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What Is the Home Buyers' Plan in Canada? 2026 Guide
Table of Contents
- What Is the Home Buyers' Plan and How Does It Work?
- Home Buyers' Plan Eligibility: Who Qualifies?
- Home Buyers' Plan Withdrawal Limit and Eligible Purchases
- Step-by-Step: How to Withdraw Funds for Your Home Purchase
- Home Buyers' Plan Repayment Rules You Need to Know
- HBP vs. First Home Savings Account: Which Should You Use?
- Frequently Asked Questions
Last Updated: October 21, 2026
What Is the Home Buyers' Plan and How Does It Work?
The home buyers plan is a federal program that lets you withdraw money from your registered retirement savings plan (RRSP) to buy or build a qualifying home. You pay no tax on the withdrawal, as long as you repay the funds within a set period. The rules trip up more people than you'd expect.
Here is the short version. You borrow from your own retirement savings, use the cash for a down payment, and put it back over time.
The Core Mechanics: RRSP to Down Payment
The Canada Revenue Agency (CRA) administers the plan. Your RRSP contributions normally sit untouched until retirement. The Home Buyers' Plan lets you pull some of that money out early, tax-free, for one specific purpose: a home.
Two things make this work:
- The withdrawal is tax-deferred, not tax-free forever. You avoid tax now, but you must repay.
- Your RRSP contribution room is not restored. The money leaves your plan and comes back as repayments, not new contributions.
That second point surprises people. You don't get a new RRSP deduction when you repay. You're just returning what you borrowed.
Who It Is For and Why It Exists
The program exists to help people who don't yet own a home get into the market. Retirement savings locked away until age 71 don't help a 30-year-old scrape together a down payment.
The logic is simple: a home is also an asset. The government would rather you own one than rent forever while your RRSP grows untouched. Full details of the program live on the Canada Revenue Agency's Home Buyers' Plan page, which is the source of truth for every rule below.
Home Buyers' Plan Eligibility: Who Qualifies?
You qualify as a first-time home buyer under the Home Buyers' Plan eligibility rules if neither you nor your spouse or common-law partner owned a qualifying home that you occupied as your principal residence in the four years before the withdrawal. You must also be a Canadian resident and have a written agreement to buy or build a qualifying home.
First-Time Home Buyer Definition and Edge Cases
The four-year lookback is where edge cases live. A few situations worth knowing:
- You owned a home years ago. If it's been more than four years since you or your partner owned and lived in a home, you can qualify again.
- Your partner owns property. If your spouse or common-law partner owned a home you lived in within the last four years, you're likely disqualified, even if your name was never on title.
- You're buying with someone who isn't your spouse. Their homeownership history generally doesn't affect your eligibility.
- A related person with a disability. You may be able to withdraw funds to help a related person with a disability buy a home, even if you're not a first-time buyer yourself.
Home Buyers' Plan Withdrawal Limit and Eligible Purchases
The Home Buyers' Plan withdrawal limit is a per-person figure set by the federal government, and it has been raised more than once. The current limit is $60,000 for withdrawals made after April 16, 2024, up from the previous $35,000. Because the limit applies to each eligible individual, a couple who both qualify can withdraw up to $120,000 combined from their RRSPs. Confirm the figure on the CRA's official Home Buyers' Plan guidance before you finalize your down payment plan, since the amount is indexed to policy changes rather than to inflation.
Two mechanics matter more than the headline number:
- The limit is per person, not per home. Each co-borrower files a separate Form T1036 and reports their own withdrawal.
- Your withdrawal cannot exceed the fair market value of the home. If you buy a $300,000 property, you cannot withdraw $60,000 per person and apply the surplus elsewhere.
- Timing is tight. Funds must be withdrawn in the same calendar year as the purchase or within 30 days after closing, so the withdrawal request has to be in motion before you sign.
Transitional Rules If You Withdrew Before April 16, 2024
If you made an HBP withdrawal under the older $35,000 limit, the higher $60,000 cap does not retroactively apply to that withdrawal. The amount you took out governs your repayment schedule. A common pattern is a buyer who withdrew $35,000 in 2023 and assumes the new limit resets their repayment clock, it does not. Your repayment period and minimum annual amount are fixed at the time of withdrawal.
What Counts as a Qualifying Home
A qualifying home must be:
- Located in Canada
- Intended as your principal residence within one year of buying or building it
- Bought or built under a written agreement
That covers resale homes, new builds, condos, and mobile homes on owned land. It does not cover a rental property you plan to lease out, or a vacation home you won't live in. If you are building, the land and the construction can both qualify, but the home must be ready for occupancy within one year of the withdrawal.
Step-by-Step: How to Withdraw Funds for Your Home Purchase
Withdrawing from the Home Buyers' Plan follows a set sequence. Here is the process:
- Confirm your eligibility. Check the four-year ownership rule for you and your partner.
