Home Buyers’ Plan (HBP) Guide: Using Your RRSP for Your First Home in Canada

Mortgages & Home Buying

Home Buyers’ Plan (HBP) Guide: Using Your RRSP for Your First Home in Canada

Mar 20, 202624 min read

What Is the Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan (HBP) is a Canadian federal government program that allows first-time home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home. For couples buying together, each person can withdraw up to $35,000, bringing the combined total to $70,000 in tax-free RRSP withdrawals directed toward your first home purchase.

Unlike regular RRSP withdrawals — which are immediately added to your taxable income — HBP withdrawals are not taxed at the time of withdrawal, provided you repay the full amount back into your RRSP within 15 years. This makes the HBP an interest-free loan from your own retirement savings, giving you access to significant funds for your down payment without the immediate tax consequences.

In this comprehensive 2026 guide, we will cover everything you need to know about the Home Buyers’ Plan, including eligibility requirements, the withdrawal process, repayment schedule, qualifying home types, and advanced strategies for combining the HBP with the First Home Savings Account (FHSA) to maximize your home buying power.

HBP Eligibility Requirements

To participate in the Home Buyers’ Plan, you must meet several specific requirements established by the Canada Revenue Agency (CRA). Understanding these requirements before you begin the process will help ensure a smooth withdrawal experience.

First-Time Home Buyer Definition

For HBP purposes, you are considered a first-time home buyer if you did not own a home that you occupied as your principal place of residence during the period beginning January 1 of the fourth year before the year of withdrawal and ending 31 days before the withdrawal. Your spouse or common-law partner must also meet this condition.

If you previously owned a home, you may regain first-time buyer status after four years of not owning a home in which you lived. This means that individuals who sold their home and have been renting for over four years may be eligible for the HBP again, even if they used the program in the past (provided any previous HBP balance has been fully repaid).

Complete Eligibility Checklist

Many first-time buyers make the mistake of making a large RRSP contribution and immediately trying to withdraw under the HBP. The 90-day rule means your contributions must sit in your RRSP for at least 90 days before they are eligible for HBP withdrawal. Plan your contributions well in advance of your expected home purchase date. If you contribute on January 15 and need to withdraw for a closing date on March 30, you will not have met the 90-day requirement.

Disability Exception to First-Time Buyer Rule

There is an important exception to the first-time buyer requirement. If you are a person with a disability or you are helping a related person with a disability buy a home, you may be able to participate in the HBP even if you do not meet the first-time buyer definition, provided certain conditions are met regarding the suitability of the new home for the person with a disability.

How the HBP Withdrawal Process Works

Once you have confirmed your eligibility, the actual HBP withdrawal process involves several steps that must be completed in the correct order and within specific timeframes.

1. Confirm Your RRSP Balance and Eligibility

   Review your RRSP balance to determine how much you can withdraw (up to the $35,000 maximum). Ensure your contributions have been in the account for at least 90 days and that you meet all eligibility requirements.



2. Obtain a Written Agreement

   Secure a signed purchase agreement for a qualifying home, or a written agreement with a contractor to build one. You need this before you can make your HBP withdrawal.



3. Complete Form T1036

   Fill out CRA Form T1036 (Home Buyers’ Plan Request to Withdraw Funds from an RRSP). This form is your official request to withdraw funds under the HBP and must be submitted to your RRSP issuer.



4. Submit the Form to Your Financial Institution

   Provide the completed T1036 to the financial institution that holds your RRSP. They will process the withdrawal and issue you the funds. No withholding tax is deducted from HBP withdrawals.



5. Receive Your Funds

   Your financial institution will process the withdrawal and deposit the funds into your bank account. Processing times vary but typically take 5 to 10 business days.



6. Complete Your Home Purchase

   Use the funds toward your home purchase. You must buy or build the qualifying home before October 1 of the year following the year of withdrawal.



7. Report on Your Tax Return

   Report the HBP withdrawal on your income tax return for the year you received the funds. This is done using Schedule 7.

The $35,000 Withdrawal Limit Explained

The HBP allows a maximum withdrawal of $35,000 per individual. This limit was increased from the previous $25,000 limit, reflecting the rising cost of housing across Canada. Here are the key details about the withdrawal limit:

Individual vs. Couple Withdrawals

Each eligible individual can withdraw up to $35,000, regardless of whether they are purchasing the home alone or with a partner. When two eligible first-time buyers purchase a home together, they can each withdraw up to $35,000 from their respective RRSPs, for a combined total of $70,000.

Partial Withdrawals

You do not have to withdraw the full $35,000. You can withdraw any amount up to the maximum, and you can make multiple withdrawals in the same year or across two calendar years, as long as the total does not exceed $35,000 and you meet the timing requirements.

