RRSP Home Buyers' Plan 2025: The New $60,000 Limit, Repayment Rules, and Pitfalls

What Is the Home Buyers' Plan and Who Qualifies

The Home Buyers' Plan (HBP) is a federal program that allows first-time home buyers to temporarily withdraw funds from their RRSP to purchase or build a qualifying home — without triggering the usual tax on RRSP withdrawals. The withdrawn amount is treated as a loan against your own RRSP, which you repay over time.

Eligibility requirements:

• You must be a first-time home buyer under the CRA's definition: you have not owned a home that you occupied as your principal place of residence at any point during the current calendar year or the preceding four calendar years.
• You must be a Canadian resident at the time of the withdrawal and when you sign the purchase agreement.
• You must have a written agreement to buy or build a qualifying home before October 1 of the year after the withdrawal.
• You must intend to occupy the home as your principal place of residence within one year of purchase or construction.

The four-year look-back window is critical. If you owned a home and sold it five years ago, you likely qualify again. If you sold it three years ago, you don't yet. Check the exact dates carefully before withdrawing.

The New $60,000 Limit

Budget 2024 increased the HBP withdrawal limit from $35,000 to $60,000 per person. This increase applies to withdrawals made on or after April 16, 2024.

Key points about the new limit:

• The $60,000 limit is per person, per home. A qualifying couple (both meeting the first-time buyer test) can each withdraw up to $60,000, for a combined maximum of $120,000.
• You don't have to withdraw the full $60,000 — you can take any amount up to the limit.
• You can make multiple withdrawals across different calendar years, as long as the total doesn't exceed $60,000 and you haven't yet bought the home.
• If you withdrew under the old $35,000 limit before April 16, 2024, you cannot top up under the new limit — the window has passed.

How to Withdraw: The Process

Withdrawing under the HBP is straightforward but requires completing the right form:

1. Complete Form T1036 (Home Buyers' Plan — Request to Withdraw Funds from an RRSP). Complete a separate form for each RRSP withdrawal you make (if withdrawing from multiple accounts or in multiple amounts).
2. Give the form to your RRSP issuer (your bank or investment firm). They will process the withdrawal without withholding tax — unlike regular RRSP withdrawals, HBP withdrawals are not subject to withholding.
3. Ensure the 90-day rule is met. The funds you withdraw must have been in the RRSP for at least 90 days before the withdrawal date. Contributions made within 90 days of withdrawal cannot be used for the HBP — and may not be deductible on your tax return.
4. Use the funds for the qualifying home. The purchase must close, or construction must begin, before October 1 of the year following the withdrawal.

Your RRSP issuer will issue a T4RSP slip showing the HBP withdrawal amount in Box 27. This amount is not added to your income as long as you meet all HBP conditions and make the required repayments. You report the withdrawal on Schedule 7 of your T1 return each year.

Repayment: The 15-Year Schedule

The HBP is not a gift from the government — it's a loan from your future self. The amount you withdrew must be repaid into your RRSP (or a spousal RRSP) over 15 years, with repayments beginning 2 years after the year you made your first withdrawal.

Here's how the repayment math works:

• Annual repayment obligation: Total HBP balance ÷ 15 years. If you withdrew $60,000, your annual obligation is $4,000 per year.
• Repayments must be designated: When you make an RRSP contribution you intend to count as an HBP repayment, you designate it on Schedule 7 of your T1 return. The contribution is NOT deducted from income — it's applied against your HBP balance instead.
• Missed payments become income: If you don't repay your annual obligation, the CRA adds that amount to your taxable income for that year. At a 33% combined rate, missing a $4,000 repayment costs you $1,320 in tax that year.
• You can repay faster: Nothing stops you from repaying more than the minimum each year, reducing the balance and the remaining annual obligations.

HBP vs. FHSA: Which Is Better for First-Time Buyers?

