Home Buyers' Plan: RRSP Withdrawal for Your First Home

Saving for a down payment on a home in Canada can feel like an uphill battle, especially for newcomers who are building their financial foundation from scratch. The Home Buyers' Plan (HBP) is a federal government program that allows first-time home buyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to put toward the purchase of a qualifying home — without paying tax on the withdrawal. This guide explains exactly how the HBP works in 2026, who qualifies, how to make the withdrawal, the repayment rules you must follow, and important strategies for making the most of this program.

What Is the Home Buyers' Plan (HBP)?

The Home Buyers' Plan is a program administered by the Canada Revenue Agency (CRA) that allows you to withdraw funds from your RRSP to buy or build a qualifying home for yourself or for a specified disabled person. The key advantage is that the withdrawal is not added to your income for tax purposes — meaning you do not pay income tax on the amount you withdraw, provided you follow the repayment rules.

The HBP was significantly enhanced in recent years. The withdrawal limit was increased from $25,000 to $35,000 in 2019, and then further increased to $60,000 per person as of April 2024. This means a couple buying together can withdraw up to $120,000 combined from their RRSPs, which can make a substantial difference when assembling a down payment in Canada's expensive housing markets.

HBP vs. FHSA: Understanding Your Options

In addition to the HBP, the federal government introduced the First Home Savings Account (FHSA) in 2023. The FHSA allows you to save up to $40,000 specifically for your first home, with contributions being tax-deductible (like an RRSP) and withdrawals being tax-free (like a TFSA). Unlike the HBP, FHSA withdrawals do not need to be repaid. You can use both the HBP and the FHSA for the same home purchase, potentially giving you access to $100,000 in tax-advantaged funds per person. For a broader understanding of RRSPs, see our RRSP guide for newcomers.

Who Is Eligible for the Home Buyers' Plan?

To use the HBP, you must meet the following eligibility requirements:

First-Time Home Buyer Definition

You must be considered a first-time home buyer. Under the HBP, this means you did not own a home that you occupied as your principal residence during the four-year period that began on January 1 of the fourth year before the year of the withdrawal. For example, if you are making an HBP withdrawal in 2026, you must not have owned and lived in a home as your principal place of residence at any point from January 1, 2022, through to the withdrawal date.

This definition means that people who owned a home in the past but have not been homeowners for at least four full years can use the HBP again. This is sometimes called the "re-qualifying" provision.

Other Eligibility Requirements

• Canadian resident: You must be a resident of Canada at the time of the withdrawal and up to the time you buy or build the home.
• Written agreement: You must have a written agreement to buy or build a qualifying home by October 1 of the year following the withdrawal.
• Intend to occupy: You must intend to occupy the home as your principal place of residence within one year of buying or building it.
• RRSP funds must be on deposit: The funds you withdraw must have been in your RRSP for at least 89 days before the withdrawal. This prevents people from making a last-minute RRSP contribution, getting the tax deduction, and immediately withdrawing the funds tax-free.
• No outstanding HBP balance: You must have fully repaid any previous HBP balance from an earlier participation, or the balance must be zero on January 1 of the year of the new withdrawal.

Full details on eligibility conditions are available on the CRA HBP participation page.

How to Make an HBP Withdrawal

The withdrawal process involves several steps, and timing is important. Here is how to do it correctly.

Step 1: Ensure Your RRSP Has Sufficient Funds

Make sure you have enough money in your RRSP to make the withdrawal you need. Remember, the funds must have been deposited at least 89 days before you withdraw them. If you are planning to contribute to your RRSP specifically for HBP purposes, do so at least three months before you expect to make the withdrawal. This is especially important for newcomers who may be building their RRSP from scratch — start contributing early in your home-buying planning process.

Step 2: Complete Form T1036

To request an HBP withdrawal, you must complete CRA Form T1036 (Home Buyers' Plan Request to Withdraw Funds from an RRSP). This form is submitted to your RRSP financial institution (bank, credit union, investment company), not directly to the CRA. On the form, you certify that you meet the eligibility requirements and specify the amount you wish to withdraw.

You can make multiple withdrawals from different RRSP accounts, as long as the total does not exceed $60,000 and all withdrawals are made in the same calendar year or by January 31 of the following year. Each withdrawal requires a separate T1036 form. If you need help understanding this form, our Document Explainer can break it down for you.

Step 3: Receive the Funds

Your RRSP issuer will process the withdrawal and provide you with the funds. Unlike regular RRSP withdrawals, there is no withholding tax on HBP withdrawals, so you receive the full amount. Your issuer will report the withdrawal to the CRA as a non-taxable HBP withdrawal.

Step 4: Buy or Build Your Home

You must have a written agreement to buy or build a qualifying home by October 1 of the year after the year of the withdrawal. For example, if you withdraw funds in 2026, you must have a purchase agreement in place by October 1, 2027. You must also intend to occupy the home as your principal residence within one year of buying or building it.

Step 5: Report on Your Tax Return

In the year you make an HBP withdrawal, you must report it on your income tax return using Schedule 7. While the withdrawal itself is not taxable, you must still report it to the CRA so they can track your HBP balance and repayment obligations. This is important to understand when filing your taxes, especially if it is your first year doing so in Canada.

HBP Repayment Rules: The Most Important Part

This is the critical part that many people overlook. The HBP is not a tax-free gift — it is an interest-free loan from your own RRSP. You must repay the full amount you withdrew back into your RRSP over a period of 15 years, starting the fifth year after your first withdrawal (previously the second year, but this was extended in 2024).

How Repayment Works

Each year during the repayment period, you must contribute at least 1/15th of your total HBP withdrawal back into your RRSP and designate it as an HBP repayment on your tax return (using Schedule 7). For example, if you withdrew $60,000, you must repay at least $4,000 per year for 15 years.

