First Time Home Owners RRSP: How to Use the Home Buyers' Plan in Ontario (2026)
How First Time Home Owners Can Use Their RRSP to Buy a Home
If you're buying your first home in Ontario, your RRSP may already be one of your most powerful down payment tools. Through the federal Home Buyers' Plan (HBP), first-time home owners can withdraw up to $60,000 from their RRSP completely tax-free to fund a qualifying home purchase. That limit was raised from $35,000 to $60,000 per person in the 2024 federal budget, applying to first withdrawals made on or after April 16, 2024. Couples purchasing together where both partners qualify as first-time buyers can now combine withdrawals for up to $120,000 toward a down payment.
The HBP isn't a traditional withdrawal. No tax is withheld when you pull the money out because the CRA treats it as a loan from your own RRSP, not taxable income. You repay that loan back into your RRSP over a maximum of 15 years, starting in the second year after your withdrawal year. As CIBC outlines, there's one important timing rule to know before you plan: contributions must have been sitting in your RRSP for at least 90 consecutive days before you withdraw them under the HBP. Any money you add within 90 days of your planned withdrawal won't count.
For a full breakdown of how the HBP mechanism works alongside your mortgage strategy, our RRSP First Time Home Buyer HBP Guide covers the mechanics in detail.
Who Qualifies: RRSP First Time Home Buyer Eligibility Rules
The CRA defines "first-time home buyer" more broadly than most people expect, so it's worth checking your exact situation before assuming you don't qualify.
According to the CRA's official HBP page, you qualify if you have not owned and occupied a principal residence at any point during the four calendar years preceding your withdrawal. That means if you sold a home in 2020 and rented since then, you could potentially qualify again in 2025 or 2026. The rule counts calendar years, not a rolling 48-month window, so the exact timing of a past sale matters.
Beyond that four-year lookback, the TD guide on the HBP notes a few additional eligibility requirements:
- You must have a written agreement to buy or build a qualifying home in Canada before October 1 of the year after your withdrawal.
- The home must become your principal place of residence within one year of purchasing or building it. Investment properties and rental units don't qualify.
- You must be a Canadian resident at the time of withdrawal and when you take ownership of the home.
There's also an important exception for people with disabilities, or those purchasing a home for a related person with a disability. These buyers may be eligible for the HBP even if they've previously owned a home, making the plan more accessible than a strict "first-time only" rule implies. RBC's overview of the HBP covers this exemption clearly.
In a couple, each person's eligibility is assessed independently. One partner's prior homeownership doesn't automatically block the other from making their own HBP withdrawal, as long as that partner meets the four-year lookback rule on their own.
One more thing that's changed significantly: as of 2023, the First Home Savings Account (FHSA) can be combined with the HBP in the same purchase year. FHSA withdrawals are completely tax-free and never require repayment, which makes the FHSA a stronger vehicle for new savings. But the HBP is what unlocks larger pools of existing RRSP money that exceed the FHSA's $40,000 lifetime limit. Using both together is the most effective approach for most buyers in 2026.
For more on how these rules apply to your specific purchase situation, our RRSP Home Buyers Plan Ontario Guide and First Time Home Buyer Mortgage Advice Ontario walk through the full picture.
Step-by-Step: How to Withdraw RRSP Funds as a First Time Home Buyer
Here's exactly how the HBP withdrawal process works, from confirming your eligibility to tracking your repayments.
Step 1: Confirm the 90-day rule
Only RRSP contributions that have been in the account for at least 90 consecutive days are eligible for HBP withdrawal. If you contributed $20,000 on January 1 and try to withdraw on March 29, only funds that were already seasoned before January 1 qualify. Plan your contributions well in advance of your target closing date.
Step 2: Complete CRA Form T1028
The official form is called the Request to Make a Withdrawal From Your RRSP Under the Home Buyers' Plan. You submit this form to your RRSP issuer (your bank or investment firm), not directly to the CRA. This form authorizes them to release the funds without withholding income tax.
Step 3: Receive your funds
Your RRSP issuer processes the withdrawal and deposits the amount to you. As RBC explains, no tax is withheld at this stage because the HBP treats the withdrawal as a structured loan from your own RRSP, not a taxable event.
Step 4: Report the withdrawal on your tax return
Your RRSP issuer will issue a T4RSP slip with the HBP withdrawal amount in Box 27. You report this on Schedule 7 of your T1 personal tax return for the year of withdrawal. Reporting it correctly is essential to avoid CRA treating it as a regular (taxable) RRSP withdrawal.
Step 5: Understand when repayment begins
Under the standard rules, if you withdrew in 2026, your first repayment would be due by March 1, 2029 (the RRSP contribution deadline for the 2028 tax year). However, the 2024 federal budget introduced a three-year repayment grace period for withdrawals made between January 1, 2022 and December 31, 2025, pushing the first required repayment to five years after the withdrawal year for qualifying participants. Check your specific withdrawal year to confirm which timeline applies to you.
Step 6: Make annual repayments of at least 1/15th
Each year, you must repay at least 1/15th of the total amount withdrawn. On a $60,000 withdrawal, that's a minimum of $4,000 per year. If you miss a year or repay less than the required amount, the shortfall is added to your taxable income for that year. As CIBC notes, these repayments restore your RRSP deduction room over time, but they aren't deductible themselves.
Step 7: Track your HBP balance
Use CRA My Account to monitor your outstanding HBP balance. When you make RRSP contributions intended as HBP repayments, you designate them using Form RC471 (Home Buyers' Plan Repayment). This is what tells CRA the contribution is a repayment, not a new deductible contribution.