With the introduction of the FHSA in 2023, first-time buyers now have two tools for tax-sheltered down payment savings. They're different enough that the right choice depends on your situation:

• FHSA wins if you're starting from scratch: The FHSA has no repayment obligation. Qualifying FHSA withdrawals are completely tax-free, period. The HBP requires repaying the money into your RRSP over 15 years, or losing RRSP room. For someone who doesn't yet have significant RRSP savings, the FHSA is clearly superior.
• HBP wins if you already have substantial RRSP savings: If you've been contributing to an RRSP for years and have $60,000+ sitting in it, the HBP lets you put that money to work for a home purchase without a tax bill — no new contribution needed.
• Use both for maximum impact: The HBP and FHSA can be used for the same qualifying home purchase. This is the most powerful strategy: contribute to the FHSA first (up to $40,000 lifetime for tax-free withdrawal), then supplement with HBP from your RRSP. That's up to $100,000 per person in tax-sheltered down payment funds.

Common Pitfalls

• Violating the 90-day rule: Contributing to an RRSP and immediately withdrawing for the HBP doesn't work. The funds must sit for 90 days. Plan your timeline carefully, especially if you contributed recently.
• Not repaying on schedule: Missing even one year's repayment results in that amount being added to your income. Set up automatic RRSP contributions scheduled for the right amount each year to avoid accidental misses.
• Not designating repayments: Making an RRSP contribution doesn't automatically count as an HBP repayment. You must designate it on Schedule 7. Failing to do this means the contribution is treated as a deductible RRSP contribution (which seems fine until you realize you're getting taxed on the HBP balance income instead).
• Using the HBP when the FHSA would have been better: If you haven't maximized your FHSA room first (up to $40,000), depleting your RRSP via HBP may not be optimal. The FHSA withdrawal has no repayment requirement.
• Forgetting the first-time buyer test for your spouse: If only one spouse qualifies under the 4-year look-back test, only that spouse can use the HBP. The other spouse's withdrawal would be treated as a regular taxable RRSP withdrawal.

Frequently Asked Questions

Can my spouse and I both use the HBP on the same home purchase?

Yes. If both spouses are first-time buyers (meeting the 4-year look-back test independently), each can withdraw up to $60,000 from their individual RRSPs, for a total of up to $120,000 as a couple. Each person must complete their own Form T1036 and track their own HBP balance and repayments separately. One spouse qualifying does not automatically qualify the other.

What happens if I miss a repayment year?

The amount you were supposed to repay but didn't is added to your taxable income for that year. For example, if your annual repayment obligation is $4,000 and you contribute nothing designated as an HBP repayment, $4,000 is reported as income on your T1 and taxed at your marginal rate. Over many years of missed payments, this can significantly erode the tax advantage of the original withdrawal.

Can I use both the HBP and the FHSA for the same home purchase?

Yes. The HBP and FHSA are entirely separate federal programs and can both be used for the same qualifying home purchase. Using both maximizes the tax-sheltered savings you can deploy toward your down payment — up to $60,000 from the HBP and up to $40,000 from the FHSA (per person), for a potential total of $100,000 per person or $200,000 as a couple.

Does the money have to be in my RRSP for 90 days before I can withdraw under the HBP?

Yes. Funds must have been in your RRSP for at least 90 consecutive days before the HBP withdrawal date. If you make a contribution specifically to fund the HBP withdrawal and the 90-day window hasn't elapsed, that contribution may not be deductible for that tax year. Plan contributions well in advance of your anticipated purchase date.

Can I use the HBP a second time?

Yes, you can use the HBP again if two conditions are met: (1) your outstanding HBP balance from the prior use has been fully repaid to zero, and (2) you qualify as a first-time buyer again under the 4-year look-back test — meaning you have not owned and occupied a home as your principal residence in the current or preceding four calendar years. This scenario is realistic for people who sold a home, paid off the HBP balance, and are now buying again after several years of renting.