The Home Buyers’ Plan (HBP) allows first-time homebuyers in Canada to withdraw up to $60,000 from their RRSP tax-free to use as a down payment on a qualifying home. The 2024 federal budget increased the HBP withdrawal limit from $35,000 to $60,000 — a significant boost for Mississauga buyers navigating one of Canada’s most expensive real estate markets. Pathak Professional Corporation helps Mississauga first-time homebuyers maximize the HBP and minimize their tax exposure. Call 437-872-7399.
Home Buyers’ Plan 2025 — Key Facts at a Glance
| HBP Feature | 2025 Rules |
|---|---|
| Maximum HBP withdrawal per person | $60,000 (increased from $35,000 in Budget 2024) |
| Maximum HBP per couple (both partners) | $120,000 combined ($60,000 each) |
| Repayment period | 15 years (beginning 2nd calendar year after withdrawal) |
| Annual minimum repayment | 1/15 of the amount withdrawn per year |
| First-time buyer requirement | Neither you nor your spouse can have owned a home in the prior 4 calendar years |
| RRSP seasoning requirement | Funds must have been in the RRSP for at least 90 days before withdrawal |
| Qualifying home criteria | Must be a qualifying home in Canada that you intend to occupy as principal residence before October 1 of the year following the HBP withdrawal |
| Special rule — extended waiting period | Those with a disability or supporting a disabled person may qualify even after owning a home |
Who Qualifies as a “First-Time Homebuyer” for the HBP?
Despite its name, the HBP’s “first-time buyer” requirement is more lenient than most people assume. You qualify as a first-time buyer for HBP purposes if:
- You have NOT owned a home that you used as your principal residence at any time during the 4-calendar-year period before the HBP withdrawal
- Your spouse/common-law partner has also NOT owned such a home during the same 4-year period
What this means in practice: If you sold a home in 2020 and have been renting since, you could qualify for the HBP again in 2025 (4 years after the year you stopped living in the home). Many Canadians can use the HBP a SECOND time if they’ve been renting for 4+ years since their last home ownership. Pathak Professional Corporation assesses each client’s HBP eligibility. Call 437-872-7399.
HBP vs FHSA vs TFSA — Which to Use for Your Down Payment?
| Feature | Home Buyers’ Plan (HBP) | First Home Savings Account (FHSA) | TFSA |
|---|---|---|---|
| Maximum withdrawal for home | $60,000 per person | $40,000 lifetime (no repayment) | No limit (entire balance) |
| Tax deduction on contribution | ✅ RRSP contribution deductible | ✅ FHSA contribution deductible | ❌ No deduction |
| Tax on withdrawal | ❌ No tax (but must repay over 15 years) | ✅ Tax-free, no repayment | ✅ Tax-free, no repayment |
| Repayment required? | YES — 1/15 per year over 15 years | No | No |
| Lost RRSP room if not repaid? | YES — missed repayments become income | N/A | Contribution room restored next year |
| Best for… | Those with existing RRSP savings | Those saving specifically for first home | Flexible savings with no strings |
Optimal strategy for Mississauga first-time buyers: Use FHSA first (up to $40,000 — no repayment required, tax-deductible contributions), then supplement with HBP (up to $60,000 per person from RRSP), then draw from TFSA if needed. The combined maximum per couple: $80,000 FHSA + $120,000 HBP = $200,000 in tax-sheltered savings for a down payment. Pathak Professional Corporation creates personalized first-home savings strategies for Mississauga buyers. Call 437-872-7399.
The 90-Day RRSP Seasoning Rule
This is the most common trap for first-time HBP users: any RRSP funds you plan to withdraw under the HBP must have been in your RRSP for at least 90 days before the withdrawal. Specifically:
- Contributions made within 90 days of the HBP withdrawal CANNOT be withdrawn under the HBP
- They can still be in your RRSP — you just can’t use them for the HBP withdrawal immediately
- This means if you plan to make a last-minute RRSP contribution to boost your HBP withdrawal amount, you must make the contribution at least 90 days before your planned closing date
Example: You want to close on your Mississauga condo on June 30, 2025 and need $60,000 from your RRSP via HBP. You can only withdraw funds that were in your RRSP by April 1, 2025 (90 days before June 30). Any contributions made in April, May, or June cannot be part of the HBP withdrawal. Plan well in advance. Pathak Professional Corporation identifies the RRSP seasoning deadline for all HBP clients. Call 437-872-7399.
