Quick Answer: What is the Home Buyers' Plan?
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to $60,000 from their RRSP tax-free to buy or build a qualifying home. You must repay the amount to your RRSP over 15 years, starting the second year after withdrawal. Both spouses can each use $60,000 ($120,000 total for a couple).
Buying your first home in Canada? The RRSP Home Buyers' Plan just got significantly better. In the 2024 federal budget, the government increased the HBP withdrawal limit from $35,000 to $60,000 - a 71% increase designed to help first-time buyers in expensive housing markets like Toronto, Vancouver, and the Greater Toronto Area.
But before you withdraw, you need to understand the repayment requirements, tax consequences of missing repayments, and whether the newer FHSA (First Home Savings Account) might be a better choice.
How the Home Buyers' Plan Works
Eligibility Requirements
- •You must be a first-time home buyer: Haven't owned a home you lived in as your principal residence in the current year or previous 4 calendar years
- •Must have a written agreement to buy or build a qualifying home in Canada
- •Must intend to occupy the home as your principal residence within 1 year
- •The funds must have been in your RRSP for at least 90 days before withdrawal
- •Must be a Canadian resident at time of withdrawal and up to the time you buy/build the home
Making the Withdrawal
- •Maximum withdrawal: $60,000 per person ($120,000 for couples)
- •Can make multiple withdrawals in the same year (or until 30 days after buying)
- •Complete Form T1036 (HBP Request) and give to your RRSP issuer
- •No withholding tax is deducted if you meet all conditions
- •CRA will send you a statement showing your HBP balance and repayment schedule
Repayment Requirements
- •Repayment period: 15 years of equal installments
- •First repayment: Due the second year after withdrawal (you get a 1-year grace period)
- •Annual repayment = Total withdrawal ÷ 15 years
- •Repayments are made by contributing to your RRSP and designating the contribution as an HBP repayment
- •Important: HBP repayments do NOT give you a tax deduction (you already got the deduction when you originally contributed)
Consequences of Missing Repayments
- •Any missed repayment becomes taxable income for that year
- •You cannot "catch up" in future years - the missed amount is permanently lost as RRSP room
- •Example: If you miss a $4,000 repayment and your marginal rate is 30%, you owe $1,200 in unexpected tax
- •Set up automatic monthly contributions to avoid accidentally missing repayments
HBP Repayment Schedule Examples
Here's what your annual and monthly repayments look like for different HBP withdrawal amounts:
| Withdrawal Amount | Annual Repayment | Monthly Equivalent | Total Repayment Period |
|---|---|---|---|
| $20,000 | $1,333 | $111 | 15 years |
| $35,000 | $2,333 | $194 | 15 years |
| $60,000 (New Max) | $4,000 | $333 | 15 years |
Planning Tip: Think of your HBP withdrawal as a 0% interest loan from yourself. You must pay it back, but you're paying yourself (into your RRSP), not a bank. Set up automatic monthly contributions equal to the monthly equivalent to stay on track.
Calculate Your HBP Repayment Schedule
Use our interactive calculator to see your exact repayment schedule, compare HBP vs FHSA, and understand the tax consequences of missing repayments.
Home Buyers' Plan (HBP) Calculator
Calculate your HBP repayment schedule and compare with the FHSA alternative.
Maximum: $60,000
Your HBP Repayment Schedule
Tax If You Miss a Repayment
Important: Any missed repayment is added to your taxable income for that year. Missing repayments can result in significant unexpected tax bills.
HBP vs FHSA: Which is Better?
| Feature | HBP (RRSP) | FHSA |
|---|---|---|
| Maximum Amount | $60,000 | $40,000 |
| Must Repay? | YES - 15 years | NO |
| Tax Deduction? | YES | YES |
| Tax on Withdrawal? | NO | NO |
| Can Combine Both? | YES - Up to $100,000 total! | |
Best Strategy: Use FHSA first (no repayment required), then HBP if you need more. For couples buying together, you can each use $60,000 HBP + $40,000 FHSA = $200,000 combined!
