How to Use the Home Buyers' Plan in Canada

The short answer

Withdraw up to $60,000 from your RRSPs with Form T1036, buy or build a qualifying home, move in within a year, and pay the money back to your RRSPs over 15 years. The Home Buyers' Plan (HBP) is a Canada Revenue Agency (CRA) program that lets you take money out of your registered retirement savings plans (RRSPs) to buy or build a home for yourself or for a specified disabled person, with no tax withheld on amounts of $60,000 or less. It is not a grant and it is not free money: the amount you withdraw becomes a balance you repay, and any yearly amount you do not repay on schedule is added to your income. This guide walks the HBP only. It does not walk opening an RRSP; the live guide on opening an RRSP covers that step.

Who can use the plan

You must meet all of the HBP conditions. The main ones, according to Canada Revenue Agency, How to participate in the Home Buyers' Plan, are:

• You are considered a first-time home buyer. The test is set out in the next section.
• You have a written agreement to buy or build a home, for yourself or for a specified disabled person.
• You are a resident of Canada at the time of your withdrawal, and you stay a resident of Canada from your first eligible withdrawal until you buy or build the home, if you have not acquired the home before your first withdrawal.
• You intend that you or the specified disabled person occupy the qualifying home as a principal place of residence no later than one year after acquiring it.

If you have participated in the HBP before, you may be able to do so again only if your HBP balance on January 1 of the year of the withdrawal is zero and you meet all the other HBP conditions. Some RRSPs, such as locked-in or group RRSPs, do not allow you to make a withdrawal under the HBP, so check with your plan administrator before counting on the money.

The first-time buyer test

You are considered a first-time home buyer if you did not, at any time in the current calendar year before the withdrawal (except the 30 days immediately before the withdrawal) or at any time in the preceding four calendar years, live in a home as your principal place of residence that either you owned or jointly owned, or your current spouse or common-law partner (at the time of the withdrawal) owned or jointly owned, according to Canada Revenue Agency, Definitions for Home Buyers' Plan. The CRA's example: if you make a withdrawal on July 31, 2026, the period is from January 1, 2022 to June 30, 2026.

Two points in that test catch people out. First, it looks at where you lived, not only at what you owned: living in a home your current spouse or common-law partner owned counts against you, even if you did not own it yourself. Second, the 30-day exception is narrow: it covers only the 30 days immediately before the withdrawal, not a longer gap. If you are participating for a specified disabled person, the first-time buyer condition does not have to be met.

What counts as a qualifying home

A qualifying home is a housing unit located in Canada, including existing homes and homes being constructed, according to Canada Revenue Agency, Definitions for Home Buyers' Plan. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. A share that only gives you a right to tenancy in the housing unit does not qualify.

The written agreement must include the date the agreement was signed, the address of the qualifying home, and the closing date. Obtaining a pre-approved mortgage is not considered a written agreement to buy or build a home and does not satisfy this condition.

How to make the withdrawal

Before you withdraw, check the participation conditions on the CRA page above. Then, according to Canada Revenue Agency, How to make withdrawals from your RRSPs under the Home Buyers' Plan:

1. Fill out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP. You have to fill out a separate form for each withdrawal you make.
2. Fill out Area 1 of the form and give it to your RRSP issuer. The RRSP issuer must fill out Area 2.
3. Keep the total at or under $60,000. You can withdraw from more than one RRSP as long as you are the annuitant of each account.

You are permitted to make multiple withdrawals, but only in the same calendar year as your first withdrawal, and in January of the following calendar year. Any portion above $60,000 has to be reported as income on your income tax and benefit return for the year you received it, and your RRSP issuer will have to withhold tax on the amount in excess at the time of the withdrawal.

One timing rule matters before you move money in. If you made contributions to your RRSPs during the 89-day period before you withdrew the amount, your RRSP contribution may not be deductible. In effect, money you plan to withdraw under the HBP should have been in your RRSP for at least 90 days before the withdrawal. The CRA's rule is exact: for contributions made in the 89-day period to be fully deductible, the value of that RRSP after you made the withdrawal must be at least equal to those contributions.

