The Home Buyers' Plan (HBP)
A complete guide for Canadians.
The Home Buyers' Plan (HBP) is a Canadian government program that allows first-time homebuyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) tax-free to help purchase a qualifying home. For many Canadians, it is one of the most practical ways to accelerate saving for a down payment.
At SG Wealth, we help our clients evaluate whether the HBP is the right tool for their situation and how to use it strategically within their broader financial plan.
How the HBP Works
Under the HBP, you can withdraw up to $60,000 from your RRSP to use toward a down payment on your first home. If you are purchasing with a spouse or common-law partner who also qualifies, you can each withdraw up to $60,000 - for a combined total of up to $120,000.
The key advantage is that this withdrawal is not subject to the usual RRSP withholding tax and is not included in your taxable income for the year. It is, in effect, an interest-free loan from your future self.
Eligibility Requirements
To participate in the HBP, you must meet all of the following conditions:
- •You must be a first-time homebuyer. This generally means you have not owned a home or lived in a home owned by your spouse or common-law partner in the past four years.
- •You must have a written agreement to buy or build a qualifying home before October 1 of the year following the year of withdrawal.
- •You must be a resident of Canada at the time of the withdrawal.
- •You must intend to occupy the home as your principal place of residence within one year of buying or building it. The RRSP funds you withdraw must have been in your account for at least 90 days.
The Repayment Schedule
The HBP is not a gift - it is a loan from your RRSP that must be repaid. Your 15-year repayment period begins the second year after your withdrawal year. Each year, you must repay at least 1/15th of the total amount you withdrew.
| Withdrawal Amount | Annual Repayment Required |
|---|---|
| $30,000 | $2,000 per year |
| $45,000 | $3,000 per year |
| $60,000 | $4,000 per year |
If you repay less than the required annual amount, the shortfall is added to your taxable income for that year. You can repay the full amount faster than the 15-year schedule at any time.
The Trade-Off: Is the HBP Right for You?
The HBP is a powerful tool, but it comes with trade-offs that are worth understanding carefully.
The Cost
The funds you withdraw from your RRSP will miss out on tax-sheltered investment growth for the duration they are outside the plan. If your RRSP was invested in equities earning 7% annually, withdrawing $60,000 for 15 years has a real opportunity cost.
The Benefit
Getting into the housing market sooner - and building home equity - can more than offset this cost, particularly in markets where real estate has appreciated significantly.
The Repayment Discipline
You must have the financial discipline to make the annual repayments. If you fail to repay, the shortfall becomes taxable income.
An SG Wealth advisor can help you model both scenarios and determine whether the HBP is the right choice for your situation. This analysis is a natural part of our retirement planning and investment solutions work.
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Plan Your Path to Home Ownership
The Home Buyers' Plan can be a powerful stepping stone to your first home when used strategically.
Let an SG Wealth advisor help you evaluate whether the HBP fits your financial plan.