Down Payment Analysis
15-Year Repayment Schedule
| Year | Annual Repayment | Balance Remaining |
|---|---|---|
| Year 1 (starts 2nd year) | $2,333 | $32,667 |
| Year 2 | $2,333 | $30,333 |
| Year 3 | $2,333 | $28,000 |
| Year 4 | $2,333 | $25,667 |
| Year 5 | $2,333 | $23,333 |
| Year 6 | $2,333 | $21,000 |
| Year 7 | $2,333 | $18,667 |
| Year 8 | $2,333 | $16,333 |
| Year 9 | $2,333 | $14,000 |
| Year 10 | $2,333 | $11,667 |
| Year 11 | $2,333 | $9,333 |
| Year 12 | $2,333 | $7,000 |
| Year 13 | $2,333 | $4,667 |
| Year 14 | $2,333 | $2,333 |
| Year 15 | $2,333 | $0 |
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Real-World Examples
Let's look at three real scenarios to see how the Home Buyers' Plan works in practice:
Toronto Couple Using Both Spouse's HBP
Maximizing down payment with $120,000 combined
Scenario:
- •Sarah and James, both age 31: Both first-time buyers purchasing together
- •Home purchase price: $850,000 in Toronto
- •HBP withdrawals: Sarah: $60,000, James: $60,000 ($120,000 total)
- •Additional savings: $30,000 from TFSA
Their Strategy:
- • Set up automatic $333/month RRSP contributions for each person
- • Designate contributions as HBP repayments (no tax deduction)
- • Avoided CMHC insurance by putting 17.6% down (saved ~$28,000)
- • Used TFSA for additional savings so they can access it tax-free later
Result: By both using HBP, they avoided CMHC insurance fees and got into the Toronto market. Their combined $8,000/year repayment is manageable on two incomes.
Single Buyer in Vancouver Using HBP + FHSA
Combining both programs for maximum benefit
Scenario:
- •Kevin, age 28: First-time buyer in Vancouver
- •Home purchase price: $700,000 (condo)
- •FHSA balance: $40,000 (maxed out)
- •RRSP balance: $55,000
- •HBP withdrawal: $50,000 from RRSP
His Repayment Plan:
- FHSA repayment:$0 (none required!)
- HBP annual repayment:$3,333
- Monthly repayment:$278
Result: Kevin used the FHSA first (smart - no repayment), then topped up with HBP. His repayment obligation is only $3,333/year instead of $6,000 if he'd used HBP alone.
Missing HBP Repayments - Tax Consequences
What happens when life gets in the way
Scenario:
- •Michelle, age 34: Withdrew $40,000 via HBP 3 years ago
- •Annual repayment required: $2,667
- •What happened: Made first two repayments, then missed year 3 entirely (maternity leave)
- •Marginal tax rate: 35% (Ontario)
The Impact:
- • $2,667 permanently added to her taxable income for year 3
- • Owes $933 in unexpected tax when she files her return
- • Cannot "catch up" in year 4 - the $2,667 is permanently lost as RRSP room
- • Still owes $2,667 repayment for years 4-15 (13 years remaining)
- • New remaining balance: $34,667 to repay over 13 years
Lesson: Set up automatic monthly contributions to avoid accidentally missing HBP repayments. Even small missed amounts become permanent taxable income. Michelle should have set up a $222/month automatic transfer to her RRSP.
Key Takeaway from Examples
The HBP is powerful for first-time buyers, especially couples who can access $120,000 combined. But the 15-year repayment is mandatory - any missed repayment becomes taxable income. Always set up automatic monthly contributions to stay on track.
Frequently Asked Questions
Frequently Asked Questions
Q:Can both spouses use HBP?
A:Yes! If you're buying a home together and both qualify as first-time buyers, each person can withdraw up to $60,000 from their own RRSP under the HBP. That's $120,000 combined for a couple. Each person must have their own RRSP and meet the first-time buyer definition independently. You can also combine HBP with FHSA - each spouse could use $60,000 HBP + $40,000 FHSA for a total of $200,000 in tax-advantaged down payment funds!
Q:Can I use HBP for a cottage or rental property?
A:No. The HBP can only be used for a qualifying home that you intend to occupy as your principal residence within one year of buying or building it. Investment properties, cottages, vacation homes, and rental properties do not qualify. The home must be located in Canada, and you must move in as your primary residence. If you're buying to renovate before moving in, you have up to one year to occupy it.
Q:What if I don't repay on time?
