To qualify for the HBP
- You must be a first-time home buyer
- Did not live in a home you owned in the last 4 years.
- Did not live in a home your spouse owned in the last 4 years.
- Your contributions must be in your RRSP for at least 90 days before you withdraw them.
- You will buy or build your new home before October 1st of the year after you made the withdrawal.
- You plan to live in the home you are buying.
- You can save money in an RRSP without giving up on the homeownership dream.
- Maximum withdrawal: $35,000 per person as of March 19, 2019. A couple can withdraw up to $70,000.
- 15 years to repay your RRSP.
How can the HBP help with your down payment?
Frank and Laura want to buy a $300,000 condo in the summer of 2021.
- They each have $10,000 in their RRSPs.
- They need to come up with a minimum down payment of 5%, which is $15,000.
- They decide to use the HBP for the down payment. They each withdraw $7,500 from their RRSPs.
- They have until October 1, 2022 to buy or build a qualifying home.
- Each of them will need to repay $500 to their RRSPs every year starting in 2023.
*Down payments under 20% must be insured with a CMHC loan.
Can you cancel your HBP if you decide not to buy a house?
Sophia was planning to use the HBP to buy a condo by October 1, 2021.
- However, the place she wanted to buy is no longer for sale.
- If she decides not to buy a different residence by October 1, she can cancel her HBP participation and put the funds back into her RRSP.
What happens if you can’t buy a house in time?
Michael applied for the HBP but was unable to buy or build a house by October 1, 2021. He can still meet the deadline if:
- He has a written agreement in effect on October 1, 2021 to buy a home by October 1 of the following year.
- He spent an amount at least equal to his full HBP amount on materials for his home or towards its construction.
Does the HBP work for everyone who buys their first house?
Synden and Gianni plan to buy a $400,000 home. They already have the 5% down payment, which is $20,000.
- They are reluctant to withdraw $30,000 each from their RRSP to make the 20% down payment and avoid having a CMHC-insured loan.
- In fact, having an insured loan could lower their mortgage rate.
- But withdrawing funds from their RRSP could reduce their RRSP income down the road.
- For them, the HBP may not be the best solution.
Like other financial tools, the HBP should be used strategically to ensure it helps you achieve your financial goals.
Need help saving for a house or with your RRSP?
Do you need help saving to buy your first house? Or maybe you need to set up an RRSP? Whatever the case, a Sun Life Financial advisor can:
- explain your options,
- answer your questions, and
- help you build a plan that meets your needs and goals.
Most advisors now offer virtual services and provide consultations by phone or video chat. Find an advisor today.
This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.