Insights &
Perspectives.

Here is one way to come up with a down payment for a home purchase.

HBP is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year. TAX FREE!

How does it work?
As mentioned above, if you are a first time home buyer, you can withdraw up to $25,000 out of your RRSP tax free! If you are purchasing the home with a spouse, you can both withdraw $25k EACH from your accounts. In terms of repayment, you have up to 15 years to pay back your RRSP starting the second year after the year of withdrawal (from govt website). At this time 1/15 of your borrowed amount must be paid back / year.

What’s the catch?
In terms of penalties, if you don’t repay 1/15 of the borrowed amount / year, you’ll have to add the amount as income.

You MUST be a first time home buyer and a resident of Canada at the time of withdrawal.

You MUST purchase/build the home before Oct 1 after the year of withdrawal.

RRSP contributions of up to 90 days before the withdrawal date can be used towards the HBP.

For more info visit http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html

When we bought our first house, we fortunately have saved a bit of cash for a down payment to buy a house but unfortunately, did not have enough for closing close. This is the time when we found about the Home Buyers' Plan (HBP). 

HBP is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year. TAX FREE!

How does it work?
As mentioned above, if you are a first time home buyer, you can withdraw up to $25,000 out of your RRSP tax free! If you are purchasing the home with a spouse, you can both withdraw $25k EACH from your accounts. In terms of repayment, you have up to 15 years to pay back your RRSP starting the second year after the year of withdrawal (from govt website). At this time 1/15 of your borrowed amount must be paid back / year.

What’s the catch?
In terms of penalties, if you don’t repay 1/15 of the borrowed amount / year, you’ll have to add the amount as income.

You MUST be a first time home buyer and a resident of Canada at the time of withdrawal.

You MUST purchase/build the home before Oct 1 after the year of withdrawal.

RRSP contributions of up to 90 days before the withdrawal date can be used towards the HBP.

For more info visit http://www.cra-arc.gc.ca/E/pub/tg/rc4135/rc4135-e.html