What’s New with the Home Buyers’ Plan Grace Period
In June 2026, Canada’s Parliament passed Bill C-30, implementing measures from the Spring Economic Update 2026. One significant change is the extension of the Home Buyers’ Plan (HBP) repayment grace period—previously two years—now extended to five years for those making their first withdrawal between 2022 and 2028. Under this change, the 15-year repayment period still begins in the fifth year following the year of the first withdrawal. (canada.ca)
What Does This Mean for First-Time Home Buyers?
- More breathing room in the early years: you’ll have five years before you're required to start repaying HBP-withdrawn RRSP funds, which can ease immediate financial pressures.
- Longer repayment horizon still enforced: once the grace period ends, you must repay over 15 years.
- This applies only for those with their first withdrawal made up to December 31, 2028. If you withdrew before 2022 or later than 2028, the former rules may still apply. (canada.ca)
Strategic Tips & Examples
Example 1: If Mary made her first RRSP withdrawal under HBP in March 2025, she doesn’t begin repayment until 2028. That gives her five full years before the repayment schedule starts. During that time, Mary can prioritize savings, adjust budgets, or pay down high-interest debt.
Example 2: Suppose John plans to buy his first home in mid-2028. He may withdraw under HBP then, benefitting from the extended grace period and delaying repayments until 2029-30, assuming first withdrawal before end-2028.
Tips:
- Use that five-year buffer to increase emergency savings. Unexpected costs from owning a home (repairs, maintenance) often arise early.
- Plan your budget to ensure you can make the required annual repayments once the five years elapse. Missing payments can lead to tax penalties and included income.
- If income fluctuates, consider making voluntary repayments during the grace period. It reduces the total interest imputed when the repayment schedule begins.
Caveats & Considerations
- Only applies to first time withdrawals between 2022 and end of 2028. If you make your first withdrawal after Dec 31, 2028, the grace period reverts to the prior rule. (budget.canada.ca)
- Must adhere to repayment schedule post grace period; failure can induce tax consequences.
- RRSP funds once withdrawn are subject to the HBP rules. Monitor deadlines carefully and seek professional advice if needed.
Action Steps
- Confirm whether you are qualifying as a first-time home buyer and when your first HBP withdrawal was made or will be made.
- If you plan a withdrawal before end-2028, map out your budget including the five-year grace period to optimize financial stability.
- Use the buffer years wisely (save, reduce other debts) so that once repayment begins, it’s manageable.
- Consult with a tax advisor to ensure you report accurately and avoid pitfalls.
Bottom line: This policy gives first-time homebuyers extra flexibility in the short term. Use the grace period not just as a delay, but as an opportunity to strengthen your financial foundation ahead of long-term commitments.