Pull $60,000 From Your RRSP for a First Home, Tax-Free
The Home Buyers' Plan lets a first-time buyer take up to $60,000 out of an RRSP with no withholding tax — $120,000 for a qualifying couple — and repay it to themselves over 15 years. The 2024 budget more than doubled the old $35,000 limit, and the plan now stacks on top of the FHSA for up to $100,000 per buyer. The catch isn't the loan. It's the repayment schedule and the tax-deferred growth you give up while the money sits in a house instead of compounding. Here is how to run the trade.
- The answer: as a first-time buyer in 2026 you can withdraw up to $60,000 from your RRSP under the HBP with zero withholding tax, stack it with an FHSA for up to $100,000, and repay only the HBP portion — 1/15 a year, starting the second year after you withdraw.
- The trap: miss a year's $4,000 repayment and that $4,000 is added to your taxable income for the year, taxed at your full marginal rate — the HBP is a loan from yourself, not a grant.
- The recommendation: fill the FHSA first — its withdrawal never has to be repaid — and use the HBP for the gap, while counting the lost RRSP growth on the withdrawn balance, which on $60,000 at 6% is about $83,600 over 15 years.
Where the AI summary above gets this wrong
"The Home Buyers' Plan lets first-time buyers withdraw up to $35,000 from their RRSP tax-free to buy or build a home, with up to 15 years to pay it back."
That's the old number, and it skips the part that costs real money. Here's what it misses:
- It quotes the dead $35,000 limit — for withdrawals after April 16, 2024 the cap is $60,000 per person, $120,000 for a qualifying couple. A reader still planning around $35,000 leaves up to $25,000 of tax-free withdrawal room unused.
- It calls the withdrawal "tax-free" and stops there — it is tax-free at the door, but every dollar you pull is a dollar that stops compounding inside the RRSP. On $60,000 at 6%, that's roughly $83,600 of growth the RRSP never sees over 15 years, even if you repay on schedule.
- It never mentions the FHSA — the First Home Savings Account withdraws tax-free for a first home with nothing to repay, and it stacks with the HBP for up to $100,000. The buyer who only knows the HBP overuses the account that has to be paid back.
→ See chapter 3 for the repayment and opportunity-cost math.
A reader wrote in last spring with a question I get in some form every week, so I'll use her as the representative case throughout — anonymous, but her numbers are real and the calculator below opens on them. She is 32, renting in Ottawa, has a $90,000 RRSP built up over eight years of payroll contributions and matching, and she's about to make an offer on her first condo. Her question was the right one: not "can I use the HBP," but "should I, given what it does to the retirement account I just spent eight years filling." That's the trade this post is about.
01 Who qualifies, and the $60,000 limit in 2026
The Home Buyers' Plan lets a first-time buyer withdraw up to $60,000 from their RRSP, tax-free at the point of withdrawal, to buy or build a qualifying home. That limit applies to withdrawals made after April 16, 2024 — it was $35,000 before the 2024 federal budget raised it. If you buy with a spouse or common-law partner who also qualifies and also has an RRSP, you can each withdraw up to the maximum, for $120,000 combined toward one home.
"First-time buyer" has a precise meaning here, and it isn't literal. You qualify if you did not own a home that you occupied as your principal residence at any time in the current year up to four weeks before the withdrawal, or in the previous four calendar years. The same four-year test applies to a spouse's home you occupied. That four-year clock is why people who owned years ago can sometimes re-qualify — the plan is named for first-time buyers but written as a look-back window. Our reader has never owned, so for her it's straightforward: a clean $60,000 of room against her $90,000 RRSP.
Source: Canada Revenue Agency — How to participate in the Home Buyers' Plan
02 The 90-day rule and the deduction you can lose
Money has to sit in your RRSP for at least 90 days before you withdraw it under the HBP, or the contribution may not be deductible. This is the rule that catches people who try to route a down payment through their RRSP at the last minute to grab the tax deduction on the way past.
Here is the move that backfires. You have $20,000 of cash for a down payment and $20,000 of unused RRSP room, so you contribute the $20,000 in February to claim the deduction, then withdraw it under the HBP in March for a closing. Because it was in the account fewer than 90 days, the CRA can deny the deduction on that $20,000 — you get the cash back out, but not the tax break that was the whole point. If you want both the deduction and the HBP withdrawal on the same dollars, the contribution has to clear the 90-day window first. For our reader, the $90,000 has been in the RRSP for years, so none of this bites — but it's the single most common way the plan goes sideways for people contributing late.
