What is the Home Buyers’ Plan (HBP)?
The HBP allows eligible individuals to withdraw up to $60,000 from their RRSP to buy or build a first home (or for a specified disabled person home). Purchases made jointly allow each partner to withdraw their own $60,000. Key point: the withdrawal must be repaid over a 15-year period, starting in the second year after the first withdrawal.(budget.canada.ca)
Recent Changes You Should Know
Because of Cost Pressures and to Aid First-Time Buyers, the Government of Canada has proposed changes under the Spring Economic Update 2026:
- The grace period (before you must begin repayments) was temporarily increased—from 2 years to 5 years—for those whose first HBP withdrawal occurred between January 1, 2022 and December 31, 2025.(budget.canada.ca)
- The proposal is to extend the 5-year grace period to be available for first withdrawals up to the end of 2028, meaning those making their first withdrawals through December 31, 2028 can wait 5 years before starting repayments.(budget.canada.ca)
Real-World Examples
| Scenario | Before Change | After Change (Proposed) |
|---|---|---|
| First withdrawal in 2024 | Repayments begin in 2026 (year 2 after withdrawal) | Can delay until 2029 because grace period extended to 5 years |
| First withdrawal in 2026 | Repayments begin 2028 | Still can delay until 2031 under extended grace period |
| First withdrawal in 2029 | Not eligible for extended grace period; 2-year grace applies | Same as before (2-year grace) |
Actionable Insights: How to Plan Smart
- If you're considering first using the HBP, strive to make your first withdrawal by December 31, 2028 to get the extended grace period benefit.
- Use those extra years to build savings or align with other cash flows, e.g. pay down debt before the repayment schedule begins.
- Keep accurate records of when the first withdrawal is made—CRA form annotations or RRSP statements will need to show your eligibility date.
- Remember that if you don’t repay as required, the outstanding amount becomes taxable income for the year repayment was missed.
Considerations before Opting In
- Suspending repayment for 5 years means less RRSP room for future years, plus delayed tax relief from RRSP deductions.
- During the grace period, you’re missing out on potential investment growth if the funds remained in RRSP.
- Ensure that delaying repayment doesn’t clash with other financial goals like retirement or travel.
Summary
The Home Buyers’ Plan remains a powerful RRSP-based strategy for first-time purchasers. Thanks to recent proposals, eligible first‐time buyers can gain an extended 5-year grace period if their first withdrawal is made by end of 2028. Plan accordingly—this window is limited. Use it to maximize benefit without disrupting long-term financial priorities.