Multiple RRSP Accounts

If you have RRSPs at multiple financial institutions, you can make HBP withdrawals from more than one account. You will need to submit a separate Form T1036 to each institution, and the combined total of all withdrawals must not exceed $35,000.

HBP Repayment Schedule and Rules

The repayment of your HBP withdrawal is one of the most important aspects of the program to understand. Failing to make required repayments will result in the unpaid amounts being added to your taxable income.

When Repayment Begins

You must begin repaying your HBP withdrawal starting in the second calendar year following the year you made the withdrawal. For example, if you made your HBP withdrawal in 2026, your first repayment would be due for the 2028 tax year (with the payment needing to be made by the RRSP contribution deadline for 2028, which would be March 1, 2029).

How Repayment Works

The total amount you withdrew is divided into 15 equal annual repayments. Each year, you must contribute at least the minimum repayment amount to your RRSP and designate it as an HBP repayment on your tax return (Schedule 7).

Repayment Examples

If you do not make the minimum required repayment in any given year, the shortfall amount is added to your taxable income for that year. This means you will pay income tax on that portion as if you had made a regular RRSP withdrawal. This can result in a significant and unexpected tax bill, particularly if you are in a higher tax bracket. Set up automatic contributions to ensure you never miss a repayment.

Accelerated Repayment

You can repay more than the minimum required amount in any year. Extra repayments reduce your outstanding HBP balance and lower your future minimum repayment amounts. If you come into extra money — a bonus, tax refund, or inheritance — consider making a larger HBP repayment to reduce the burden in future years.

Qualifying Homes Under the HBP

The HBP can be used to purchase or build a variety of housing types in Canada. Understanding what qualifies as a “qualifying home” ensures your withdrawal will be accepted and remain tax-free.

Types of Qualifying Homes

A qualifying home is a housing unit located in Canada that you intend to occupy as your principal place of residence within one year of purchase or construction. Qualifying homes include:

• Detached houses: Single-family homes on their own lot
• Semi-detached houses: Homes sharing one wall with a neighbouring unit
• Townhouses and row houses: Multi-unit complexes with shared walls
• Condominium units: Individual units within a condominium corporation
• Mobile homes: Factory-built homes that can be transported to a site
• Apartments: Units in duplexes, triplexes, fourplexes, or apartment buildings
• Co-operative housing shares: A share in a housing co-operative that entitles you to occupy a unit

Existing Homes vs. New Construction

Both existing homes and new construction qualify for the HBP. If you are building a home, you can make HBP withdrawals during the construction period, but the home must be completed and occupied as your principal residence by October 1 of the year following the year of your withdrawal.

If you are purchasing a pre-construction condominium, timing is particularly important. You need a written agreement of purchase and sale to make your HBP withdrawal, but you must occupy the home within the required timeframe. If construction delays push your occupancy beyond the deadline, you may need to request an extension from the CRA or face adverse tax consequences.

The First-Time Home Buyer Definition: A Deeper Look

The definition of a “first-time home buyer” under the HBP is more nuanced than many people realize. Understanding these nuances can be the difference between qualifying and being denied.

The Four-Year Look-Back Period

You qualify as a first-time home buyer if, during the period beginning January 1 of the fourth year before the year of your HBP withdrawal and ending 31 days before your withdrawal, neither you nor your spouse or common-law partner owned a home that served as your principal residence.

Scenario Analysis

Combining the HBP With the FHSA

The introduction of the First Home Savings Account (FHSA) in 2023 created a powerful opportunity for first-time buyers to combine two distinct programs for maximum benefit. Understanding how these programs work together is essential for optimizing your home buying strategy in 2026.

Combined Power: Up to $75,000 Per Person

By maxing out both programs, a single individual can access up to $75,000 in tax-advantaged funds for their first home purchase. Here is how the math works:

Priority Strategy: FHSA First, Then HBP

If you have limited funds to save, prioritize your FHSA contributions over RRSP contributions intended for the HBP. The reason is simple: FHSA withdrawals never need to be repaid, while HBP withdrawals must be repaid over 15 years. By maximizing your FHSA first, you minimize the future repayment obligation.

1. Open and Max Out Your FHSA

   Contribute $8,000 per year to your FHSA, aiming for the $40,000 lifetime maximum. The tax deduction and tax-free growth make this your top priority.



2. Contribute to Your RRSP for the HBP

   Once your FHSA is on track, direct additional savings to your RRSP. Remember the 90-day rule — contributions must be in your RRSP for at least 90 days before HBP withdrawal.



