Use the Home Buyers’ Plan to Buy Your Home Sooner

Use the Home Buyers’ Plan to Buy Your Home Sooner

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    Published 03/07/2020 13:07 EST

    Having tools available to help save for your down payment can mean the difference between buying your first home now or waiting until you have enough money in your savings account. And who knows how long that can take? It’s important to remember that the sooner you start building equity in your own home, the quicker you can become mortgage free. 

    So why wait when you have the down payment means today sitting in your registered retirement savings plans (RRSPs)? See: What is the RRSP Home Buyers’ Plan (HBP)?

    Key Takeaways
    • Having tools available to help save for your down payment can mean the difference between buying your first home now or waiting until you have enough money in your savings account
    • First-time homebuyers can withdraw up to $35,000 from RRSPs to buy or build a home
    • Repayment of the loan must be completed in annual increments over 15 years

    How much can I withdraw from my RRSP?

    Under the Home Buyers’ Plan (HBP), first-time homebuyers can withdraw up to $35,000 from their RRSPs ($70,000 as a couple) to buy or build a home. 

    👆 Tip

    RRSP funds only have to be in your account for 90 days prior to withdrawal under the HBP. Consider getting a bank loan for the amount you’d like to withdraw so you can deposit the money into an RRSP three months in advance. You can then pay back the loan and benefit from a reduced income amount, which will result in an increased tax return.

    How does the Home Buyers’ Plan work?

    The HBP is a tax-free, interest-free loan for first-time home buyers to use to buy or build a qualifying home for yourself or a related person with a disability.

    ⚡️ Important

    A "qualifying home" includes existing homes and those being constructed, including:
    - Single-family homes
    - Semi-detached homes
    - Townhouses
    - Mobile homes
    - Condominium units
    - Apartments in duplexes, triplexes, fourplexes or apartment buildings

    Funds must be in the RRSP account for a minimum of 90 days prior to being withdrawn for HBP use. 

    Repayment of the loan must be completed over 15 years (annual payments of one 15th of the total amount are required). See: What is the RRSP Home Buyers’ Plan (HBP)?

    Who qualifies for the Home Buyers’ Plan?

    Certain conditions must be met in order to be eligible to participate in the HBP, including the following:

    • you must be considered a first-time home buyer
    • you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability
    • you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built
    • You must intend to occupy the qualifying home as your principal residence within one year after buying or building. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal residence
    • In all cases, if you have previously participated in the HBP, you may be able to do so again if your HBP balance on January 1st of the year of the withdrawal is zero and you meet all other HBP eligibility conditions
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