The deadline to buy or build

The home, or a replacement property for the home, must be acquired or built before October 1 of the year after the year of your first withdrawal. If the home is being built, it is considered built on the date it becomes habitable. If it is an agreement to purchase a condominium unit, it is considered acquired on the day you are entitled to immediate vacant possession of it.

If you cannot meet that date, you still meet the deadline if one of these applies: if the home is being acquired, you have another written agreement before that October 1 date to acquire the home or a replacement property before October 1 of the second year after the year you made your first withdrawal; or, if the home is being constructed, you made payments to the contractors or suppliers for materials or construction, at least equal to the total of all withdrawals under the HBP, during the period from the date of the first withdrawal to before October 1 of the year after the year of your first withdrawal. If neither applies and you do not buy or build the home in time, you must cancel your participation in the HBP. To tell the CRA you are buying a replacement property, send a letter to the tax centre for your province, with your name, address, and Social Insurance Number, the address of the replacement property, and a statement that you intend to occupy it as your principal place of residence within one year after you buy or build it.

Repaying the withdrawal over 15 years

You have up to 15 years to repay the amounts you withdrew to your RRSP, pooled registered pension plan (PRPP), or specified pension plan (SPP), according to Canada Revenue Agency, How to repay the amounts withdrawn from your RRSPs under the Home Buyers' Plan. When repayments start depends on when you made your first withdrawal:

• If you made your first withdrawal before January 1, 2022, your repayment period started the second year after the year you made your first withdrawal. A first withdrawal in 2020 meant a first repayment year of 2022.
• Temporary repayment relief defers the start by an additional three years for participants making a first withdrawal between January 1, 2022 and December 31, 2028. The 15-year repayment period starts in the fifth year after the year of the first withdrawal. A first withdrawal in 2022 means a first repayment year of 2027, and a first withdrawal in 2026 means a first repayment year of 2031.

You can repay the full amount at any time. If you start repayments earlier, your repayment period stays the same, but the early repayments reduce the amount you have to repay for the first year.

How to make a repayment

To make a repayment, contribute to your RRSPs, PRPPs, or SPP in the year the repayment is due, or in the first 60 days of the year after. Then designate all or part of the contributions as a repayment by filling out Schedule 7, RRSP, PRPP and SPP Contributions and Transfers, and HBP and LLP Activities, and entering the amount on line 24600. You cannot claim as a deduction an amount you designated as a repayment. Repayments do not affect your RRSP deduction limit: you can still contribute and designate amounts as repayments even if your RRSP deduction limit is zero.

Each year, the CRA sends you an HBP statement of account with your notice of assessment or reassessment, or on Form T1028, Your RRSP, HBP, LLP and FHSA Information. It shows what you have designated as a repayment so far, your remaining HBP balance, and the amount you have to contribute and designate as a repayment for the following year. You can also view your HBP statement in your CRA account. You have to file an income tax and benefit return until you have repaid all of your HBP withdrawals or included them in your income.

The minimum each year, and what a shortfall costs

Your minimum required repayment for a year is your HBP balance divided by the number of years remaining in your repayment period. The CRA's example: a $16,500 withdrawal made in 2021 carried a minimum repayment of $1,100 a year ($16,500 divided by 15). On the same arithmetic, a $60,000 withdrawal means $4,000 in the first repayment year. If you repay more than the minimum in a year, your minimum repayments for later years are reduced, but you still have to make repayments in the following years until the balance is zero.

If you repay less than the minimum, you have to include the difference between your designated repayments and the minimum required repayment as RRSP income on line 12900 of your income tax and benefit return. If you make no repayment, the full minimum required repayment is included as income on line 12900, and your HBP balance is reduced accordingly. You still have to make annual repayments for each year remaining in your participation period until the total is repaid.

