Using the Home Buyers’ Plan for a Down Payment

July 29, 2013

Mortgage Monday

Did you know that Canadians can use money (up to $25,000 per calendar year) from their RRSPs (Registered Retirement Savings Plan) tax-free for a down payment on their first home? It’s a program called the Home Buyers’ Plan (HBP), however there are some conditions for participating (the RRSP contributions must stay in the RRSP for at least 90 days before it cab be withdrawn; it has to be paid back usually within 15 years; the purchase has to be the principal residence).

If you’re looking to buy your first home, but don’t have a down payment saved yet, using your RRSPs can help you purchase a home now instead of slowly saving for a down payment. In addition, if you can use your RRSPs to increase your down payment to at least 20% of the purchase price of the home, you could avoid paying mortgage default insurance and save thousands of dollars.

For more information on the Home Buyers’s Program, visit the CRA information page on the HBP or have a chat with your favourite mortgage broker and we can help guide you through the process.

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About Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

View all posts by Tim

4 Responses to “Using the Home Buyers’ Plan for a Down Payment”

  1. george Says:

    Hi my name george if are not a first time buy how do Hbp work

    Reply

  2. admin Says:

    Hey George,

    Thanks for the comment. In order to be eligible as a first-time homebuyer, you must meet the following criteria:
    – Not owned a home within the previous four years
    – Sign a written agreement to buy a home
    – Intend to live in the home within one year of purchase
    – If you have used the Home Buyers’ Plan before, you cannot have any outstanding balance due
    – You must make the withdrawl from your RRSP within 30 days of taking title of the home
    – You must buy the home before October 1st of the year after you made the withdrawal

    If you don’t meet those criteria, unfortunately you won’t qualify for the Home Buyers Program.

    Please let me know if you have any additional questions!

    Reply

    • george Says:

      Good morning it george again I need to now one more thing I sold my principle an rent I sold one in Nov of 2011 then another one in Feb of 2012 the thing is I was live an rent bout of them

      Reply

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