- Get your written purchase agreement. You need a signed agreement to buy or build before you withdraw.
- Complete CRA Form T1036. This is the Home Buyers' Plan Request to Withdraw form. Your RRSP provider usually supplies it.
- Submit the form to your RRSP provider. They process the withdrawal and issue a T4RSP slip reporting the amount.
- Receive the funds. Timing depends on your provider, so build a buffer before your closing date.
- File Form T1 with your tax return. You report the withdrawal and designate it under the plan.
Home Buyers' Plan Repayment Rules You Need to Know
You must repay what you withdraw, and the Home Buyers' Plan repayment rules are strict. Repayments go back into your RRSP and are not tax-deductible. Your repayment period is 15 years, and it starts in the second calendar year after your withdrawal year. If you withdraw in 2026, your first required repayment year is 2028 and your final year is 2042.
Your minimum annual repayment is your total withdrawal divided by 15. On a $60,000 withdrawal, that is $4,000 per year. On a $35,000 withdrawal, it is roughly $2,333 per year. You can always pay more than the minimum, and paying faster restores your retirement savings sooner.
Worked Repayment Scenarios
| Situation | What Happens |
|---|---|
| You withdraw $60,000 and repay $4,000 each year | No tax owed, plan stays on track |
| You repay $6,000 in a year | Allowed, shortens your timeline and reduces future minimums |
| You repay $2,500 against a $4,000 minimum | The $1,500 shortfall is added to your taxable income for that year |
| You repay nothing in a year | The full $4,000 required amount becomes taxable |
| You repay the full balance early | No further minimums, but no new RRSP deduction |
What Happens If You Miss a Repayment
A missed repayment doesn't trigger a penalty in the usual sense. Instead, the amount you failed to repay is added to your income for that tax year and taxed at your marginal rate. That's often a bigger hit than people expect. If your marginal rate is 30%, a $4,000 shortfall adds roughly $1,200 to your tax bill, and you still owe the $4,000 back into your RRSP in a later year if you want to keep the plan intact.
If cash is tight in a given year, you can repay less than required, but you'll pay tax on the shortfall. Plan your repayments around your budget so you're not caught off guard. A common pattern is to set up automatic monthly contributions to your RRSP equal to one-twelfth of your minimum, which removes the year-end scramble.
HBP vs. First Home Savings Account: Which Should You Use?
The First Home Savings Account (FHSA) is the newer option, and it changes the math for anyone weighing the home buyers plan against it. FHSA contributions are tax-deductible going in, and qualifying withdrawals are tax-free coming out (First Home Savings Account (FHSA)). That's a stronger combination than the Home Buyers' Plan offers on its own.
So which should you use? Many buyers use both. Here's how we think about it:
- Use the FHSA first if you're eligible. Tax-free in, tax-free out beats a loan from your RRSP.
- Use the Home Buyers' Plan to top up your down payment when your RRSP holds more than your FHSA.
- Watch the combined limits. Each program has its own caps, so plan your withdrawals together.
The rules around the Home Buyers' Plan reward planning and punish guesswork. A missed repayment or an eligibility misstep can cost you real money at tax time. We've guided buyers through this market since 1987, combining hands-on client care with strategic negotiation so your purchase stays on track. Book a discovery call to map out your first purchase the right way.
Frequently Asked Questions
Who is considered a first-time homebuyer in Canada for the Home Buyers' Plan?
You qualify as a first-time homebuyer if you have not owned a qualifying home that you occupied as your principal residence in the current calendar year or the four preceding calendar years. This definition applies to you and your spouse or common-law partner. Even if you owned a home more than four years ago, you may still qualify. A person with a disability, or a related person helping a person with a disability, may also qualify under different rules.
How much can you withdraw from an RRSP under the Home Buyers' Plan?
The Home Buyers' Plan withdrawal limit is $60,000 per person, up from the previous $35,000 limit. If you and your spouse or common-law partner both qualify, you can each withdraw up to $60,000 for a combined total of $120,000 toward the same qualifying home. The withdrawal must be made in a single calendar year.
Do you have to repay money withdrawn under the Home Buyers' Plan?
Yes, you must repay the amount you withdraw under the Home Buyers' Plan. Repayment starts the second year after the year you made the withdrawal. You have up to 15 years to repay the full amount through designated contributions to your RRSP. Each year, you must repay at least one-fifteenth of the original withdrawal amount. If you repay less than the minimum, the shortfall is added to your taxable income for that year.
Can spouses both use the Home Buyers' Plan to buy the same home?
Yes, if both you and your spouse or common-law partner qualify as first-time homebuyers, you can each withdraw up to $60,000 from your own RRSPs under the Home Buyers' Plan. This means a couple could access up to $120,000 combined for a down payment on the same qualifying home. Each person must meet the eligibility requirements independently, including the first-time homebuyer definition and the intent to occupy the home as a principal residence within one year of purchase.
