Tax Planning
RRSP & HBP Update: How the Grace Period Extension and Withdrawal Changes Help First-Time Buyers
Enhancements to the Home Buyers’ Plan and their interaction with RRSPs and the FHSA are giving homebuyers more flexibility, breathing room, and tax-advantaged tools.
By NomadicTax Research Team • 5-8 min read • August 15, 2026
## What’s New in the HBP Rules
Thanks to changes adopted in **Budget 2024** (via Bill C-69), several improvements are now in place:
- The maximum RRSP withdrawal amount under the Home Buyers’ Plan (HBP) increased from **$35,000** to **$60,000** for first-time homebuyers (and related scenarios). ([budget.canada.ca](https://budget.canada.ca/2024/report-rapport/budget-2024.pdf?_cldee=TDEw5AEDQpd76h2-Y_G-PXwhMjgIPTCrrvp69WMJIW5GG-cxAXVHG__o5DYhPT9M&esid=485fd6a4-fcfb-ee11-a1ff-000d3a323ca9&recipientid=contact-b6113e8c6697ed11aad1000d3a5b89f3-bbefbf0a40d748d8a62f3e0e3eeb7e23&utm_source=openai))
- For withdrawals made between **January 1, 2022** and **December 31, 2025**, the repayment start date (normally the 2nd year after withdrawal) is delayed by an extra 3 years. That means instead of starting in year 2, repayments begin in the **5th year** following the year of the first withdrawal. ([budget.canada.ca](https://budget.canada.ca/2024/report-rapport/budget-2024.pdf?_cldee=TDEw5AEDQpd76h2-Y_G-PXwhMjgIPTCrrvp69WMJIW5GG-cxAXVHG__o5DYhPT9M&esid=485fd6a4-fcfb-ee11-a1ff-000d3a323ca9&recipientid=contact-b6113e8c6697ed11aad1000d3a5b89f3-bbefbf0a40d748d8a62f3e0e3eeb7e23&utm_source=openai))
## How This Aids Homebuyers: Real-World Examples
| Scenario | Old Rules | New Rules (for 2022–2025 withdrawals) |
|----------|-----------|-----------------------------------------|
| First HBP withdrawal in 2023 | Required to start repayment in 2025 (2 years later) | Now required to start in **2027** (5 years later) |
| Withdrawal amount $60,000 | Not permitted under old limit | Full $60,000 allowed under the higher limit |
Say you withdrew the full **$60,000** in 2023. Under old rules, your annual repayment would have been $60,000 ÷ 15 = **$4,000** starting in 2025. Under the new grace provision, you don’t have to make repayments until **2027**, easing cash flow during early homeownership (renovations, higher mortgage payments, moving costs etc.).
## Interactions with FHSAs and RRSPs
- You can use both the **First Home Savings Account (FHSA)** and the HBP for the *same* qualifying home, provided you meet all eligibility conditions. FHSA contributions (up to $8,000/year, $40,000 lifetime) may also be used alongside RRSP withdrawals. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/keys-unlocking-housing-related-tax-savings-filing-season.html?utm_source=openai))
- Leftover FHSA room and RRSP contributions give you flexible paths to save down payment funds with tax advantages until you're ready to withdraw or purchase.
## Actionable Steps for Homebuyers
1. **Check your HBP withdrawal history:** if you withdrew between 2022-2025, confirm when your first repayment is due and update your budget accordingly.
2. **Take full advantage of the increased limit:** consider borrowing as much as you need via RRSP withdrawals now (up to $60,000), rather than underutilized room.
3. **Use FHSA concurrently:** maximize tax savings by contributing to FHSA while using RRSPs through HBP if you want both programs.
4. **Track your repayment obligations and tax filings carefully:** late or missed repayments trigger inclusion in income; keeping records and verifying annual HBP statements reduces surprises. CRA’s “How to Repay” guide is key. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/repay-funds-withdrawn-rrsp-s-under-home-buyers-plan.html?utm_source=openai))
**Bottom line:** for eligible homebuyers, these changes bring breathing room and more flexibility. Larger withdrawal allowances and delayed repayment timelines can help you budget more effectively, especially when entering homeownership in tight markets.