A few notes for Ontario buyers specifically: lenders here treat HBP-sourced down payments as fully legitimate. They'll ask to see your T4RSP slip or a letter from your RRSP issuer confirming the withdrawal, and the funds must be fully accessible before your closing date, not still subject to the 90-day hold. If you're self-employed, our guide on how to qualify for a mortgage as a self-employed buyer in Ontario is especially relevant, since your declared income directly affects both your RRSP contribution room and your mortgage qualification. And if you're comparing where to get your mortgage after you've sorted your down payment, our mortgage broker vs. bank comparison explains why working with a broker typically gives you access to better rates and more lender options.
RRSP First Time Home Buyer Tips: Maximize Your Down Payment and Avoid Costly Mistakes
The HBP is genuinely useful, but the way you use it makes a significant difference to your overall financial position. Here are the strategies and mistakes that matter most for Ontario buyers in 2026.
Use your RRSP contribution to generate a tax refund, then put the refund toward your down payment
This is one of the most reliable ways to squeeze more out of your RRSP before you buy. A $10,000 RRSP contribution by someone earning $80,000 in Ontario generates approximately $3,148 in combined federal and provincial tax savings, since the marginal rate at that income is around 31.48%. At $100,000 income, the marginal rate climbs to approximately 43.41%, producing about $4,341 back on the same $10,000 contribution. That refund can go straight into your FHSA or directly toward your purchase costs. Discussion threads on r/PersonalFinanceCanada highlight this strategy frequently as one of the clearest wins available to first-time buyers.
Don't contribute to your RRSP within 90 days of wanting to withdraw
This is the timing error that costs first-time buyers the most. If you add money to your RRSP and then try to withdraw it under the HBP before 90 days have passed, those new contributions are frozen for HBP purposes. You'll either have to wait or reduce your withdrawal amount. Plan your contributions at least a full quarter before your target withdrawal date.
Be deliberate about how much you withdraw
Withdrawing more than you actually need has a hidden cost. HBP repayments don't count as deductible RRSP contributions; they simply restore the room you used. If you withdraw $60,000 but only needed $40,000, you've committed yourself to repaying $4,000 per year for 15 years using non-deductible dollars. Think carefully about the number, and talk it through with a mortgage broker before you submit your T1028.
Stack your FHSA and HBP in the same purchase year
For 2026 buyers, the most tax-efficient approach is to maximize your FHSA contributions first (up to $8,000 per year, with a $40,000 lifetime cap), withdraw those funds with no repayment obligation, and then use the HBP to access any additional RRSP balance you need. The CIBC RRSP withdrawal resource and the CRA's HBP page both confirm these two programs can be used in the same year without conflict.
Understand how HBP repayments affect your mortgage cash flow
Lenders calculate your mortgage qualification on gross income and existing debts. An HBP withdrawal doesn't count as income, and lenders don't currently factor the annual repayment obligation (roughly $333 to $400 per month on a $60,000 withdrawal) into your debt-service ratios. That works in your favour at approval time. But after you close, those repayments are a real cash-flow item. Pairing accelerated bi-weekly mortgage payments with disciplined HBP repayments can meaningfully reduce your total interest costs over time. Our article on mortgage payment frequency and long-term savings shows how payment structure compounds in your favour after purchase.
At Burns Mortgages, we work with first-time buyers across Southern Ontario and the GTA to time pre-approvals around RRSP contribution and withdrawal schedules, flag lender-specific documentation requirements for HBP funds, and compare options across banks, credit unions, monolines, and private lenders. Your RRSP strategy and your mortgage strategy should work together from the start.
RRSP First Time Home Buyer: Frequently Asked Questions
Can you use RRSP for first time home purchase?
Yes. The CRA's Home Buyers' Plan lets first-time buyers withdraw up to $60,000 from their RRSP tax-free for a qualifying home purchase, as of withdrawals made on or after April 16, 2024. The funds must have been in your RRSP for at least 90 days, and the home must become your principal residence within one year. CRA's HBP page has the full eligibility criteria. Couples where both partners qualify can withdraw up to $120,000 combined. You repay the withdrawn amount over 15 years, with no tax consequence at the time of withdrawal.
How much will I get back if I put $10,000 in RRSP?
It depends on your marginal tax rate. In Ontario, someone earning $80,000 gets back roughly $3,148 on a $10,000 RRSP contribution. At $100,000 income, that climbs to about $4,341. At incomes above $150,000, combined marginal rates can reach 53.53%, meaning a $10,000 contribution could return over $5,350. These refunds can go directly toward your down payment or into your FHSA for additional tax-free savings. TD's first-time buyer resource covers how RRSP contributions factor into your overall home purchase planning.
What is the 3-year rule for RRSP?
The phrase refers to the repayment grace period introduced in the 2024 federal budget. Normally, HBP repayments must begin in the second year after the year of withdrawal. Under the updated rules, buyers who made their first HBP withdrawal between January 1, 2022 and December 31, 2025 don't need to begin repaying until five years after the withdrawal year, which is effectively a three-year extension on the standard two-year grace. Once repayment starts, you must return at least 1/15th of the total withdrawn amount each year. Any shortfall is added to your taxable income for that year.
What is better, FHSA or RRSP?
For new savings in 2026, the FHSA is generally the stronger option. Contributions are tax-deductible and withdrawals for a first home purchase are completely tax-free with no repayment required. The RRSP HBP requires you to repay withdrawn funds over 15 years. That said, the HBP is essential if you already have significant RRSP savings, since the FHSA is capped at $40,000 lifetime. The best approach for most Ontario buyers is to withdraw from the FHSA first, then use the HBP to access additional RRSP funds. A couple using both programs together could access up to $80,000 in FHSA withdrawals combined with up to $120,000 in HBP withdrawals. RBC's HBP overview explains the repayment structure in further detail.