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First-Time Home Buyer Plan (HBP): Using Your RRSP for a Down Payment

Published Nov 05, 2025 • 8 min read • Family Finance

If you have been watching Canadian home prices and quietly wondering how anyone saves a down payment from scratch anymore, you are not alone. For a lot of first-time buyers, the gap between what the bank wants you to put down and what is actually sitting in a chequing account is the whole problem. The federal government's Home Buyers' Plan (HBP) was designed for exactly that gap.

The idea is simple on the surface: you borrow from your own RRSP, tax-free, to put toward your first home. You then pay yourself back over 15 years. No interest. No credit check. No bank approval. It sounds almost too good, which is usually a sign there are some details worth knowing before you sign anything.

This article walks through how the HBP actually works in 2026, who qualifies, what the repayment looks like in real life, and how it fits alongside the newer First Home Savings Account (FHSA). It is not personalized advice — your situation, your province, and your other accounts all matter — but by the end you should have a clear sense of whether the HBP is a tool worth using.

What the Home Buyers' Plan Actually Is

The HBP is a program run through the Canada Revenue Agency (CRA) that lets you take money out of your Registered Retirement Savings Plan (RRSP) without paying tax on the withdrawal — provided you use it to buy or build a qualifying first home, and provided you put the money back over time.

Normally, when you pull cash out of an RRSP, the financial institution holds back withholding tax and the full amount gets added to your income for the year. That can mean a serious tax bill come April. The HBP is one of the few legal ways to sidestep that. As long as you follow the rules, the withdrawal is treated like a loan from yourself rather than taxable income.

As of 2026, the federal limit is $60,000 per person. If you are buying with a spouse or common-law partner who also qualifies, you can each withdraw up to $60,000, for a combined $120,000. That number was raised from $35,000 in the 2024 federal budget, and it has made a real difference for buyers in higher-cost markets like Toronto, Vancouver, and increasingly Halifax and Ottawa.

Who Counts as a First-Time Home Buyer

The CRA's definition is a bit looser than the name suggests. You are considered a first-time home buyer if you did not, during the current calendar year (excluding the 30 days right before the withdrawal) or in the previous four calendar years, live in a home that you or your current spouse or common-law partner owned as your principal place of residence.

That four-year window is important. It means people who owned a home years ago — say, before a divorce, a move abroad, or a long stretch of renting — can become "first-time" buyers again. Plenty of Canadians in their 40s, 50s, and 60s use the HBP this way and have no idea they qualify until someone tells them.

You also need to:

• Be a Canadian resident at the time of the withdrawal and up to the closing date.
• Have a written agreement to buy or build a qualifying home in Canada (existing or new construction).
• Intend to occupy the home as your principal residence within one year of buying or building it.

The home itself can be almost any type — detached, semi, townhouse, condo, mobile home, or even a share in a co-op that gives you an equity interest. A pure rental investment property does not qualify.

The 90-Day Contribution Rule (and Why It Trips People Up)

Here is one of the most common HBP mistakes: people hear about the program, race to dump $30,000 or $40,000 into their RRSP to grab the tax deduction, and then try to pull it back out a few weeks later for their down payment. That does not work.

Any RRSP contribution must sit in the account for at least 90 days before it becomes eligible for an HBP withdrawal. If you withdraw it earlier than that, you can lose the tax deduction on the contribution entirely — meaning you get taxed on the money going in and out with no benefit.

If you are thinking about using the HBP, the planning window matters. Contributions made well in advance — ideally during the prior tax year or at least three full months before you plan to withdraw — give you both the upfront RRSP deduction and access to the HBP. Talking to your bank or a planner at an institution like RBC, TD, Sun Life, or Manulife about timing can save a lot of grief.

How the 15-Year Repayment Works

The HBP is interest-free, but it is not free. You have to put the money back into your RRSP over 15 years, in roughly equal annual instalments. Repayment normally begins in the second year after the year of your withdrawal.

For example, if you withdraw $45,000 in 2026, you owe yourself $3,000 a year (1/15 of $45,000), starting with your 2028 tax year. You designate those contributions as HBP repayments on Schedule 7 of your tax return.

