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Mortgage-Matters

Home buyers' plan

Are you considering purchasing your first home this year?

If so, before March 1 could be the best time to implement this strategy, if you are thinking about buying this spring.

If you need a source for your down payment, the Home Buyers’ Plan (HBP) will allow you to withdraw up to $25,000 from your RRSP to use in assisting with the purchase of your first home, tax-free. 

If you are purchasing with someone who is also a first-time home buyer, then that amount can be increased to $50,000. You can use any amount up to $25,000 to add to any down payment amount you may have saved or use towards other expenses for purchasing a home.

The amount that you have withdrawn from your RRSP must be paid back into your RRSP account in annual payments and you have 15 years to repay them, but if you don’t make your annual payment, then it will be added to your annual income and you will be taxed accordingly. 

If you make a withdrawal from your RRSP, but do not meet the first-time homebuyer eligibility requirements, this withdrawal will be taxed and you must include it in your income tax return as taxable income.

What if you don’t have any RRSP savings?

You can get your savings working for you in a tax free and efficient way.

This strategy might be right for you. If you have room under your RRSP contribution limit you could secure a RRSP loan and contribute those funds and then later use them towards your down payment.

If you aren’t sure whether you have room to contribute, check your Notice of Assessment (NOA) for last year.

Each year, you are allowed a percentage of your income to contribute to a RRSP and the amount is carried forward and added to the next year’s total either partially or in full if you haven’t contributed.

It’s important to note that the funds you plan to withdraw for the purchase of your home, must be in your account for 90 days prior to your withdrawal.

You do not need to use the withdrawn funds for only your down payment as they may be used for any purpose that assists with the purchase of your first home:

  • closing costs
  • paying off outstanding debt
  • renovations, etc.

You must have a written contract in place agreeing to purchase a home and the home must be owner-occupied within one year.

If you have used the Home Buyers’ Plan in the past, but have not owned a home for four years, you may qualify to withdraw from your RRSP again as long as you or your common-law partner or spouse did not occupy a home that either of you owned in that four-year period. 

If you think that this makes sense for you and your financial situation, take the necessary steps before the end of this month and the RRSP deadline date for 2016 contributions.

If you would like more information on the RRSP Home Buyers’ Plan, please give me a call at 888-561-2679 or email [email protected] and I can give you some guidance and help you decide what is right for your situation.



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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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