Are you a first-time home buyer looking to buy the home of your dreams? We’ve got a hot tip for you that will help you make the down payment on your first home: the federal government’s Home Buyers’ Plan. This program lets you use up to $60,000 of your RRSP savings toward a down payment on a qualifying home. Not only will you be able to reduce the amount of your mortgage, you may also be able to avoid default insurance premiums if you have at least a 20% down payment.

The Details:

• You must qualify as a first-time home buyer
• Your RRSP funds must be on deposit for at least 90 days before you withdraw them
• You must have a written agreement to buy or build a qualifying home, either for yourself or for a specified disabled person 
• You are required to pay back the withdrawn funds within a 15-year period
• If you pay back the money within the 15 years, the funds will not be taxable

Keep in mind:

• Automating your RRSP contributions will help you keep your repayment schedule
• You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it
• Even if you have previously participated in the Home Buyers' Plan, you may be able to do so again if your repayable balance on January 1^st is zero and you meet all other conditions

When you'll start paying the funds back:

The primary purpose of having an RRSP is to save for retirement; so the government requires that you replace the funds you withdrew from your RRSP under the Home Buyers’ Plan. That way when you reach retirement age you’ll still have money available.

In 2024, the federal government adjusted the rules for repaying the amounts withdrawn from your RRSP, allowing an extra three years before you need to start repaying. The rule applies to Canadians who made their first RRSP withdrawal between January 1, 2022 and December 31, 2025. They will need to start repaying their RRSP in the fifth year following the year they withdrew the funds.

Your payment is determined by the amount you withdrew from your RRSP under the Home Buyers’ Plan. For example, a person who withdraws $35,000 from their RRSP for a down payment on a home will be expected to pay 1/15 of that total, per year, over 15 years.

$2,333.33 over 12 months = approx. $194.44/month

You can choose to pay more per month, if that works with your financial plan.

We’re here to help! Book an appointment with us, we’ll look at your financial situation and work with you to come up with personalized plan to help you meet your goals.