If you are planning on moving into your first house or condo sometime in 2025 now is the perfect time to do some serious planning on how to best gather the money you’ll need for your down payment.

What is the Home Buyer’s Plan? (HBP)

The HBP is a Federal Government program initiated in 1992. The HBP has helped millions of Canadians to purchase homes and to build homes and therefore has played and does play an integral part in Canada’s economic growth.

Simply, the HBP allows you to use your RRSP money as part of your down payment funds to purchase a home or to build a home in Canada.

Think of it as an interest free loan to yourself paid back over 15 years interest free.

HBP Main Criteria:

a)    You cannot have owned a home as a principal residence in the last 5 years.

b)   If you have already participated in a HBP the balance is zero on Jan.1 of the year you plan on making another withdrawal. ie. you cannot have more than one plan open.

c)     The funds must be in a designated RRSP account for a minimum of 90 days.

d)   The closing date must be no later than October 1 of the following year of the first withdrawal.

e)    The money must be paid back over a 15-year period using straight line amortization. eg. If you withdrawal $15,000 then each year for 15 consecutive years you must repay $1000.

-         You can overpay any year if you like however since it is interest free think again.

-         If you underpay any year the difference is taxable.

-         The first payment will be the second year following the year of the withdrawal.

f)      You can contribute to your RRSP up to March 3, 2025 for the 2024 tax year.

g)    You have to have an Agreement of Purchase and Sale in place.

h)   You have to occupy your house as your principal residence no more than 1 year after you purchase it.

i)       You have to be a resident of Canada

j)       You have to receive your withdrawals in the same calendar year.

k)    The maximum withdrawal per person is $60,000.

l)       You have to complete form T1036 for each eligible withdrawal.

Important Points:

a)    Prior to utilizing your RRSP it is very important that a personal budget be prepared. Remember you have to repay an equal amount yearly for 15 years. If the repayment does not fit into your overall personal budget as a homeowner, then it is not advised.  Some of my clients use their RRSP and some do not. I have a standard personal budget form that my clients use as a worksheet.

b)   It is important to determine in advance if your RRSP qualify for the HBP. Ask your RRSP provider.

c)     If you want to maximize your RRSP contribution under the HBP then there are ways to do this with liquid cash and/or with an RRSP loan. Email me for details. 

a)    Any funds that you put into a RRSP account will generate a corresponding tax refund and this to can be added to your down payment funds.

For more information about the Home Buyer's Plan, please visit the Federal Governments website HERE.

To learn more about how you can use your RRSP as part of your down payment for 2025 please register for our informative BUYER CONSULTATION. We will discuss your personal budgeting, mortgage application and mortgage financing, credit management, the real estate market and the home buying process.