Do you or someone you know need help coming up with the down payment for a first mortgage?

There is an option which will help you if you already have an RRSP. It’s called the Home Buyers’ Plan, and not everyone is aware of it.

What is the Home Buyer’s Plan?

“The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.” (reference

Who Qualifies as a First-Time Home Buyer?

Unless you are purchasing on behalf of someone with a disability, you must NOT have owned a home or been married to someone who owns a home for a four year period beginning on January 1st of the fourth year before the year you draw the RRSP funds.

Why Should I Use RRSP funds for a Down Payment?

You need at least 20% down if you want to avoid default insurance premiums, so hopefully you’ve saved as much as you can for that down payment.

Let’s say you’ve saved the appropriate amount and are ready to start looking for a home. Consider that whether you have the full amount or not, you might want to consider transferring as much as you can to your RRSP to “borrow against yourself”.

You may use $25,000 from your RRSP as a down payment on your home purchase. Couples may use $50,000!

If you plan accordingly, you can deposit money from your savings into an RRSP fund (if you have enough contribution room), and draw on it through the Home Buyers’ Plan. The money MUST be deposited at least 90 days prior to the completion of the home purchase.

What are the PROS of borrowing from your RRSP?

  • You can claim the RRSP contribution as a tax deduction on that year’s taxes, even if you withdrew it for the down payment.
  • You can set up an automatic RRSP repayment and spread it out over the next 15 years.
  • If you repay the RRSP withdrawal within 15 years, it’s non-taxable!

What are the CONS of borrowing from your RRSP?

  • You need to budget for that extra RRSP repayment, on top of your mortgage payment.
  • You must NOT miss a payment, just like your mortgage payment.
  • You MUST intend to occupy the home within one year of purchasing it.

If you’re sure of your future income, then this option through the Home Buyers’ Plan may allow you to purchase a home sooner rather than later.

But, do your homework! Take time to figure out the financial pros and cons of using RRSP money to reduce mortgage payments. Speak to your financial advisors and fully understand what it means for you and your financial future.

Ask your financial representative about this option, and be sure to fill out a Form T1306 which requests withdrawal of funds from your RRSP.

MORE INFO can be found on the Government of Canada website.