What Is the Home Buyers’ Plan and How Does It Work?

The Home Buyers’ Plan is a federal program that lets you withdraw up to $60,000 from your Registered Retirement Savings Plan, tax-free, to buy or build your first home in Canada.¹ If you’re buying with a spouse or common-law partner and each of you qualifies, you can each withdraw up to $60,000 from your own RRSP, for a combined $120,000 toward the same home. The money isn’t a giveaway. You repay it into your RRSP over 15 years on a set schedule, and as long as you keep up, no tax is ever charged on the withdrawal.

Who Qualifies as a First-Time Buyer

The Canada Revenue Agency treats you as a first-time buyer if you did not live in a home that you, your spouse, or your common-law partner owned at any point in the current calendar year before the withdrawal (setting aside the 30 days immediately before it), or at any time in the four preceding calendar years.² For a withdrawal on July 31, 2026, the lookback runs from January 1, 2022 through June 30, 2026. If neither partner owned and occupied a principal residence during that window, you meet the test.

Three other conditions apply. You must be a resident of Canada, and you have to remain one from the first withdrawal until you buy or build the home.³ You need a written agreement to buy or build a qualifying home before making any withdrawal; the agreement must show the signing date, the property address, and the closing date.² And your HBP balance from any earlier use of the plan has to be zero on January 1 of the year you take the new withdrawal.

Disability Exception

If you have a disability, or you’re helping a related person with a disability move into a more accessible home, the first-time buyer requirement is waived. The home has to enable the disabled person to live in a dwelling better suited to their needs.³ A certified Form T2201 (Disability Tax Credit Certificate) must be filed for the year of the withdrawal. If it isn’t approved, the whole withdrawal is treated as ineligible and added to your income for the year you received it.²

Relationship Breakdown Exception

You don’t need to meet the first-time buyer test if you’re separated from your spouse or common-law partner, so long as the separation began in the year of withdrawal or within the previous four years.³ There’s a condition attached. If you still own your former principal residence, you generally have to sell it within two years after the end of the year you made the withdrawal. That disposal requirement is waived if you’re buying out your ex-partner’s share of the same home. The exception itself doesn’t apply at all if your current principal residence is owned and occupied by a new spouse or partner.

What Counts as a Qualifying Home

The home must be a housing unit in Canada. Most residential types qualify: single-family homes, semi-detached homes, townhouses, mobile homes, and condominium units. Apartments in duplexes, triplexes, fourplexes, and larger buildings count, and so does a share in a co-operative housing corporation that gives you an equity interest in a Canadian housing unit.² Property outside Canada does not qualify under any circumstances.

How Much You Can Withdraw

The current per-person limit is $60,000.¹ The ceiling was raised from $35,000 for withdrawals made after April 16, 2024. Two eligible partners buying together can each withdraw up to $60,000 from their own RRSPs, so the combined pull for a single home purchase can reach $120,000.

One timing rule catches people out. RRSP contributions you intend to withdraw under the HBP must have been in your RRSP for at least 90 days before you take them out. If you deposit money and pull it back sooner, the CRA may disallow the RRSP deduction you claimed on that contribution. If you’re planning to top up your RRSP specifically to fund a down payment, do it at least three months before the expected withdrawal date.

How to Make the Withdrawal

You withdraw HBP funds by completing Form T1036 and giving it to the financial institution that holds your RRSP.⁴ The form asks for the address of the qualifying home, your RRSP contract number, and the amount you want to withdraw. You also certify that you intend to occupy the home as your principal residence within one year of buying or building it. You fill out Area 1, the institution fills out Area 2, and neither of you sends it to the CRA. You each keep a copy.

If you have RRSPs at more than one institution, you’ll need a separate T1036 for each, and the combined total across all forms can’t exceed $60,000. The institution issues the payment without withholding income tax, so the full requested amount comes to you. A regular RRSP withdrawal would have tax deducted at source; an HBP withdrawal does not.

Timing Relative to Closing

People often assume they have 30 days after closing to make the withdrawal. The rule runs the other way: you generally cannot acquire the home more than 30 days before making the HBP withdrawal.³ Withdraw before or shortly after closing, not weeks later. Separately, you (or the specified disabled person) must acquire or build the qualifying home before October 1 of the year after your first withdrawal. A first withdrawal in 2026 means the home has to be acquired by October 1, 2027.

If the Purchase Falls Through

If your original deal collapses after you’ve withdrawn the funds, you can designate a different qualifying home as a replacement property. Write to the CRA with your name, social insurance number, the address of the replacement property, and a statement that you’ll occupy it as your principal residence within one year.³ A written agreement for the replacement property must be in place before October 1 of the year after your first withdrawal, and you must actually acquire it before October 1 of the second year after that withdrawal.

