Home Buyers’ Plan (HBP)

What the HBP is, in one sentence

Normally, taking money out of an RRSP is a taxable event. The institution withholds tax on the spot and the full amount is added to your income for the year. The Home Buyers’ Plan is a carve-out from that rule for first-time buyers.

Under the HBP you withdraw from your RRSP, no tax is withheld, and nothing is added to your income. In exchange you take on an obligation to repay the amount into an RRSP over 15 years (Canada Revenue Agency, verified 28 August 2026).

The single most useful way to think about it is that the government is lending you your own retirement money, interest-free, and the repayment schedule is the price. Everything that goes wrong with the HBP goes wrong at the repayment stage.

Who counts as a first-time buyer here

You have to be considered a first-time home buyer on the CRA’s definition, which is narrower than the phrase suggests and is not identical to the definition used by every other program.

The test is about living in a home you owned, over a look-back period counted in calendar years. If you did not live in a home you or your spouse or common-law partner owned during that window, you can generally qualify even if you owned property before.

A spouse or common-law partner’s home ownership can affect your eligibility here in a way it does not always affect other programs. If your partner owned and lived in a home during the look-back period, check carefully before assuming you qualify.

There is a separate route for a person eligible for the disability tax credit, or for someone withdrawing to buy a more accessible home for a related person who is eligible. That route does not require first-time buyer status. The exact conditions should be confirmed directly with the CRA.

You also have to be a resident of Canada when you withdraw and when you buy, and you have to intend to occupy the home as your principal place of residence within a set period after acquiring it.

How the withdrawal actually works

You complete a CRA form for each withdrawal and give it to the institution that holds your RRSP. One form per withdrawal, not one form for the whole plan.

You can withdraw up to $60,000 in total (Canada Revenue Agency, verified 28 August 2026). Where two people are buying together and both qualify, each has their own separate limit and each must satisfy the conditions on their own withdrawal — which is often what makes a GTA down payment work.

All of your HBP withdrawals for a single home have to be made within the same calendar year, plus a short window into January of the following year. You cannot take some this year and top it up in two years’ time.

You also need a written agreement to buy or build the home, and the home has to be acquired by a deadline set by the CRA. Confirm both before you start the withdrawal.

The contribution timing rule, where people lose money

This is the trap, and it is not obvious.

Money you contribute to an RRSP shortly before making an HBP withdrawal may not be deductible. The rule looks at contributions made during a set period immediately before the withdrawal, and it can deny you the deduction on part or all of them.

The reason the rule exists is straightforward. Without it, you could push money through an RRSP purely to collect a deduction and pull it straight back out again tax-free the same week. The rule stops that.

The practical consequence is that the tactic people are most often advised to use, contributing a lump sum to an RRSP and immediately withdrawing it under the HBP for the down payment, can cost you the deduction that made it attractive in the first place.

If you intend to do this, the money has to sit in the RRSP for the required period before you withdraw it. Confirm the exact number of days, and count backwards from your intended withdrawal date rather than your closing date.

The repayment obligation

You repay by making contributions to an RRSP, a PRPP or an SPP and then designating those contributions as HBP repayments on the relevant schedule when you file. If you do not designate them, they are treated as ordinary new contributions instead, and your repayment for the year is recorded as missed.

Repayments do not start immediately. Normally your first repayment year is the second year after the year of your first withdrawal (Canada Revenue Agency, verified 28 August 2026). A temporary relief measure defers that start to the fifth year for anyone whose first withdrawal was made between 1 January 2022 and 31 December 2025. Work out which one applies to you from the year you took the money, not the year you closed.

Once repayments begin, you owe a set fraction of the outstanding balance each year, spread evenly over the fifteen years (Canada Revenue Agency, verified 28 August 2026).

You can repay faster than required, and doing so reduces what you owe in later years. Repaying the whole balance early ends the obligation.

As with an RRSP contribution generally, a repayment made in the first part of the new calendar year can be designated against the previous year. Confirm the current cut-off date.

What happens if you miss a repayment year

Nothing dramatic happens immediately. You are not penalized, charged interest, or asked for the money.

Instead, the amount you were required to repay that year and did not is included in your taxable income for that year. You are taxed on it at your marginal rate, as though you had simply withdrawn it.

The balance owing then drops by that amount, and the annual required repayment is recalculated over the years remaining. So a missed year does not compound. It converts part of the loan into an ordinary taxable withdrawal.

That means missing a repayment is a decision with a price, not a default. In a very low income year it is sometimes even the cheaper option. In a high income year it is expensive.

The RRSP room used by that amount is not returned to you. This is the cost people underestimate: you lose both the money and the sheltered space it occupied.

Your CRA account shows your HBP balance and the required repayment for the year, and it appears on your notice of assessment. Check it rather than relying on memory.

The cost that does not appear on any form

The HBP is interest-free, so it looks costless. It is not.

Money withdrawn from an RRSP stops growing inside the RRSP. Over a long repayment period, the compounding you give up on that amount is the real cost of the plan, and it is usually larger than people expect.

That is not an argument against using it. For most first-time buyers, getting into a home earlier is worth more than the foregone growth, and a larger down payment can cut mortgage insurance costs. It is an argument for repaying on schedule or faster rather than treating the annual repayment as optional.

If the purchase falls through

If you withdraw under the HBP and then do not buy the home, you can cancel your participation. You repay the withdrawn amount to your RRSP by a CRA deadline and notify the CRA in writing.

Cancelled properly, it is as though the withdrawal never happened. Missed, and the whole amount becomes taxable income.

This matters in a market where conditional deals collapse. If your purchase dies after you have already taken the money out, deal with the cancellation immediately rather than at tax time.