Source: Canada Revenue Agency — How to participate in the Home Buyers' Plan
03 Repayment, missed payments, and the growth you give up
The HBP is an interest-free loan from yourself, and you repay it to your own RRSP over 15 years in equal instalments. Repayment starts the second year after the year of the withdrawal — withdraw in 2026 and your first repayment is due for the 2028 tax year. Each year you put back 1/15 of what you took: on a $60,000 withdrawal, that's $4,000 a year for 15 years.
The instalment is not optional in the way people assume. If you repay less than the required $4,000 in a given year, the shortfall is added to your taxable income for that year and taxed at your full marginal rate. So a missed payment isn't free — it converts a chunk of your HBP balance into ordinary income, the exact opposite of the tax-deferral the RRSP was for. And the repayment itself earns you no new deduction, because you already deducted the original contribution. A temporary 2024 budget measure pushed the repayment start out by three years — a five-year grace period instead of two — for withdrawals made between January 1, 2022 and December 31, 2025; withdrawals in 2026 are back on the standard second-year start.
The cost the brochures skip is the growth you forgo. Pull $60,000 out and it stops compounding inside the RRSP, and even faithful $4,000 repayments drip back in over 15 years rather than as a lump, so they have less time to grow. The calculator below is the one I built for our reader. It opens on her case — a $60,000 HBP withdrawal — and shows three things at once: the tax-free cash toward her down payment, the annual repayment, and the tax-deferred growth that $60,000 won't earn over the repayment window. The point is the opportunity cost, not a verdict on whether to buy.
Shows: the tax-free amount the HBP puts toward your down payment, the equal annual repayment over 15 years, and the tax-deferred RRSP growth you give up on the withdrawn balance over the repayment window. Ignores: inflation, the repayments dripping back in, home-price appreciation, mortgage-insurance savings, the FHSA, your marginal tax rate on a missed payment, and every other account.
On the defaults above, the worked example returns $83,793. $60,000 comes out tax-free toward your down payment and is repaid at $4,000 a year for 15 years. Left invested at 6%, that $60,000 would have grown to $143,793 — about $83,793 of tax-deferred growth the RRSP gives up.
Source: Canada Revenue Agency — Repaying your HBP withdrawals
04 FHSA + HBP: stacking to $100,000 toward a first home
The First Home Savings Account is the piece most HBP explainers leave out, and it changes the order you should fund things. The FHSA gives you an RRSP-style deduction on contributions of up to $8,000 a year, to a $40,000 lifetime limit, and a TFSA-style tax-free withdrawal for a qualifying first home — with nothing to repay. You get the deduction going in and pay no tax coming out, on the same dollars.
The two plans stack. A single first-time buyer who has maxed an FHSA at $40,000 and withdraws $60,000 under the HBP moves $100,000 toward a first home; a qualifying couple who each do both reach $200,000. The strategic point is which account to spend first. The FHSA withdrawal is permanent and costs nothing to use, while the HBP withdrawal has to be paid back over 15 years and removes compounding from your RRSP. So fund and drain the FHSA first, and use the HBP only for the gap between your FHSA balance and the down payment you actually need. Our reader had no FHSA, but she had eight months before closing — enough to open one, drop in $8,000 for the 2026 deduction, and shrink the HBP withdrawal she needed by that much.
| Feature | HBP (from RRSP) | FHSA |
|---|---|---|
| Max toward a first home | $60,000 per person | $40,000 lifetime ($8,000/yr) |
| Tax on the contribution | Already deducted as RRSP | Deductible like an RRSP |
| Tax on the withdrawal | Tax-free at withdrawal | Tax-free for a first home |
| Repayment required? | Yes — 1/15 a year for 15 years | None, ever |
| Cost if you miss a repayment | Shortfall added to taxable income | Not applicable |
| Combined ceiling per buyer | Up to $100,000 when stacked | |
Source: Canada Revenue Agency — The First Home Savings Account (FHSA)
05 When the HBP is the right call — and when it isn't
The HBP works best when you can carry the $4,000-a-year repayment on top of your normal RRSP contributions, not instead of them. If the repayment crowds out new contributions, you're not really getting $60,000 of housing money for free — you're trading future retirement saving for a down payment, and the lost growth in the calculator above is the price. It also helps most when the withdrawal pushes your down payment over 20%, because that avoids mortgage default insurance entirely, a real cash saving that partly offsets the forgone growth.