The 2026 federal Spring Economic Statement extended a temporary repayment break: anyone whose first HBP withdrawal falls between January 1, 2026 and December 31, 2028 gets to delay the start of the 15-year clock until the fifth year after withdrawal, instead of the second. In plain terms, you get three extra years of breathing room before repayments kick in. That is meaningful for buyers stretching to absorb a new mortgage payment.

If you miss or under-pay a year, the shortfall is added to your taxable income for that year. So if you owe $3,000 and only repay $1,000, the missing $2,000 gets taxed at your marginal rate. It is not a penalty exactly — more of a forced "you took it out, now it counts as income."

One useful detail: HBP repayments do not eat into your regular RRSP contribution room. You can still make new, deductible RRSP contributions on top of your repayment. The catch is that you have to clearly designate which portion of your contribution is the HBP repayment on Schedule 7. Skip that step and the CRA will treat the whole amount as a regular contribution.

HBP and the FHSA: Use Them Together

Since 2023, Canadians have had another tool for first-home savings: the First Home Savings Account (FHSA). It is a hybrid of the RRSP and TFSA — contributions are tax-deductible like an RRSP, and qualifying withdrawals for a first home are completely tax-free, like a TFSA. No repayment required.

The FHSA has its own lifetime contribution limit of $40,000 ($8,000 per year). And — this is the part many buyers miss — you can use the HBP and the FHSA for the same home. They are independent programs.

That means a solo buyer can theoretically access up to $100,000 in tax-advantaged money toward a first home ($60,000 HBP + $40,000 FHSA). A couple, where both partners qualify, could combine for up to $200,000. Those are ceilings, not targets — but they illustrate why first-home planning has become a more serious exercise than it used to be.

If you are building a strategy from scratch, the general logic most planners follow is: fill the FHSA first, because every dollar inside it is permanently tax-free, then use the HBP to top up. The HBP is a loan to yourself; the FHSA is a gift from the tax code.

Provincial and Practical Considerations

The HBP itself is a federal program, so the rules are the same whether you are buying in St. John's or Victoria. But the surrounding context — land transfer taxes, first-time buyer rebates, and closing costs — varies a lot by province.

• Ontario offers a land transfer tax refund of up to $4,000 for first-time buyers, and Toronto buyers get an additional municipal land transfer tax rebate of up to $4,475.
• British Columbia has a first-time buyer property transfer tax exemption with thresholds that change periodically — worth checking before you make an offer.
• Quebec, with its civil law system, handles property transactions through notaries rather than lawyers, and has its own Home Buyers' Tax Credit. The federal HBP works the same way, but closing logistics look different.
• Alberta and Saskatchewan have no land transfer tax, though there are smaller title registration fees.
• Nova Scotia, New Brunswick, PEI, and Newfoundland each have their own deed transfer tax structures, set provincially or municipally.

One quiet point worth raising: the HBP empties part of your retirement savings, even if temporarily. If you are in your late 50s or 60s and using the HBP to re-enter homeownership, think carefully about how the withdrawal interacts with your future CPP, OAS, and eventual RRIF conversion. Pulling $60,000 out of an RRSP that was meant to fund retirement is a real trade-off, not a free win.

The same goes for younger buyers. The market gain you might earn on $60,000 sitting in an RRSP for 30 years is significant. Borrowing from your future self has a real opportunity cost, even at 0% interest.

When the HBP Makes Sense — and When It Does Not

The HBP tends to be a strong fit when you have meaningful RRSP savings, a stable income, and a clear plan to repay on schedule. It also pairs well with the FHSA for buyers who have been saving for a few years across both accounts.

It can be a weaker fit if your RRSP is small to begin with, if your income is unstable enough that repayments could become a problem, or if you are very close to retirement and would have a hard time replacing the withdrawn capital.

This is one of those decisions where running the numbers with a mortgage broker, an accountant, or a planner — and looking at the bigger picture, including life insurance, mortgage protection, and your overall savings rate — tends to be worth the time. If you would like to talk through how a first-home decision fits into your broader financial protection, Get a Free Quote →

The HBP is not a silver bullet, but it is one of the few genuinely useful tools the Canadian tax code offers first-time buyers. Used carefully, with eyes open about the repayment side, it can be the difference between buying this year and waiting another three.

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