How to Use Your RRSP as a First-Time Home Buyer in 2026 (HBP Guide)
Using Your RRSP to Buy Your First Home: What You Need to Know
The RRSP Home Buyers' Plan (HBP) allows first-time buyers to withdraw up to $35,000 per person, or $70,000 per couple, from their RRSP tax-free to put toward a qualifying home purchase. That's a meaningful head start on a down payment, and it's one of the most practical government programs available to Ontario buyers today.
Here's the short version of how it works: when you withdraw funds under the HBP, the CRA does not tax the withdrawal at the time it happens. Instead, the withdrawn amount must be repaid to your RRSP over a 15-year period, starting two years after the year of your first withdrawal. Miss a repayment, and that year's required amount gets added to your taxable income.
One thing worth knowing before you plan your timeline: RRSP contributions must sit in your account for at least 90 days before you can withdraw them under the HBP. Funds deposited within that 90-day window don't count toward your eligible withdrawal, even if your total RRSP balance is well above $35,000. Plan accordingly.
Ontario first-time buyers also have the option to stack the HBP with the First Home Savings Account (FHSA), a newer program that lets you contribute up to $8,000 per year (lifetime limit of $40,000) in a fully tax-deductible, tax-free account for a qualifying home purchase. As Sun Life explains, combining these two programs can significantly expand the pool of tax-advantaged funds available for your down payment.
If you're not sure how the HBP fits into your broader mortgage plan, the team at Burns Mortgages can help you think through the timing and structure before you make any withdrawals.
Do You Qualify? HBP Eligibility Rules Every First-Time Buyer Should Know
To use the HBP, you need to meet a specific definition of "first-time home buyer." According to the CRA, you qualify as a first-time home buyer under the HBP if you have not owned and lived in a principal residence in the four calendar years before your withdrawal. That means if you haven't occupied a home you owned at any point in that four-year window, you're eligible.
This rule opens the door to more people than you might expect. Canadians who previously owned a home but sold it and moved into a rental can regain first-time buyer status once enough time has passed under this four-year rule. If you're not sure whether you qualify, it's worth checking your situation carefully before assuming you don't.
There's also a specific exception for people who've gone through a relationship breakdown. If you're separated or divorced and no longer occupy a home you owned with a former spouse or common-law partner, you may qualify as a first-time buyer even if you owned property during the relationship. The CRA's specific criteria apply here, so confirming your individual situation is important.
Beyond the first-time buyer definition, there are a few other eligibility conditions you need to satisfy:
- You must have a written agreement to buy or build a qualifying home in Canada before you make your HBP withdrawal. A firm purchase agreement or builder contract satisfies this requirement.
- The home must be your principal residence. Vacation properties and rental properties don't qualify. You need to intend to live in the home as your primary address.
- Your RRSP funds must have been on deposit for at least 90 days before the withdrawal date. Contributions made within that 90-day window are not eligible, regardless of your total RRSP balance.
- You must be a Canadian resident at the time of both the withdrawal and the purchase or build.
- If you've used the HBP before, your previous HBP balance must be fully repaid before you can participate again.
As TD's first-time buyer resource and RBC's HBP overview both confirm, individuals with disabilities (or those helping a related person with a disability purchase a home) may be exempt from the first-time buyer requirement under specific CRA guidelines. If this applies to your situation, CRA's rules provide additional flexibility that's worth exploring directly.
Step-by-Step: How to Withdraw RRSP Funds Under the Home Buyers' Plan
Once you've confirmed you're eligible, the actual withdrawal process is straightforward. Here's how it works, step by step.
Step 1: Confirm your eligibility
Before you do anything else, verify that you meet the first-time buyer definition, that you have a signed purchase agreement in place, and that the RRSP funds you plan to withdraw have been on deposit for at least 90 days. Skipping this check is what causes delays and missed funds at closing.
Step 2: Complete CRA Form T1036
The form you need is called the Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP. You fill it out yourself and submit it to your RRSP issuer (your bank, credit union, or investment platform) at the time of the withdrawal. This form is what tells your RRSP issuer not to withhold tax on the amount you're taking out.
Step 3: Submit Form T1036 to your financial institution
Your RRSP provider processes the withdrawal without withholding any tax, as long as the T1036 is correctly completed. That's the tax-free part people refer to when they talk about HBP withdrawals. To withdraw RRSP funds under the HBP, complete CRA Form T1036 and submit it to your RRSP issuer; no tax is withheld at the time of withdrawal as long as the form is properly filed.
Step 4: Withdraw up to $35,000 per person
You can make more than one withdrawal in the same calendar year, which is useful if your RRSP is held across multiple accounts or institutions. Each withdrawal requires its own separate T1036 form, and the total across all withdrawals in that calendar year cannot exceed $35,000. As Sun Life notes, if you and your partner are both eligible, you each complete your own forms for your own RRSP accounts.
Step 5: Apply the funds to your home purchase
HBP funds are most often used as part of the down payment. Your mortgage lender will want documentation confirming where these funds came from, including a 90-day RRSP statement history showing the balance was there before the withdrawal. As RBC outlines, lenders treat these as verified down payment funds, but the documentation has to be in order.
Step 6: Understand the repayment schedule
Repayment begins in the second year after the year of your first HBP withdrawal. If you withdrew in 2026, your first repayment is due for the 2028 tax year. You then have 15 years to repay the full amount.
Step 7: Make your annual RRSP repayments
Each year you must repay at least 1/15th of your total withdrawal. If you miss a year's repayment, that year's required amount is added to your taxable income. It doesn't generate a separate penalty, but it effectively cancels the tax advantage on that portion of your original RRSP contribution.
