What Is the Home Buyers’ Plan (HBP)?
The HBP allows first-time homebuyers to withdraw funds from a Registered Retirement Savings Plan (RRSP) to buy or build a home. Normally, you must begin repaying the amount you withdraw within two years. If you fail to make payments, amounts may be taxed as income.
New Extension Through 2028
Under Bill C-30, which passed as part of the Spring Economic Update 2026 legislation (Royal Assent on June 19, 2026), the repayment grace period is extended from two to five years for withdrawals made from RRSPs between 2026 and 2028. The 15-year repayment period begins in the fifth year following the year of first withdrawal. (canada.ca)
Who Is Affected
- Individuals who make their first HBP withdrawal during the years 2026, 2027, or 2028.
- Those who withdraw before 2026 do not qualify for the extended grace period.
What It Means in Practice
- If you withdraw in 2026, instead of starting repayments in 2028, you’ll start in 2029.
- This gives an extra three years without mandatory repayments, which improves cash flow for potential homeowners managing mortgages, moving costs, or other startup expenses.
Strategic Suggestions
- If considering using the HBP during 2026-2028, factor in lower costs early on without required repayments. Use the extra years to reduce debt or bolster savings.
- Make sure your RRSP withdrawals qualify as “first-time” under CRA rules.
- Plan repayment schedule ahead — while repayments are pushed back, the total repayment period remains 15 years, so annual repayment amounts may be higher.
- Use the grace period to budget for upcoming repayments so they don’t come as a surprise.
Caveats & Compliance
- Not all RRSP withdrawals are eligible — must meet first-time home buyer criteria.
- Extended grace doesn’t reduce total repayable amount or the 15-year requirement.
- Failure to repay still results in inclusion in income.
- Avoid stacking withdrawals so repayments become unmanageable.
Example
Michael withdraws $35,000 in 2027 under HBP for his first home. Under old rules, repayments begin 2029. Under new rules, Michael has until 2032 (five-year grace period) before starting repayments, pushing the start by three years. If annual repayments over remaining 15 years, he spreads repayment from 2032 through 2047.
Category: Tax Planning. TaxHome: Canada. Author: NomadicTax Research Team. ReadTime: 5-8 min.