USING RRSPs FOR YOUR DOWN PAYMENT

First-time buyers can use the Home Buyers’ Plan (HBP) to withdraw RRSP funds for their down payment — but the rules are specific and easy to misunderstand. Knowing them in advance helps you avoid costly mistakes.

Here’s what you must know before using RRSPs for your home purchase 👇

1️⃣ You must qualify as a first-time buyer

You cannot have owned a home in the past four years.

✔️ spouse ownership doesn’t disqualify you if you didn’t live there

✔️ applies to principal residences only

✔️ special exceptions may apply

This rule determines whether you’re eligible for the HBP program.

2️⃣ RRSP funds must be in the account for 90 days

Only funds held for at least 90 days are eligible.

✔️ monthly contributions count after 90 days

✔️ partial amounts may qualify

✔️ new deposits must age before withdrawal

Timing your contributions properly is crucial.

3️⃣ You can borrow money to contribute — with conditions

Borrowed funds can be deposited into an RRSP and withdrawn after 90 days.

✔️ lender must allow early repayment

✔️ avoid RRSP products with withdrawal penalties

✔️ use low-fee investment options

Confirm the RRSP type before attempting this strategy.

4️⃣ You can withdraw up to $25,000 under the HBP

Locked-in RRSPs or LIRAs do not qualify.

✔️ $25,000 per person

✔️ $50,000 for couples

✔️ funds must come from a valid RRSP

Verify account type before planning withdrawals.

5️⃣ You must repay the RRSP over 15 years

HBP withdrawals are not free money — repayment is mandatory.

✔️ annual minimum repayment required

✔️ missed payments are taxable

✔️ repayment begins the second year after withdrawal

Failing to repay increases your taxable income.

6️⃣ RRSP contributions may generate a tax refund

Contributions made before the deadline count toward the current tax year.

✔️ refund may help with down payment

✔️ works even if funds were borrowed

✔️ maximize benefits by reinvesting refund

This approach can boost your available funds when timed correctly.

💬 Final Thought

The Home Buyers’ Plan can be a powerful tool for first-time buyers, but the rules around timing, repayment, and account types must be understood clearly to avoid surprises.

If you want help planning your RRSP strategy for a home purchase, The Frontline Mortgage Group can outline the exact steps and timelines to make everything compliant and stress-free.