Home Buyers' Plan RRSP Withdrawal: Rules, Limits, and Repayment Explained
Home Buyers' Plan RRSP Withdrawal: Rules, Limits, and Repayment Explained
Withdrawing money from your RRSP normally triggers income tax — the full amount is added to your income for the year and taxed at your marginal rate. The Home Buyers' Plan (HBP) is the federal exception that lets you take out up to $60,000 per person from your RRSP, completely tax-free, and use it toward a down payment. For buyers in British Columbia — where even a condo in the Fraser Valley requires $50,000 or more in down payment — the HBP is one of the most practical tools available for accumulating that capital.
Here's a complete breakdown of how it works.
The $60,000 Withdrawal Limit
The current HBP limit is $60,000 per person. This applies per person, not per couple — so two co-buyers who are both eligible can each withdraw $60,000, for a combined $120,000 in RRSP funds available for the down payment.
This limit was increased from $35,000 to $60,000 in 2024. If you made an HBP withdrawal before 2024 and it hasn't been fully repaid, you may be able to make an additional withdrawal to bring your total up to the new $60,000 limit, provided you meet all current eligibility requirements.
The withdrawal must come from your own RRSP, not from a spousal RRSP you contributed to (though you can withdraw from a spousal RRSP that you are the annuitant of, subject to the attribution rules described below).
The 90-Day Rule
Funds withdrawn under the HBP must have been in your RRSP for at least 90 days before you withdraw them. Depositing $60,000 into your RRSP today and withdrawing it next week doesn't work — and it doesn't generate any tax benefit anyway, since the deduction and inclusion cancel each other out in the same tax year.
This rule is designed to prevent the HBP from being used as a simple tax deduction mechanism. It means HBP planning needs to happen at least three months before your anticipated closing date. For many buyers, this means building RRSP savings gradually over time, which is the intended use.
First-Time Buyer Requirement
To use the HBP, you must be a first-time home buyer — specifically, you must not have owned a home that you lived in as your principal residence at any time during the current calendar year or the four preceding calendar years.
This is the "four-year lookback" rule. It means:
- If you sold a home you lived in five or more years ago, you may qualify again
- If you've been renting for the past five years, you qualify even if you owned previously
- Owning a rental property you never lived in doesn't affect your eligibility
Your spouse or common-law partner is evaluated separately. If they owned a principal residence in the past four years and you didn't, you can still use the HBP for your own RRSP funds — but they cannot.
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Qualified Home Requirements
The home you're buying must be a qualifying home in Canada — not an investment property or a home you intend to rent out entirely. You must:
- Have a written agreement to buy or build a qualifying home before October 1 of the year following your withdrawal
- Intend to occupy the home as your principal residence within one year of buying or building it
"Qualifying home" includes single-family homes, condos, townhouses, mobile homes, and shares in a cooperative housing corporation that give you the right to occupy a housing unit as your principal residence.
Making the Withdrawal: Form T1036
To withdraw RRSP funds under the HBP, you complete CRA Form T1036 (Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP). You submit this form to your RRSP issuer (your bank or investment firm) before making the withdrawal.
The financial institution will issue the funds to you without withholding tax, since the HBP withdrawal is not treated as income in the year of withdrawal. You can make multiple withdrawals across multiple RRSPs as long as the total doesn't exceed $60,000, and all withdrawals should be made in the same calendar year.
You'll need to report the withdrawal on your tax return that year, but it won't add to your taxable income.
Repayment Rules
The HBP is a loan from your RRSP, not a grant. You have 15 years to repay the full amount, starting in the second calendar year after the year you made the withdrawal.
If you withdrew $60,000 in 2026, your repayment period runs from 2028 through 2042. The minimum annual repayment is the total amount withdrawn divided by 15 — so $60,000 ÷ 15 = $4,000 per year.
Each year's repayment is made by contributing to your RRSP and designating that contribution as an HBP repayment on your tax return (Schedule 7). Crucially: HBP repayments are not tax-deductible. Only new contributions to your RRSP beyond the HBP repayment get a deduction. If you contribute $4,000 and designate all of it as HBP repayment, you get no RRSP deduction for that contribution.
If you miss an annual repayment: The missed amount is added to your income for that year and taxed at your marginal rate. There's no grace period — the CRA adds the shortfall to your T4 income on your Notice of Assessment.
The FHSA and HBP Combination
The HBP and the First Home Savings Account (FHSA) are separate programs and can be used together for the same purchase. The FHSA has a lifetime contribution limit of $40,000 per person, and withdrawals for a first home are tax-free with no repayment required. Combined:
- HBP withdrawal: up to $60,000 per person
- FHSA withdrawal: up to $40,000 per person
A couple who has maximized both accounts can access $200,000 in combined tax-sheltered savings toward their down payment — $60K + $40K = $100K per person.
In BC's market, this kind of down payment changes the math significantly. On a $900,000 townhouse purchase, $200,000 down means the mortgage is $700,000 — which, if structured with a 20% effective down payment (22.2%), avoids CMHC insurance entirely and reduces the monthly carrying cost substantially.
Spousal RRSP Considerations
If you've been making contributions to a spousal RRSP (a plan where your spouse is the annuitant but you make the contributions), the spousal RRSP belongs to your spouse for HBP purposes. Your spouse can withdraw up to $60,000 from their spousal RRSP under the HBP, provided the contributions have been in the plan for at least 90 days.
There's a wrinkle: the RRSP attribution rule normally requires that if you contribute to a spousal RRSP and your spouse withdraws it within three years, the amount is attributed back to you as income. The HBP is an exception to this attribution rule — spousal RRSP withdrawals made under the HBP are attributed to the spouse (the annuitant), not the contributor. This makes spousal RRSPs useful for income splitting the down payment effectively.
If You Don't End Up Buying
If you make an HBP withdrawal and then don't complete a purchase in the same calendar year or by January 1 of the following year, you must repay the full amount to your RRSP by December 31 of the year after withdrawal — or it will be included in your income for that year.
This is a meaningful risk for buyers who have their offer fall through late in the year. If you're withdrawing funds in October or November and your purchase is delayed into the following year, confirm timing carefully with your tax advisor.
For a complete picture of all down payment strategies available to first-time buyers in British Columbia — including the HBP, FHSA, and how they interact with BC's PTT exemption and CMHC requirements — the British Columbia First-Time Home Buyer Guide walks through the full financial picture.
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