First-Time Home Buyers' Plan (HBP): Complete Guide for Canadian Buyers

The First-Time Home Buyers' Plan (HBP) is one of the most powerful tools for Canadians saving for a first home. This guide explains how the HBP works, who qualifies, how to withdraw and repay funds, key deadlines, and practical examples to help you plan your purchase with confidence.

What is the HBP?

The HBP allows eligible individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home for themselves or a related person with a disability. Withdrawals are typically tax-free when made under the HBP, provided you meet the repayment terms set by the Canada Revenue Agency (CRA).

Who is eligible?

First-time home buyer status: You are considered a first-time home buyer for HBP purposes if you did not occupy a home that you or your current spouse or common-law partner owned during the four-year period prior to the withdrawal. Special rules apply for persons with disabilities and for certain separated or divorced individuals.

RRSP ownership and contribution timing: The funds you withdraw must have been in your RRSP for at least 90 days before the withdrawal if you want them to be tax-free. Contributions made within the 90-day window may be subject to tax unless properly managed.

Written agreement to buy or build: You must have a written agreement to buy or build a qualifying home before making the withdrawal, or be building a home you intend to occupy as your primary residence.

How much can you withdraw?

As of 2025, you can withdraw up to $35,000 from your RRSP under the HBP. If you and your spouse or common-law partner are both first-time home buyers, each of you can withdraw up to $35,000 from your own RRSPs, which can provide up to $70,000 combined for a purchase.

Making a withdrawal: step-by-step

Step 1 — Confirm eligibility: Verify first-time status, ensure contributions have been in the RRSP for the required period, and have a written purchase or build agreement.

Step 2 — Complete Form T1036: Use CRA Form T1036 'Request to Withdraw from an RRSP Under the Home Buyers' Plan' to authorize your RRSP issuer to make the withdrawal. Keep a copy for your records.

Step 3 — Request the withdrawal from your RRSP issuer: Submit Form T1036 to each financial institution that holds the RRSPs you wish to use. The institution will issue the funds following their internal processes.

Step 4 — Use the funds for the qualifying home: Withdrawn funds should be used toward the purchase or construction of the qualifying home according to the agreement and relevant deadlines.

Repayment rules and timeline

Repayments to your RRSP begin the second year following the year you make the first withdrawal. The repayment period is 15 years, and you must repay at least 1/15th of the total amount withdrawn each year to avoid including that year's required repayment in your income as a taxable amount.

Example: If you withdraw $30,000 under the HBP in 2025, your first required repayment is for the 2027 tax year and equals $2,000 per year. You can make additional voluntary repayments at any time, and amounts you contribute back that exceed the required annual repayment can be claimed as a deduction only when you designate them as a regular RRSP contribution if eligible.

Tax implications and interaction with RRSP contributions

Withdrawn HBP funds are not included in taxable income provided you meet the rules and make the required repayments. Repaying under the HBP is not the same as claiming an RRSP deduction. When you repay, the repayment is added back to your RRSP but you cannot claim a tax deduction for an HBP repayment in the year you repay because the repayment is considered a return of your own funds. However, if you make a regular RRSP contribution in addition to the HBP repayment, you may be able to claim a deduction for that separate contribution based on your contribution room.

Common mistakes and how to avoid them

Missing the 90-day rule: Moving recent contributions into your RRSP less than 90 days before withdrawal can trigger tax consequences. Plan contributions early enough before the HBP withdrawal.

Not filing Form T1036 correctly: Errors or missing documentation can delay withdrawals. Keep copies of all forms and confirmations from your RRSP issuer.

Ignoring repayment start year: Remember that the first repayment year is the second year after the withdrawal. Set up automatic contributions to your RRSP or budget for the annual required repayment to avoid unexpected taxable income.

Practical examples

Single buyer example: Jane withdraws $20,000 from her RRSP in 2025 to buy her first home. Her first required repayment is due for the 2027 tax year and equals $20,000 divided by 15, or $1,333.34. If she misses a repayment in a given year and does not recontribute the amount, that year's required repayment is included in her taxable income.

Couple example: Sam and Alex are both first-time buyers. Sam withdraws $35,000 and Alex withdraws $15,000. Their combined funds provide $50,000 for the purchase. Each will repay their respective amounts over 15 years based on their individual HBP withdrawal totals.

Using the HBP with other programs

First-Time Home Buyer Incentive: The HBP can be used alongside other federal or provincial first-time buyer programs, but each program has its own eligibility rules and implications for down payment, mortgage insurance, and ongoing obligations. Evaluate combined impacts on affordability and long-term finances.

Home Buyers' Amount (tax credit): The non-refundable Home Buyers' Amount is a separate tax credit. Using the HBP does not disqualify you from claiming other federal credits provided you meet their individual criteria.

When the HBP might not be the best option

Penalized RRSPs or lost growth: If your RRSP investments would experience significant growth if left invested, withdrawing them now could mean missing future gains. Compare the long-term opportunity cost against the benefits of a larger down payment.

Insufficient repayment capacity: If you're not confident you can make the annual HBP repayments, consider alternative financing or using other savings so you avoid future tax hits when required repayments are missed.

Frequently asked questions

Can I use the HBP more than once? Yes, but only if you meet the first-time home buyer conditions again at the time of the new withdrawal. The CRA allows repeat participation if the four-year ownership condition is satisfied.

What happens if I sell the home? Selling the home does not remove the obligation to repay the HBP. Repayment rules remain, and you must continue to make annual repayments until the balance is fully repaid or included in income as required.

Can I recontribute early? Yes. You can repay HBP amounts at any time. Any amount repaid in a year is added back to your RRSP and reduces your remaining HBP balance, but it does not create a new RRSP deduction unless you also have contribution room and designate it as such.

Practical tips to maximize the HBP

Plan contributions well in advance: Make RRSP contributions early to satisfy the 90-day rule and avoid last-minute tax complications.

Coordinate with your lender: Communicate with your mortgage broker or lender about timing so the HBP funds are available at closing without delaying the transaction.

Automate repayments: Treat the annual HBP repayment like a recurring bill to avoid missed payments and unplanned taxable income.

Where to get official information

For authoritative and up-to-date rules, refer to the CRA page on the Home Buyers' Plan and the instructions for Form T1036. The official resource is available at Canada Revenue Agency - Home Buyers' Plan.

Key takeaway: The HBP is a tax-efficient way to access RRSP savings for a first home, but it requires careful planning to satisfy eligibility and repayment rules. When used correctly, it can significantly improve your down payment and mortgage terms.

Final thoughts

The HBP remains a flexible and valuable option for many first-time home buyers in Canada. Start by confirming eligibility, plan RRSP contributions and withdrawals in advance, and integrate repayment planning into your broader homeownership budget. When in doubt, consult a tax professional or financial advisor to model scenarios specific to your situation.

If you want, provide details about your timeline, RRSP balance, and purchase price and I can help you model the HBP impact on your down payment and repayment schedule.