A:If you miss your annual HBP repayment, the amount you were supposed to repay is added to your taxable income for that year. For example, if your annual repayment is $4,000 and you only repay $2,000, the remaining $2,000 becomes taxable income. At a 30% marginal rate, that's $600 in additional tax owed. You cannot 'catch up' missed repayments in future years - the unpaid amount permanently becomes taxable income. This is why it's critical to set up automatic contributions to avoid missed repayments.
Q:Can I use HBP if I owned a home 10 years ago?
A:Yes, you likely qualify. To be eligible for HBP, you must not have owned a home that you lived in as your principal residence during the current year or the previous 4 calendar years. So if you sold your home 10 years ago, you meet the first-time buyer definition for HBP purposes. It doesn't matter that you owned a home in the past - what matters is that you haven't owned AND lived in a home as your principal residence in the past 4 years.
Q:Should I use HBP or FHSA?
A:Use FHSA first if possible, then HBP if you need more funds. Here's why: FHSA withdrawals never need to be repaid, while HBP requires 15 years of repayments. Both give you a tax deduction on contributions and tax-free withdrawals. FHSA allows $40,000 maximum, HBP allows $60,000. The best strategy: maximize FHSA first ($40,000 no repayment), then use HBP for any additional amount needed (up to $60,000 with repayment). For couples, you can use both: $40,000 FHSA + $60,000 HBP per person = $200,000 total!
Q:Can I use HBP multiple times?
A:Yes, but only after you've fully repaid your previous HBP withdrawal. Once you've completed all 15 years of repayments, you can use the HBP again if you meet the first-time buyer definition at that time (haven't owned a principal residence in the past 4 years). Most people only use HBP once in their lifetime since it's rare to go 4+ years without owning a home after your first purchase. If you're buying with a new spouse who has never used HBP, they can use it even if you previously did.
Question: Can both spouses use HBP?
Answer: Yes! If you're buying a home together and both qualify as first-time buyers, each person can withdraw up to $60,000 from their own RRSP under the HBP. That's $120,000 combined for a couple. Each person must have their own RRSP and meet the first-time buyer definition independently. You can also combine HBP with FHSA - each spouse could use $60,000 HBP + $40,000 FHSA for a total of $200,000 in tax-advantaged down payment funds!
Question: Can I use HBP for a cottage or rental property?
Answer: No. The HBP can only be used for a qualifying home that you intend to occupy as your principal residence within one year of buying or building it. Investment properties, cottages, vacation homes, and rental properties do not qualify. The home must be located in Canada, and you must move in as your primary residence. If you're buying to renovate before moving in, you have up to one year to occupy it.
Question: What if I don't repay on time?
Answer: If you miss your annual HBP repayment, the amount you were supposed to repay is added to your taxable income for that year. For example, if your annual repayment is $4,000 and you only repay $2,000, the remaining $2,000 becomes taxable income. At a 30% marginal rate, that's $600 in additional tax owed. You cannot 'catch up' missed repayments in future years - the unpaid amount permanently becomes taxable income. This is why it's critical to set up automatic contributions to avoid missed repayments.
Question: Can I use HBP if I owned a home 10 years ago?
Answer: Yes, you likely qualify. To be eligible for HBP, you must not have owned a home that you lived in as your principal residence during the current year or the previous 4 calendar years. So if you sold your home 10 years ago, you meet the first-time buyer definition for HBP purposes. It doesn't matter that you owned a home in the past - what matters is that you haven't owned AND lived in a home as your principal residence in the past 4 years.
Question: Should I use HBP or FHSA?
Answer: Use FHSA first if possible, then HBP if you need more funds. Here's why: FHSA withdrawals never need to be repaid, while HBP requires 15 years of repayments. Both give you a tax deduction on contributions and tax-free withdrawals. FHSA allows $40,000 maximum, HBP allows $60,000. The best strategy: maximize FHSA first ($40,000 no repayment), then use HBP for any additional amount needed (up to $60,000 with repayment). For couples, you can use both: $40,000 FHSA + $60,000 HBP per person = $200,000 total!
Question: Can I use HBP multiple times?
Answer: Yes, but only after you've fully repaid your previous HBP withdrawal. Once you've completed all 15 years of repayments, you can use the HBP again if you meet the first-time buyer definition at that time (haven't owned a principal residence in the past 4 years). Most people only use HBP once in their lifetime since it's rare to go 4+ years without owning a home after your first purchase. If you're buying with a new spouse who has never used HBP, they can use it even if you previously did.
Watch Our Complete Video Guide
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