3. Coordinate Withdrawal Timing

   Plan your FHSA qualifying withdrawal and HBP withdrawal to align with your home purchase closing date. Both can be done simultaneously.



4. Use Combined Funds for Down Payment

   Apply the combined FHSA and HBP funds toward your down payment and closing costs. A larger down payment may help you avoid CMHC mortgage insurance.



5. Set Up HBP Repayment Schedule

   After your purchase, establish automatic RRSP contributions for your HBP repayment schedule. Remember, FHSA funds never need to be repaid.

If your combined FHSA and HBP funds can bring your down payment to 20% or more of the purchase price, you will avoid the requirement for Canada Mortgage and Housing Corporation (CMHC) mortgage insurance. This insurance can cost thousands of dollars and is added to your mortgage balance. For a couple with $150,000 combined from both programs, this means a mortgage insurance-free purchase on homes up to $750,000.

HBP Withdrawal Timing and Deadlines

The HBP has specific timing requirements that must be carefully managed to avoid complications or loss of eligibility.

Key Deadlines

Planning Your Timeline

Working backward from your expected closing date is the best approach to HBP timing:

• 6+ months before closing: Make any new RRSP contributions you plan to use for the HBP (to satisfy the 90-day rule with a comfortable buffer)
• 3-4 months before closing: Confirm your RRSP balance and verify that all contributions have met the 90-day requirement
• 1-2 months before closing: Complete Form T1036 and submit to your financial institution
• At closing: Ensure HBP funds have been received and are available for the down payment

HBP and Your Credit Score

While the HBP itself does not directly impact your credit score, it plays an important role in your overall mortgage application and financial health.

How a Larger Down Payment Helps

Using the HBP to increase your down payment can benefit your mortgage application in several ways, particularly important for buyers with less-than-perfect credit:

• Lower loan-to-value ratio: A larger down payment means borrowing less relative to the home’s value, which reduces lender risk
• Potentially lower mortgage rate: Some lenders offer better rates for lower loan-to-value ratios
• Avoiding mortgage insurance: If your down payment reaches 20%, you eliminate the CMHC insurance premium
• Smaller monthly payments: Borrowing less means lower monthly obligations, improving your debt service ratios

The period while you are building your RRSP for the HBP is also an excellent time to work on improving your credit score. Pay all bills on time, reduce credit card balances below 30% of your limits, avoid opening unnecessary new credit accounts, and check your credit report for errors. A higher credit score when you apply for your mortgage will help you secure a better interest rate, potentially saving you tens of thousands over the life of your mortgage.

Common HBP Mistakes and How to Avoid Them

Over the years, many first-time buyers have encountered pitfalls with the HBP. Learning from these common mistakes can save you from costly errors.

Mistake 1: Failing to Meet the 90-Day Rule

Contributing to your RRSP and immediately trying to withdraw under the HBP is one of the most common errors. The CRA may deny the tax deduction on contributions that were clearly made solely for HBP withdrawal if they do not meet the 90-day requirement.

Mistake 2: Not Designating Repayments Correctly

When you make your annual RRSP contribution that is intended as an HBP repayment, you must designate it as such on Schedule 7 of your tax return. Simply contributing to your RRSP without making this designation means the contribution counts as a regular RRSP contribution, and the CRA will still consider your HBP repayment as missed.

Mistake 3: Ignoring the Impact on Retirement Savings

Withdrawing $35,000 from your RRSP removes that money from tax-sheltered compound growth. Over 25 years at a 7% return, that $35,000 would have grown to approximately $190,000. While the HBP is still beneficial because you are investing in real estate instead, it is important to factor in the opportunity cost and prioritize repayments.

Mistake 4: Missing Repayment Deadlines

Life gets busy after buying a home, and it is easy to forget about the annual HBP repayment. Set up automatic RRSP contributions specifically for your HBP repayment to avoid having the amount added to your taxable income.

Mistake 5: Not Considering the FHSA Alternative

Since the introduction of the FHSA, some buyers use the HBP when they would be better served by the FHSA, which does not require repayment. If you have time to build up FHSA savings, this should generally be your first priority.

HBP for Self-Employed Canadians

Self-employed Canadians can participate in the HBP just like employed individuals, but there are additional considerations to keep in mind.

RRSP Contributions for the Self-Employed

As a self-employed individual, your RRSP contribution room is based on your earned income from the previous tax year. This means your contribution room may fluctuate from year to year, making it important to plan your HBP contributions well in advance.

