Using RRSPs and the Home Buyers' Plan

What Is the Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan (HBP) is a federal program that allows eligible first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to fund a down payment—tax-free at the time of withdrawal.

If purchasing with a spouse or partner, each can withdraw up to $35,000, totaling $70,000 toward your home purchase.

While this provides valuable access to funds, it’s important to remember that HBP withdrawals are essentially a loan from your own retirement savings. You must repay the withdrawn amount over a 15-year period, or face taxation on unpaid portions.

Tip: Contribute to your RRSP at least 90 days before withdrawal. This ensures the funds qualify and can even reduce your taxable income for the year — a strategic win on both sides.

Optimize ensures you understand both the benefits and the long-term implications of using the HBP.

Who Is Eligible for the HBP?

You can participate in the HBP if:

You are a first-time homebuyer, defined as not having owned a home as your principal residence in the past four years.
You have a written agreement to buy or build a qualifying home.
You intend to occupy the home as your principal residence within one year.
Your RRSP contributions must have been in the account for at least 90 days before withdrawal.

Even if you’ve previously used the HBP, you may qualify again if you meet the “first-time” criteria due to changed circumstances.

Optimize helps verify your eligibility and ensures your timeline aligns with program rules.

How HBP withdrawals work

Feature	Details
Withdrawal Amount	Up to $35,000 per person (up to $70,000 for a couple)
Tax Treatment	Tax-free at the time of withdrawal if all program rules are followed
Repayment Start	Second year after the year of withdrawal
Annual Repayment	1/15th of the withdrawn amount each year
Missed Repayment	Added to your taxable income for the year

For example, a $30,000 HBP withdrawal requires $2,000 in annual repayments. Optimize helps you integrate these payments into your long-term cash flow plan.

Benefits of Using the HBP for Your Down Payment

Increases available funds for your down payment without immediate tax consequences.
Can help you avoid or reduce mortgage loan insurance by increasing your total down payment.
Provides an option to access capital that may otherwise be locked into long-term retirement plans.

For many first-time buyers, the HBP is a key tool to bridge the gap between available savings and desired down payment size.

Important Considerations Before Using the HBP

Impact on Retirement Savings: Withdrawn funds miss out on potential compound growth until repaid.
Repayment Obligation: You must have the capacity to meet annual repayments over 15 years.
Alternative Uses for RRSPs: Consider if keeping funds in your RRSP for tax-deferred growth might serve your long-term goals better.

Important: The HBP solves a short-term need by borrowing from your long-term future. Be sure your income and savings plan can support the repayments without compromising your retirement.

Optimize helps you weigh whether using the HBP aligns with your broader financial strategy, not just your immediate homeownership goal.

How Optimize Supports Your HBP Strategy

We guide you through:

Determining if the HBP is the right funding strategy for your down payment.
Structuring RRSP contributions ahead of purchase to maximize the program’s benefit.
Planning for repayments to avoid future tax penalties.
Ensuring your home purchase doesn’t derail your retirement goals.

With Optimize, using the HBP becomes a thoughtful, strategic component of your financial plan—not just a short-term solution.