Working with a mortgage broker before completing your HBP withdrawal ensures the timing aligns with your lender's conditions and your closing date. We'd encourage you to connect with a mortgage broker before making any withdrawals so there are no surprises on closing day.
Maximize Your HBP: Tips for Ontario First-Time Buyers in 2026
Knowing the rules is one thing. Getting the most out of the HBP is another. Here are the strategies that actually move the needle for Ontario buyers.
Stack the HBP with the FHSA
Ontario first-time buyers can combine the RRSP Home Buyers' Plan with the First Home Savings Account (FHSA) to access over $110,000 in tax-advantaged down payment funds as a couple. The FHSA allows annual contributions of up to $8,000 (lifetime limit of $40,000 per person), and those contributions are fully tax-deductible with tax-free withdrawals for a qualifying purchase. The two programs are completely separate, and using one doesn't disqualify you from the other. A couple who maximizes both the HBP and FHSA could potentially bring $110,000 or more in tax-advantaged funds to a purchase, as TD's buyer guide outlines when discussing combined savings strategies.
Plan your RRSP contribution timing carefully
The 90-day rule catches buyers who deposit a lump sum right before they want to make their HBP withdrawal. Contribute to your RRSP at least 90 days before your expected closing date, not just 90 days before you submit your T1036. Even if your total RRSP balance is well above $35,000, any funds deposited within that window won't count. Sun Life's guide on using your RRSP to buy a home emphasizes this point as one of the most important timing considerations in the process.
Use the tax refund from your RRSP contribution too
Even if you plan to withdraw the funds under the HBP, contributing to your RRSP first still generates a tax refund based on your marginal tax rate. That refund can then go toward your down payment on top of your HBP withdrawal. It's a two-step move that many buyers overlook.
Track your repayments on Schedule 7
If you miss an annual HBP repayment, the missed amount is added to your taxable income for that year. There's no separate penalty, but the tax hit reverses the benefit you got when you originally made that RRSP contribution. To make sure CRA records each repayment correctly, you need to designate it on Schedule 7 of your annual tax return. Without that designation, CRA treats your RRSP contribution as a new contribution rather than a repayment. The CRA's HBP page and discussions in communities like r/PersonalFinanceCanada confirm that this is one of the steps buyers most frequently get wrong in the repayment phase.
Think through the long-term trade-off
Funds withdrawn under the HBP lose their compounding potential during the repayment window. That's a real cost to weigh against the benefit of a larger down payment. For most buyers in Ontario's housing market, accessing the HBP still makes sense, but it's worth having a clear-eyed view of what you're giving up in RRSP growth.
If you want to make sure your HBP withdrawal is timed correctly with your pre-approval and your lender's documentation requirements, speak with Chris Burns about coordinating your HBP withdrawal with your mortgage before you move forward.
RRSP First-Time Home Buyer: Frequently Asked Questions
Here are answers to the most common questions about the RRSP Home Buyers' Plan, including repayment rules, the 90-day waiting period, and eligibility after a relationship breakdown.
Q: How much can I withdraw from my RRSP as a first-time home buyer?
You can withdraw up to $35,000 from your RRSP under the Home Buyers' Plan (HBP). If you're purchasing with a partner who also qualifies as a first-time buyer, each of you can withdraw up to $35,000 from your own RRSPs, giving you a combined maximum of $70,000 toward your home purchase.
Q: Do I have to pay tax on my RRSP withdrawal under the Home Buyers' Plan?
No. When you withdraw funds under the HBP using CRA Form T1036, your RRSP issuer will not withhold tax on the withdrawal. However, the amount must be repaid to your RRSP over 15 years. If you miss a required annual repayment, that portion is added to your taxable income for that year.
Q: What is the 90-day rule for the RRSP Home Buyers' Plan?
RRSP contributions must be on deposit in your account for at least 90 days before you withdraw them under the HBP. Any funds contributed within 90 days of your withdrawal date are ineligible, even if your total RRSP balance is well above $35,000. Contributing a lump sum shortly before closing and then finding those funds can't be used is one of the most disruptive timing mistakes buyers make.
Q: Can I use both the RRSP Home Buyers' Plan and the First Home Savings Account (FHSA)?
Yes. The HBP and the FHSA are separate government programs and can both be used toward the same qualifying home purchase. Ontario buyers who maximize both programs can access up to $35,000 per person from the HBP plus up to $40,000 per person from the FHSA, significantly increasing the tax-advantaged funds available for a down payment. As TD's first-time buyer resource notes, these two programs are designed to work independently, not as substitutes for each other.
Q: What happens if I miss an annual HBP repayment?
If you don't make your required annual HBP repayment (1/15th of your total withdrawal), the missed amount is added to your taxable income for that tax year. There's no separate CRA penalty fee, but the tax impact effectively reverses part of the original tax benefit you received on that RRSP contribution. Designate your repayments on Schedule 7 of your annual tax return to make sure CRA records them correctly, as Sun Life's RRSP home buying guide highlights.
Q: Can I use the HBP if I owned a home before but went through a separation?
Possibly, yes. CRA has a specific exception for individuals who've experienced a relationship breakdown. If you're separated or divorced and no longer live in a home you owned with your former partner, you may be eligible to use the HBP even if you don't meet the standard four-year rule. Confirm your specific situation with CRA directly or with a qualified mortgage professional before proceeding.
Q: How does using the HBP affect my mortgage application?
HBP funds count as verified down payment funds for your mortgage application, but lenders typically require a 90-day history of your RRSP balance to confirm the funds weren't borrowed or recently deposited just for the purchase. Working with a mortgage broker before making your withdrawal helps ensure the timing and documentation meet your lender's specific requirements, which prevents delays at closing.