If you repay more than the minimum in any year, the excess reduces your future minimum repayments. If you repay less than the minimum, the shortfall is added to your income for that year and taxed as regular income. You lose the RRSP contribution room for that amount permanently.

Repayment Example

Let's say you withdraw $60,000 under the HBP in 2026. Your repayment schedule begins in 2031 (the fifth year after withdrawal). Each year from 2031 to 2045, you must repay at least $4,000 into your RRSP. If in 2031 you only contribute $2,500 as your HBP repayment, the $1,500 shortfall is added to your 2031 income and taxed. This is a costly mistake that you want to avoid. Set up automatic monthly RRSP contributions to ensure you never miss a repayment.

What If You Cannot Repay?

If you cannot make the minimum repayment in a given year, the unpaid amount is simply added to your income and taxed. While this is not ideal, it is not a penalty — you just lose the tax deferral benefit on that portion. If your income is low in a particular year, the tax impact may be minimal. However, consistently failing to repay means you are gradually depleting your retirement savings without the intended tax benefit.

What Counts as a Qualifying Home?

Under the HBP, a qualifying home includes a wide range of housing types:

• Detached houses, semi-detached houses, and townhouses
• Condominium units
• Mobile homes
• Apartment units in duplexes, triplexes, fourplexes, or apartment buildings
• A share in a co-operative housing corporation

The home must be located in Canada and can be either an existing property or a new construction. If you are building a home, the property must be substantially completed by October 1 of the year after the year of withdrawal. For additional details on qualifying homes, visit the CRA HBP definitions page.

Strategies for Newcomers Using the HBP

For newcomers to Canada, the HBP can be a powerful tool, but it requires planning. Here are strategies to maximize its value:

Start Contributing to Your RRSP Early

Even if you are not ready to buy a home immediately, start contributing to your RRSP as soon as you begin working in Canada. The 89-day rule means your contributions must be in your RRSP for at least three months before you can withdraw them under the HBP. Additionally, RRSP contributions give you a tax deduction, which can be significant in your early years when you may be in a higher tax bracket. Review your RRSP contribution room on your CRA Notice of Assessment each year to ensure you stay on track.

Combine HBP with FHSA

If you are planning ahead, open a First Home Savings Account in addition to your RRSP. You can contribute up to $8,000 per year to the FHSA (up to a lifetime maximum of $40,000) and withdraw the entire balance tax-free for a home purchase — with no repayment required. Combined with the $60,000 HBP, a single person could access up to $100,000 in tax-advantaged home-buying funds.

Use the HBP With a Partner

If you are buying with a spouse or common-law partner, each of you can use the HBP independently. This means you can withdraw up to $120,000 combined ($60,000 each) from your respective RRSPs. Both of you must individually meet the eligibility requirements, including the first-time buyer definition.

Consider the Tax Implications

While the HBP withdrawal itself is not taxed, the RRSP contributions you make to build up your withdrawal amount do generate tax deductions. Consider the timing of these deductions carefully. If you expect your income to be higher in future years, you might contribute to the RRSP now but defer claiming the deduction until a later year when the tax savings would be greater. This is a somewhat advanced strategy — consult a tax professional if you are unsure. Consult a tax professional for personalized advice on optimizing your contribution and deduction strategy.

Common HBP Mistakes to Avoid

• Not waiting 89 days: If you withdraw RRSP funds that were deposited less than 89 days ago, the contribution is not deductible for tax purposes. Plan your contributions well in advance.
• Exceeding the $60,000 limit: Any amount withdrawn above $60,000 is treated as a regular RRSP withdrawal, subject to income tax and withholding tax.
• Missing the home purchase deadline: If you do not buy or build a qualifying home by October 1 of the year after withdrawal, you must either repay the full amount to your RRSP within the deadline period or include it as income on your tax return.
• Forgetting annual repayments: Set up automatic RRSP contributions to cover your minimum annual HBP repayment. Missing a repayment means the shortfall is taxed as income.
• Not designating repayments on your tax return: Even if you make RRSP contributions during the repayment period, you must specifically designate them as HBP repayments on Schedule 7. Otherwise, they are treated as regular RRSP contributions, and you still owe the HBP repayment.

Additional First-Time Buyer Incentives

Beyond the HBP, first-time home buyers in Canada may benefit from several other programs:

• First-Time Home Buyers' Tax Credit (HBTC): A non-refundable tax credit of up to $1,500 on your federal tax return.
• Land Transfer Tax Rebates: Several provinces, including Ontario and British Columbia, offer first-time buyer rebates on land transfer tax. BC's First Time Home Buyers' Program can exempt you from the property transfer tax entirely on homes under a certain value.
• GST/HST New Housing Rebate: If you buy a newly constructed home, you may be eligible for a partial rebate of the GST or HST paid. Details are available on the CRA GST/HST New Housing Rebate page.

For a broader overview of the home-buying process, including mortgage pre-approval, closing costs, and what to expect as a newcomer, check out our first-time home buyer guide.

Summary and Next Steps

The Home Buyers' Plan is one of the most powerful tools available to first-time home buyers in Canada, allowing you to access up to $60,000 from your RRSP tax-free to put toward your home. Combined with the FHSA and other first-time buyer incentives, it can make homeownership achievable even in Canada's competitive housing markets. Start by building your RRSP, ensure your contributions are in place at least 89 days before you need to withdraw, and plan your repayment strategy before you make the withdrawal. Make sure you have all your financial foundations in place as a newcomer to Canada, and explore our other financial guides to build a comprehensive plan for your life in Canada.