🇨🇦 Canada 6 min read

Home Buyers' Plan: Using Your RRSP for Your First Home

The Home Buyers' Plan (HBP) lets you borrow from your own RRSP to help buy your first home, tax-free. It sounds like a no-brainer, but there are important trade-offs to understand before you raid your retirement savings for a down payment.

How the HBP Works

The Home Buyers' Plan allows you to withdraw up to $35,000 from your RRSP ($60,000 for withdrawals made after April 16, 2024, under the 2024 Federal Budget changes) to buy or build a qualifying home. If you're buying with a spouse or partner who also qualifies, you can each withdraw the maximum, giving you up to $70,000 (or $120,000 under the new rules) combined.

			Key HBP Rules
			Withdrawal limit: $60,000 per person (increased from $35,000 in April 2024)
Tax-free: No withholding tax on the withdrawal
90-day rule: Funds must have been in your RRSP for at least 90 days before withdrawal
First-time buyer: You must not have owned a home in the current year or the preceding 4 calendar years
Repayment period: 15 years, starting the second year after the withdrawal

		

The Repayment Schedule

This is where many people trip up. The HBP isn't free money — it's more like an interest-free loan from yourself. You need to repay the full amount back to your RRSP over 15 years, in roughly equal annual instalments.

Example: Jake withdraws $60,000

Jake uses the HBP to withdraw $60,000 in 2025. His repayment starts in 2027 and runs through 2041.

Annual repayment: $60,000 / 15 = $4,000 per year

If Jake doesn't repay the $4,000 in any given year, that amount is added to his taxable income for the year. So missing a payment doesn't just hurt his RRSP — it triggers a tax bill.

Important: HBP repayments do not generate a tax deduction. You already got the deduction when you contributed to the RRSP originally. The repayment just puts money back where it belongs without any additional tax benefit.

The Opportunity Cost Question

Here's the part that rarely makes it into the brochures. When you withdraw from your RRSP for the HBP, you're pulling money out of a tax-sheltered investment account. That money would have been growing tax-free inside the RRSP.

Consider the numbers:

$60,000 invested at 6% annual return for 15 years grows to roughly $143,600
That's about $83,600 in lost growth your RRSP won't see
Even if you faithfully repay $4,000 per year, those contributions go in gradually, not as a lump sum, so they have less time to compound

Of course, this assumes the alternative is leaving the money invested. If you genuinely need the funds for a down payment and the alternative is renting indefinitely or taking on mortgage default insurance, the calculus changes.

When the HBP Makes Sense

The HBP tends to work well in these situations:

You have a solid income and can comfortably make the annual repayments on top of your regular RRSP contributions
The down payment puts you above 20%, helping you avoid CMHC mortgage insurance
You have other retirement savings (TFSA, workplace pension) so your RRSP isn't your only nest egg
You're in a lower tax bracket now than you expect to be later, making future RRSP deductions more valuable

TFSA vs RRSP for Your Down Payment

Here's something worth considering: if you're specifically saving for a home, a TFSA might be a better vehicle than an RRSP in many cases. TFSA withdrawals don't need to be repaid, there's no 90-day waiting rule, and you get the contribution room back the following year.

First Home Savings Account (FHSA)

Since 2023, the FHSA offers the best of both worlds: RRSP-like tax deductions on contributions (up to $8,000/year, $40,000 lifetime) and TFSA-like tax-free withdrawals for a first home. If you're planning ahead, this is often the optimal tool — though it can be combined with the HBP for a larger down payment.

How Talk Through Wealth Helps

The HBP decision involves weighing your current housing needs against your long-term retirement trajectory. Talk Through Wealth lets you model both paths:

Compare using the HBP vs saving for a down payment outside your RRSP
See the long-term impact of the RRSP withdrawal on your retirement income
Factor in repayment schedules alongside your other financial obligations
Model the FHSA + HBP + TFSA combination for maximum down payment

Model Your Home Purchase Strategy

See how the HBP fits into your overall financial plan — retirement and all.

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Disclaimer: This article is for educational purposes only and does not constitute financial advice. HBP rules, withdrawal limits, and repayment terms may change. Consult the CRA website for current rules and a qualified financial professional for advice specific to your situation.