Tax Planning Considerations

Self-employed individuals often have more variable income, which creates both opportunities and challenges for HBP planning. In high-income years, the tax deduction from RRSP contributions is more valuable. However, the HBP repayment obligation of approximately $2,333 per year (on a full $35,000 withdrawal) becomes an additional fixed financial commitment that must be managed alongside the inherent income variability of self-employment.

HBP and Different Property Types

Understanding how the HBP applies to various property types helps you plan your purchase strategy effectively.

Multi-Unit Properties

You can use the HBP to purchase a multi-unit property (such as a duplex or triplex) as long as you intend to live in one of the units as your principal residence. This is a popular strategy for first-time buyers who want to offset their mortgage costs with rental income from other units.

Building a Home

The HBP can be used when building a home, not just purchasing an existing one. The same rules apply, but your timeline for occupying the home may need to account for construction delays. The home must generally be completed and occupied by October 1 of the year following the year of your HBP withdrawal.

Purchasing a duplex or triplex with your HBP funds is often called “house hacking.” You live in one unit and rent out the others. The rental income can help cover your mortgage payments, making homeownership more affordable. Just ensure you occupy one unit as your principal residence to maintain HBP compliance.

Provincial Considerations for the HBP

While the HBP is a federal program, provincial programs and tax rules can interact with your HBP strategy in important ways.

Provincial Land Transfer Tax Rebates

HBP Repayment Strategies

Developing a smart repayment strategy can minimize the impact of your HBP withdrawal on your long-term retirement savings.

1. Set Up Automatic Monthly Contributions

   Divide your annual repayment amount by 12 and set up automatic monthly RRSP contributions. For a $35,000 withdrawal, this is approximately $194 per month. Automating this process ensures you never miss a repayment.



2. Use Tax Refunds to Accelerate Repayment

   Your RRSP contributions (including HBP repayments that also serve as regular RRSP contributions above the minimum) generate tax refunds. Redirect these refunds back into your RRSP to accelerate your HBP repayment.



3. Increase Payments When Possible

   Whenever your income increases, consider increasing your HBP repayment amount. Paying off the HBP faster restores your RRSP balance sooner, giving those funds more time for tax-sheltered growth.



4. Coordinate With Other Financial Goals

   Balance your HBP repayment with other financial priorities such as TFSA contributions, emergency fund building, and mortgage prepayments. Work with a financial advisor to optimize your overall plan.

Tax Implications and Reporting

Proper tax reporting of your HBP participation is essential to avoid problems with the CRA.

Reporting the Withdrawal

When you make an HBP withdrawal, your financial institution will issue a T4RSP slip showing the withdrawal. This amount is reported on your tax return, but as an HBP withdrawal, it is not included in your taxable income. You must complete Schedule 7 to report the withdrawal and subsequent repayments.

Annual Repayment Reporting

Each year during the repayment period, you must designate part of your RRSP contributions as HBP repayments on Schedule 7. The CRA tracks your HBP balance and will notify you of the minimum required repayment amount on your annual Notice of Assessment.

Frequently Asked Questions About the HBP

Long-Term Financial Impact of the HBP

Understanding the long-term financial implications of the HBP helps you make an informed decision about whether and how much to withdraw.

Opportunity Cost Analysis

While the opportunity cost may seem significant, remember that the HBP funds are being redirected to another investment — your home. Canadian real estate has historically provided strong returns, and the savings on mortgage interest from a larger down payment can offset much of the RRSP growth forgone.

The decision to use the HBP should be part of a comprehensive financial plan that balances homeownership goals with retirement savings. For most Canadians, owning a home is a significant component of long-term wealth building, and using the HBP to achieve homeownership sooner can be financially beneficial, provided you maintain discipline with the repayment schedule and continue contributing to your retirement savings beyond the minimum HBP repayment.

Final Thoughts: Making the Most of the HBP in 2026

The Home Buyers’ Plan remains one of the most valuable programs available to Canadian first-time home buyers, especially when combined with the newer FHSA. Together, these programs can provide up to $75,000 per person in tax-advantaged home buying funds, making homeownership significantly more attainable even in Canada’s challenging real estate market.

The key to success with the HBP is planning ahead. Start building your RRSP early, understand the eligibility requirements, meet the 90-day contribution rule, and establish a disciplined repayment strategy before you make your withdrawal. Combined with efforts to build and maintain a strong credit score, the HBP can be the foundation of your homeownership journey.

Whether you are a young professional just starting to save, a couple planning to buy your first home together, or someone who previously owned a home and has regained first-time buyer status, the HBP is designed to help you achieve your homeownership goals while maintaining your long-term financial health.

Take the first step today by reviewing your RRSP balance, checking your eligibility, and creating a savings plan that combines the HBP with the FHSA for maximum impact. Your first home may be closer than you think.