Special situations apply if the participant dies, turns 71, or becomes a non-resident. You cannot contribute to an RRSP, PRPP, or SPP after the end of the year you turn 71, so amounts withdrawn cannot be repaid after that year; in the year you turn 71 you can repay the remaining balance, make a partial repayment, or make no repayment, with the remaining balance spread as income over the remaining years. If the participant dies, the legal representative generally has to include the remaining balance in the participant's income for the year of death, unless a surviving spouse or common-law partner who is a resident of Canada elects with the legal representative to continue the repayments.

HBP or FHSA: how the choice works

The First Home Savings Account (FHSA) is the other CRA route for a first home, and the two can be used together. You can withdraw from the HBP and the FHSA for the same home, as long as you meet all the conditions at the time of each withdrawal, according to Canada Revenue Agency, Money on your mind?.

The mechanics differ in one way that decides which fits your timing. The HBP draws on money already in your RRSPs: up to $60,000 now, repaid over 15 years. The FHSA is a savings account you open and fund over time: when you open your first FHSA, your participation room is $8,000, you get another $8,000 each year after, and the lifetime limit is $40,000, according to Canada Revenue Agency, Make the most of your first home savings account. Unlike a Tax-Free Savings Account, your FHSA participation room only starts when you officially open your first account. Contributions are tax-deductible and growth is tax-free. The CRA's FHSA pages describe the FHSA as a savings account and set out no repayment schedule for a qualifying withdrawal, which is the practical difference from the HBP: HBP money comes back to your RRSPs on a schedule, FHSA money does not.

If you have years before you buy, an FHSA can build room while you save. If the RRSP balance is already there and the purchase is near, the HBP can move a larger sum at once. Either way, check the first-time buyer test for each program separately: both use a version of the test, and meeting one does not automatically mean you meet the other.

What the official pages do not state

The CRA pages do not state the current FHSA qualifying-withdrawal form number beyond the FHSA overview, and they do not state the withholding-tax rates that apply to an ordinary RRSP withdrawal outside the HBP. They also do not state whether a first-time buyer who has already used an FHSA qualifying withdrawal can still use the HBP for the same home in every case; the CRA states only that you can use both for the same home as long as you meet all the conditions at the time of each withdrawal. Those items were left out of this guide rather than carried from other websites. Check the current CRA pages before you rely on any of them.

Related guides:

• How to Open an RRSP in Canada
• First-Home Purchase Roadmap
• First-Home Purchase Closing Checklist
• TFSA and RRSP Limits for 2027 in Canada
• How to Apply for the Canada Child Benefit

Sources

• Canada Revenue Agency, How to participate in the Home Buyers' Plan — the $60,000 maximum, the no-withholding rule, the first-time buyer, written-agreement, residency and principal-residence conditions, and the repeat-participation rule.
• Canada Revenue Agency, Definitions for Home Buyers' Plan — the first-time home buyer test with its four-year lookback and 30-day exception, and the qualifying-home list.
• Canada Revenue Agency, How to make withdrawals from your RRSPs under the Home Buyers' Plan — Form T1036 Area 1 and Area 2, the multiple-withdrawal window, the $60,000 excess rule, and the 89-day contribution rule.
• Canada Revenue Agency, How to repay the amounts withdrawn from your RRSPs under the Home Buyers' Plan — the 15-year repayment period, the 2022–2028 temporary relief to a fifth-year start, Schedule 7 line 24600, the balance-divided-by-years-remaining minimum, the line 12900 shortfall rule, and the age-71, death, and non-resident situations.
• Canada Revenue Agency, Make the most of your first home savings account — FHSA participation room of $8,000 in the opening year, $8,000 more each year, a $40,000 lifetime limit, and room starting only when the first FHSA is opened.
• Canada Revenue Agency, Money on your mind? — using the HBP and the FHSA for the same home, and the FHSA $8,000 annual and $40,000 lifetime limits.