Using the RRSP Home Buyers' Plan to Buy Your First Home in Ontario

Saving for a first home in Ontario takes years for most buyers. The RRSP Home Buyers' Plan (HBP) is a federal program that lets you borrow from your own registered retirement savings — tax-free at the time of withdrawal — to fund your purchase. Used correctly, it can meaningfully accelerate your path to a down payment without triggering immediate income tax.

This guide explains how the Home Buyers' Plan works, what you need to do to qualify, and how to avoid the repayment traps that catch first-time buyers off guard.

What Is the Home Buyers' Plan?

The Home Buyers' Plan (HBP) is a CRA program that allows first-time home buyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. Unlike a regular RRSP withdrawal, the HBP withdrawal is not included in your income in the year you take it — provided you repay it to your RRSP over time.

As of writing, the withdrawal limit is set by the federal government. Verify the current maximum with CRA, as budget updates periodically increase it. Both you and your spouse or common-law partner can each make an HBP withdrawal on the same purchase, potentially doubling the total available.

Who Qualifies?

First-Time Buyer Requirement

You must be a first-time home buyer, which CRA defines as someone who has not owned and occupied a home as a principal place of residence at any time during the current calendar year or the preceding four calendar years. This is broader than you might expect — if you owned a home five years ago and have been renting since, you may qualify again.

The Home Must Qualify

The home must be:

• Located in Canada
• Purchased or built by a set deadline (generally October 1 of the year after withdrawal)
• Intended to be your principal place of residence no later than one year after buying or building

New construction, resale homes, condominiums, and townhomes can all qualify. A home purchased purely as an investment property (not your principal residence) does not.

The 90-Day Rule

RRSP funds must have been on deposit for at least 90 days before you withdraw them under the HBP. If you contribute to your RRSP and immediately withdraw, the HBP rules prohibit that. Plan at least three months ahead.

How to Make the Withdrawal

1. Complete CRA Form T1036 (Home Buyers' Plan — Request to Withdraw Funds from an RRSP). Your RRSP issuer (bank or investment firm) will require this form.
2. Specify the amount you want to withdraw.
3. The issuer processes the withdrawal without withholding tax (because the HBP is a loan, not income).
4. Confirm timing with your lawyer: HBP funds typically take several business days to process, so initiate the withdrawal well before your closing date.

Repayment Rules: The Part Buyers Often Miss

Here is the catch. The HBP withdrawal is treated as a loan to yourself. Starting two years after the year you made the withdrawal, you must begin repaying your RRSP in annual installments over a period of up to 15 years (verify the current repayment period with CRA).

What Happens If You Miss a Repayment?

If you do not make the required annual repayment, CRA adds the shortfall to your taxable income for that year. This means you pay the income tax you originally deferred — plus whatever marginal rate applies in that future year, which may be higher than when you made the contribution.

Tracking Your Balance

CRA tracks your HBP balance and tells you each year (on your Notice of Assessment) what minimum repayment is due. You designate an RRSP contribution as an HBP repayment by filing Schedule 7 with your tax return.

The First Home Savings Account: A Newer Option

Since 2023, the federal government has offered the First Home Savings Account (FHSA) — a registered account that combines features of an RRSP and a TFSA. Contributions to an FHSA are tax-deductible (like an RRSP), and qualifying withdrawals to buy a first home are tax-free with no repayment required (unlike the HBP).

As of writing, the annual and lifetime contribution limits for the FHSA are set by CRA — verify the current limits. You can use the FHSA and the HBP together on the same purchase, stacking both programs. For buyers who started saving before the FHSA existed, combining both programs maximizes the tax-advantaged pool available for a down payment.

Practical Planning Checklist

• Confirm your RRSP contributions are at least 90 days old before you plan to withdraw.
• Initiate the HBP withdrawal early — do not wait until the week of closing.
• Tell your lawyer you are using HBP funds so they factor timing into the closing schedule.
• Note the repayment start date and set up annual reminders so you do not inadvertently trigger income tax in future years.
• Open and contribute to an FHSA if you have not already — even a partial contribution before closing can be withdrawn tax-free alongside your HBP funds.

Frequently asked questions