It's the wrong call when the RRSP is your only retirement asset and you can't rebuild it, or when you'd be contributing at a low marginal rate now only to lose the deduction to the 90-day rule. For our reader, the answer was a blend: open an FHSA for the immediate $8,000 deduction, take a smaller HBP withdrawal to clear the 20% down-payment line and dodge the insurance premium, and keep her ongoing payroll RRSP contributions running alongside the $4,000 repayments. That kept the retirement account she'd spent eight years building largely intact while still getting her into the condo.
Source: Canada Revenue Agency — How to participate in the Home Buyers' Plan
The HBP gets sold as free money and it isn't — it's a loan from your future self, repaid on a clock, with the real cost hidden in the growth your RRSP doesn't earn while $60,000 sits in drywall. That doesn't make it a bad move. For a first-time buyer who'd otherwise rent for three more years or pay mortgage-default insurance, clearing the 20% line with tax-free dollars can easily beat the forgone compounding. What I'd actually do is fund the FHSA first because nothing about it has to be paid back, use the HBP only for the gap, and never let the $4,000 repayments quietly replace new retirement saving. Run your own number in the calculator before you sign — the growth you give up is the line nobody quotes you.
FAQ
How much can I withdraw under the Home Buyers' Plan in 2026?
Up to $60,000 per person for withdrawals made after April 16, 2024, raised from the old $35,000 limit. If you and your spouse or partner both qualify as first-time buyers and both have RRSP balances, you can each withdraw up to $60,000 — $120,000 combined toward one home.
Do I have to repay the Home Buyers' Plan, and what happens if I miss a payment?
Yes. You repay the withdrawal to your RRSP over 15 years in equal instalments, starting the second year after the year you withdrew — 1/15 of the balance each year. If you repay less than the required amount in a year, the shortfall is added to your taxable income for that year. The repayment is not tax-deductible, because you already deducted the original contribution.
Can I use the HBP and the FHSA together for the same home?
Yes. The two stack. The FHSA holds up to $8,000 a year to a $40,000 lifetime limit, and its qualifying withdrawal for a first home is fully tax-free with nothing to repay. Combined with a $60,000 HBP withdrawal, one buyer can move up to $100,000 toward a first home — $200,000 for a qualifying couple.
Does money have to sit in my RRSP before I can withdraw it under the HBP?
Generally yes. A contribution must stay in the RRSP for at least 90 days before you withdraw it under the HBP, or it may not be deductible. Contributing a lump sum and pulling it straight back out as a down payment in under 90 days can cost you the deduction on that amount, so time the contribution accordingly.
Sources
Regulator references
- Canada Revenue Agency — How to participate in the Home Buyers' Plan · $60,000 limit after April 16 2024, first-time-buyer four-year test, 90-day rule, qualifying homeHow to participate in the Home Buyers' Plan, and the conditions a withdrawal must meet.Last verified: 2026-06-25
- Canada Revenue Agency — Repaying your HBP withdrawals · 15-year repayment, second-year start, 1/15 instalments, missed-payment income inclusion, temporary grace-period extensionThe Home Buyers' Plan repayment schedule and what happens to a missed repayment.Last verified: 2026-06-25
- Canada Revenue Agency — The First Home Savings Account (FHSA) · $8,000 annual and $40,000 lifetime limits, deductible contributions, tax-free first-home withdrawal, HBP stackingThe First Home Savings Account: who can open one, and the contribution and withdrawal rules.Last verified: 2026-06-25
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-07-06 — worked-example default now shown without JavaScript; added in-article links to related guides
- 2026-06-25 — initial publish (new format)
Model this trade-off against your actual numbers
See how an HBP withdrawal, the FHSA, and your ongoing RRSP contributions compound together — down payment now versus retirement income later, month by month to age 95.
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.