RRSP Loan & Home Buyer Plan – Mortgage

My Mortgage Blog

RRSP Loan & Home Buyer Plan

What is the Home Buyers’ Plan?

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

With an RRSP Loan, you can borrow up to $25,000 to contribute to your RRSP for $275/month over 10 years. Once the contribution have been in your RRSP for at least 90 days you can withdrawal the $25,000 under the Home Buyers Plan and use these towards your down payment.

These RRSP loan repayments, in addition to your income and credit history, are taken into account when determining how much of a mortgage you will qualify for and is much more efficient (due to lower payment) than using a line of credit or other loan.

Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first-time home buyer, it is also possible that only one of you is a first-time home buyer. You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you or your current spouse or common-law partner owned.

Do you meet the RRSP withdrawal conditions?

  • You have to be a resident of Canada at the time of the withdrawal.
  • You have to receive or be considered to have received, all withdrawals in the same calendar year.
  • You cannot withdraw more than $25,000.
  • Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $25,000 or less.
  • Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.
  • Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP.
  • Neither you nor your spouse or common-law partner can own the qualifying home more than 30 days before the withdrawal is made.
  • You have to fill out Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP for each eligible withdrawal.

Let me know if you have any questions about how an RRSP loan (and tax refund) can be used to get you into your own home sooner.

416-769-1440 / kevin@kevinbell.ca