Can You Use Your RRSP for a Home Down Payment in Canada?
Yes. The Home Buyers’ Plan (HBP) is a federal government program that allows first-time home buyers in Canada to withdraw up to $35,000 from their RRSP, tax-free, to use toward the purchase of a qualifying home.
If you and a partner are both first-time buyers, you can each withdraw $35,000 — a combined $70,000 tax-free from your RRSPs.
How the RRSP Home Buyers’ Plan Works
Who Qualifies?
To use the HBP, you must:
- Be a Canadian resident
- Be a first-time home buyer — meaning you have not lived in a home you or your spouse owned as your principal residence at any time in the past 4 calendar years
- Have a written agreement to buy or build a qualifying home before October 1 of the year after the withdrawal year
- Intend to occupy the home as your principal residence within 1 year of purchase
What Counts as a First-Time Home Buyer?
The 4-year rule means that if you owned a home previously but have been renting for 4+ years, you may qualify again as a first-time buyer. This makes the HBP valuable not just for new buyers, but for returning buyers re-entering the market.
Step-by-Step: How to Withdraw RRSP for a Down Payment
Step 1: Ensure RRSP Funds Have Aged 90 Days
Funds must have been in your RRSP for at least 90 days before withdrawal. This means contributions you make specifically for this purpose must be made at least 90 days in advance.
Step 2: Have a Signed Purchase Agreement
You must have a written agreement to buy or build a qualifying home. Most buyers withdraw after their offer is accepted.
Step 3: Complete CRA Form T1036
Submit the “Home Buyers’ Plan Request to Withdraw Funds from an RRSP” form (T1036) to your financial institution. You can make multiple withdrawals in the same calendar year as long as the total doesn’t exceed $35,000.
Step 4: Funds Released Tax-Free
Your RRSP provider releases the funds to you without withholding tax. No income tax is owed at the time of withdrawal.
Step 5: Repay Over 15 Years
Starting 2 years after the year of withdrawal, you must repay the withdrawn amount over a maximum of 15 years — a minimum of 1/15 of the amount per year. Repayments are made as RRSP contributions.
HBP Repayment: What Happens If You Miss a Payment?
If you miss your annual HBP repayment, that year’s required repayment amount is added to your taxable income and you pay income tax on it. You will not lose the home or face penalties beyond the tax inclusion.
Example: You withdrew $35,000 in 2023. Starting in 2025, you owe $35,000 ÷ 15 = $2,333/year to your RRSP. If you miss a year, $2,333 is added to your income for that year.
RRSP + FHSA: The Ultimate First-Time Buyer Combination
The First Home Savings Account (FHSA), launched in 2023, can be used alongside the HBP:
| Account | Withdrawal Limit | Repayment Required? | Annual Contribution Limit |
|---|---|---|---|
| RRSP (HBP) | $35,000 per person | Yes (over 15 years) | 18% of income (max $31,560 in 2024) |
| FHSA | Up to $40,000 lifetime | No repayment needed | $8,000/year |
| Combined (couple) | $110,000 combined | RRSP only | — |
How Your RRSP Down Payment Affects Your Mortgage
Every extra dollar in your down payment reduces your mortgage principal — and potentially eliminates CMHC insurance:
- Down payment under 20%: CMHC insurance required (0.6%–4.0% premium on mortgage)
- Down payment of 20% or more: No CMHC insurance, lower monthly payments, and access to more lenders
Using your RRSP and FHSA to reach 20% down can save you tens of thousands of dollars over your mortgage term.
Frequently Asked Questions: RRSP for Down Payment
Can I use the HBP for a rental property?
No. The property must be your principal residence. Investment properties do not qualify.
Can I use the HBP after a bankruptcy?
Yes, as long as you are a Canadian resident and meet the first-time buyer definition. The HBP is available to any qualifying first-time buyer regardless of past credit events.
What if I don’t buy the home after withdrawing from my RRSP?
You must repay the full withdrawn amount to your RRSP by December 31 of the year after the withdrawal, or the amount will be added to your taxable income.
Can I use the HBP for a condo purchase?
Yes. The HBP applies to all qualifying residential properties including condominiums, townhouses, detached homes, and semi-detached homes.
Maximize Your RRSP Down Payment with Expert Mortgage Guidance
Saif Abdulah is a Licensed Mortgage Agent Level 2 with 8Twelve Mortgage. He helps first-time buyers across Toronto, Mississauga, Vaughan, Markham, Brampton, and all of Ontario structure their down payment strategy — including RRSP, FHSA, and gifted funds.