How Repayment Works

You have 15 years to repay the full amount back into your RRSP, a pooled registered pension plan, or a specified pension plan.⁵ The minimum annual payment is the outstanding balance divided by the years remaining. Withdraw $60,000 over 15 years and you owe at least $4,000 a year.

When repayments start depends on when you first withdrew:

For withdrawals before January 1, 2022, repayment begins in the second year after the year of your first withdrawal. A 2020 withdrawal meant the first repayment was due for 2022.
For withdrawals between January 1, 2022 and December 31, 2025, a temporary relief measure pushes the start date to the fifth year after the year of first withdrawal. A 2023 withdrawal means the first repayment is due for 2028.⁵

You report each year’s repayment on Schedule 7. When you contribute to your RRSP, you designate the amount as an HBP repayment instead of claiming it as a new deduction. A dollar can do one job or the other, never both.⁵

Missing a Repayment

If you don’t meet the minimum in a given year, the shortfall is added to your taxable income for that year and taxed at your marginal rate. Once a missed amount is included in income, it’s gone. You can’t repay it later to reverse the tax. That portion is permanently removed from your HBP balance and you lose the associated RRSP room. At the end of the 15 years, any remaining balance is added to your income in that final year, with no option to extend the schedule.

Using the HBP Alongside a First Home Savings Account

The First Home Savings Account is a separate program for first-time buyers, and you can use both the FHSA and the HBP toward the same qualifying home.¹ They have separate contribution limits and separate rules. The main practical difference is that FHSA withdrawals for a qualifying home purchase are permanently tax-free with no repayment. HBP withdrawals must go back into your RRSP over 15 years. If you have both accounts, drawing FHSA funds first and using the HBP for any remaining gap is generally the more flexible order.

Cancelling, Leaving Canada, or Dying Mid-Plan

Cancelling Your Participation

If the purchase falls through completely and no replacement property works out, you can cancel your HBP participation by returning the full withdrawn amount to your RRSP by the applicable deadline. Repay on time and the withdrawal isn’t taxed.⁶ The deadline depends on why you’re cancelling:

If you didn’t buy or build, the deadline is December 31 of the year after your first withdrawal. If you received a one-year extension to find a property but still didn’t buy, the deadline stretches to December 31 of the second year after your first withdrawal.
If you lost Canadian residency, the deadline is generally December 31 of the year after your first withdrawal. If you’re a non-resident when you file your return, the deadline may be the earlier of that date or the date you actually filed.
If a marriage or common-law partnership breakdown is the reason, the deadline is December 31 of the second year after your first withdrawal.⁶

To make it official, file Form RC471 or a letter explaining the reason; the CRA must receive it within 60 days after your cancellation payment deadline. Any portion not repaid by the deadline is included in your income for the year you originally received the funds.

Becoming a Non-Resident

If you leave Canada before buying a qualifying home, you must either cancel your HBP participation or include the full withdrawal in your income for the year you withdrew.⁵ If you leave after buying, the schedule collapses. You have to repay the entire remaining HBP balance to your RRSP within 60 days of becoming a non-resident, or before filing your return for that year, whichever comes first. Otherwise the full remaining balance goes on your income for the year you left. Continuing the ordinary 15-year schedule from abroad is not an option.

Death of a Participant

When an HBP participant dies, the outstanding balance is normally included in the deceased’s income on the final tax return. Any RRSP contribution made before death and designated as an HBP repayment for that year reduces the amount included. If the deceased had a surviving spouse or common-law partner who is a Canadian resident, that person can jointly elect with the estate’s legal representative to take over the remaining repayments. Where that election is made, nothing is included on the deceased’s final return; the surviving partner instead repays the balance into their own RRSP over the years remaining on the original schedule. The election is made by attaching a signed letter to the deceased’s final return.⁷

When a Withdrawal Is Ruled Ineligible

If the CRA later decides any condition wasn’t met (you weren’t a first-time buyer, you didn’t have a written agreement, you failed to maintain residency, or you didn’t occupy the home within one year), the withdrawal is reclassified as a regular RRSP withdrawal.³ The full amount is added to your income for the year you received it and taxed at your marginal rate. Because no tax was withheld when the funds were paid out, the whole bill lands when you file. Getting the eligibility details right before the withdrawal is where the real risk in this program lives.

1
Canada Revenue Agency. The Home Buyers’ Plan
2
Canada Revenue Agency. Definitions for Home Buyers’ Plan
3
Canada Revenue Agency. How to Participate in the Home Buyers’ Plan
4
Canada Revenue Agency. T1036 Home Buyers’ Plan (HBP) – Request to Withdraw Funds from an RRSP
5
Canada Revenue Agency. How to Repay the Amounts Withdrawn from Your RRSPs Under the Home Buyers’ Plan
6
Canada Revenue Agency. How to Cancel a Participation in the Home Buyers’ Plan
7
Government of Canada. Deceased Participated in the Home Buyers’ Plan (HBP)