Costs and closing
RRSP Home Buyers' Plan (HBP)
A program that lets a first-time buyer withdraw up to $60,000 from an RRSP tax-free for a home, repayable over 15 years.
Also called HBP.
The Home Buyers' Plan lets you take up to $60,000 out of your RRSP without paying tax, as long as you're a first-time buyer under the CRA definition. Two qualifying buyers can withdraw $120,000 between them.
It's a loan from yourself. Repayment starts in the second year after the withdrawal and runs over 15 years. If you miss a scheduled repayment, that year's amount is added to your taxable income.
One rule catches people every year: money has to sit in the RRSP for 90 days before you can withdraw it under the plan. Contributing in February for the deduction and withdrawing in March doesn't work.
The HBP stacks with the FHSA. The FHSA is generally the better account to fill first, because its withdrawals are permanently tax-free and never have to be repaid.
Related terms
First Home Savings Account (FHSA)
A registered account for first-time buyers: $8,000 a year up to a $40,000 lifetime cap, deductible going in and tax-free coming out.
First-time home buyer
For most federal programs, someone who hasn't owned a home they lived in during the current year or the 4 preceding calendar years.
Down payment
The cash you put into the purchase: 5% up to $500,000, 10% on the portion to $1.5M, and 20% above that.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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