What Is the Home Buyers Plan (HBP)?
The Home Buyers Plan allows first-time home buyers in Canada to withdraw up to $60,000 from their RRSP to purchase or build a qualifying home — completely tax-free at the time of withdrawal. If you and your spouse are both first-time buyers, you can each withdraw $60,000 for a combined total of $120,000. The HBP is one of the most powerful tools available to Canadian first-time buyers, providing access to tax-sheltered savings for a down payment without the immediate tax bill that normally applies to RRSP withdrawals.
To qualify, the funds must have been in your RRSP for at least 90 days before withdrawal, you must intend to occupy the home as your principal place of residence within 1 year of purchase, and you must be considered a first-time home buyer — meaning you have not owned a home you lived in at any time during the preceding 4 calendar years.
HBP Repayment Rules
The HBP withdrawal is not a gift — it is an interest-free loan from your own RRSP that must be repaid over 15 years. Repayment starts in the second year after the year of withdrawal. Each year, a minimum repayment amount is due — calculated as the total withdrawal divided by 15. If you miss a repayment installment in any given year, that amount is added to your taxable income for that year and taxed at your marginal rate. The 15-year repayment period and annual minimum repayment amounts are tracked by the CRA and shown on your Notice of Assessment each year.
HBP vs. FHSA: Which Is Better?
The FHSA (First Home Savings Account), introduced in 2023, offers advantages over the HBP for many first-time buyers. FHSA withdrawals do not need to be repaid, contributions are tax-deductible, and growth inside the account is tax-free. However, the FHSA has a maximum lifetime contribution of $40,000 versus $60,000 for the HBP. The most powerful strategy for many Canadians is to use both — maximizing the FHSA first (no repayment required) and supplementing with the HBP if more funds are needed for the down payment.
Frequently Asked Questions
Can I use the HBP if I owned a home more than 4 years ago?
Yes — the "first-time buyer" definition for HBP purposes uses a 4-year lookback rule. If you owned a home you lived in during the current calendar year or the preceding 4 years, you do not qualify. But if your last owner-occupied property was more than 4 years ago, you are considered a first-time buyer again and can use the HBP. This is particularly relevant for divorced Canadians who may have owned a home with a previous partner — the 4-year clock can reset eligibility.
What happens to my HBP balance if I die or become disabled?
If you die, the remaining HBP balance at the time of death is included in your income for the final tax return unless a surviving spouse agrees to take over the HBP repayments. If you become permanently disabled and unable to work, you may be eligible for a waiver of remaining HBP repayments — contact the CRA or a Licensed Insolvency Trustee for guidance specific to your situation. These provisions recognize that the HBP can become a burden in unexpected life circumstances.
Can I make an HBP withdrawal and a regular RRSP contribution in the same year?
Yes — HBP withdrawals and regular RRSP contributions are completely separate. You can contribute to your RRSP in the same year you make an HBP withdrawal and claim the deduction normally. Many buyers contribute to their RRSP in January or February (for the prior tax year's deduction), immediately withdraw under the HBP after the 90-day holding period, and use the funds for the down payment. This effectively converts a tax refund (from the RRSP contribution) into a down payment contribution — a widely recommended strategy sometimes called the "RRSP melt-down" for first-time buyers.
Can I repay more than the minimum HBP repayment each year?
Yes — you can repay as much as you want each year above the minimum. Making extra repayments reduces your outstanding HBP balance and the number of future repayment installments required. Extra repayments do not generate an additional RRSP deduction — they simply reduce the amount that would otherwise be included in your income in future years if you fail to make minimum payments. If you have extra cash and are deciding between making an RRSP contribution and repaying the HBP faster, the RRSP contribution generally makes more sense since it generates a tax deduction while HBP repayment does not.
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