needs of a person with a disability (yourself or a related person). The home must be needed to allow the person with the disability to live in a more accessible dwelling.
Separation and Divorce
If you previously used the HBP and still have a balance owing, a marriage breakdown can create complications. If you and your former spouse both move out of the qualifying home, you may need to accelerate your HBP repayment. However, if only one spouse moves out, the person who continues to live in the home does not need to accelerate repayment. The person who moves out may qualify to use the HBP again after four years of not owning a home.
Should You Use the HBP? Pros and Cons
Advantages:
- ✓Tax-free withdrawal (no withholding tax)
- ✓Interest-free loan from your own savings
- ✓Reduces mortgage amount and interest costs
- ✓May avoid CMHC mortgage insurance
- ✓Flexible repayment (can repay more to finish early)
Disadvantages:
- •Lost RRSP investment growth during repayment years
- •15-year repayment obligation adds to monthly budget
- •Missed repayments taxed as income
- •90-day rule requires advance planning
- •Reduces your retirement savings in the short term
Planning Your First Home Purchase in the GTA?
Our financial planners help first-time buyers in Toronto, Mississauga, Brampton, and across the GTA maximize their HBP and FHSA strategies. We will build a personalized savings plan, coordinate your RRSP timing, and ensure you do not miss any tax-saving opportunities.
Schedule Free Consultation →Related Articles
Ready to Take Control of Your Financial Future?
Get personalized inheritance planning advice from Toronto's trusted financial advisors.
Schedule Your Free Consultation