How to Withdraw from Your RRSP Under the HBP — Step by Step
- Confirm eligibility: Verify you meet the first-time buyer 4-year rule, the RRSP seasoning requirement, and the qualifying home criteria
- Obtain a written agreement: Have a signed purchase and sale agreement for a qualifying home before making the HBP withdrawal
- Complete Form T1036: “Home Buyers’ Plan (HBP) — Request to Withdraw Funds from an RRSP” — complete Part A and provide to your RRSP issuer (bank, investment dealer)
- Make the withdrawal: Your RRSP issuer processes the withdrawal without withholding tax (unlike regular RRSP withdrawals)
- Report on your T1: The HBP withdrawal is reported on Schedule 7 of your T1 return — it does NOT become income if properly reported
- Begin repayments in year 2: The repayment clock starts the second calendar year after the HBP withdrawal — you have flexibility to defer the first year but interest accrues on any missed repayments (as added income)
Pathak Professional Corporation prepares HBP documentation and T1 reporting for all Mississauga clients. Call 437-872-7399.
HBP Repayment — How to Pay Back Your RRSP
The HBP withdrawal must be repaid to your RRSP over 15 years. Key repayment rules:
- Annual minimum repayment = 1/15 of the amount withdrawn (e.g., $60,000 ÷ 15 = $4,000/year)
- Repayments begin in the 2nd calendar year after the year of withdrawal (e.g., withdrawal in 2025 → first repayment in 2027)
- Designate repayments on Schedule 7 of your T1 each year — regular RRSP contributions to your account must be specifically designated as HBP repayments; otherwise CRA treats them as normal contributions (and you still owe the HBP minimum)
- If you contribute less than the minimum annual repayment, the shortfall is added to your INCOME for that year (taxed at your full marginal rate) — and the portion of your RRSP used for the HBP does NOT generate a deduction for that missed repayment
Pathak Professional Corporation tracks HBP repayment obligations for all clients and ensures Schedule 7 is filed correctly each year. Missing HBP repayments is a common and costly error. Call 437-872-7399.
Frequently Asked Questions
Can my spouse and I both use the HBP for the same home?
Yes — both spouses can independently use the HBP for the same home purchase, each withdrawing up to $60,000 from their own respective RRSPs. The combined maximum is $120,000 per couple. Both spouses must independently meet the first-time buyer eligibility criteria (the 4-year rule applies separately to each person). Both spouses must separately complete Form T1036 for their own RRSP withdrawal. If only one spouse qualifies as a first-time buyer (e.g., the other owned a home within the past 4 years), only the qualifying spouse can use the HBP. Pathak Professional Corporation reviews both spouses’ HBP eligibility before any withdrawal. Call 437-872-7399.
What happens if my home purchase falls through after I’ve made the HBP withdrawal?
If your home purchase doesn’t close (offer falls through, financing fails, or you change your mind), you must repay the HBP withdrawal to your RRSP by December 31 of the year following the withdrawal to avoid income inclusion. If you cannot repay it, the full withdrawn amount is added to your income in the year of repayment default (taxed at your full marginal rate — potentially adding $25,000–$60,000 of unexpected income). If you withdrew in 2025 and the purchase fell through, you must repay to your RRSP by December 31, 2026. Act immediately — contact Pathak Professional Corporation as soon as the purchase falls through. Call 437-872-7399.
Does the HBP affect my RRSP contribution room?
No — the HBP withdrawal does NOT permanently reduce your RRSP contribution room. The withdrawals are a temporary “loan” from your RRSP. Each year’s HBP repayment is NOT a new RRSP contribution (it doesn’t use your annual contribution room) — it simply returns the borrowed funds. However, if you fail to make the minimum annual repayment, the shortfall becomes income (not an RRSP deduction), and you also LOSE that RRSP room permanently (because the contribution limit is only waived for proper HBP repayments). Pathak Professional Corporation ensures HBP repayments are designated correctly on Schedule 7 each year. Call 437-872-7399.
Should I use the HBP or just withdraw from my RRSP with withholding tax?
You should almost always use the HBP rather than making a regular RRSP withdrawal for a down payment. A regular RRSP withdrawal at $60,000 would be subject to 30% withholding tax upfront and fully included in your income — at a 46% marginal rate, you’d pay approximately $27,600 in income tax on that withdrawal. With the HBP, there is zero withholding tax and zero income inclusion in the year of withdrawal. The “cost” is the 15-year repayment obligation, but each repayment is a contribution to your own RRSP (not lost money). Even the penalty for missing repayments (income inclusion on the shortfall) is far less than the immediate tax on a regular RRSP withdrawal. The HBP is one of the best tax-free strategies available to Canadian first-time buyers. Pathak Professional Corporation confirms the HBP is always better than a regular RRSP withdrawal for home purchase purposes. Call 437-872-7399.
Home Buyers’ Plan Planning in Mississauga
Pathak Professional Corporation guides Mississauga first-time homebuyers through every step of the HBP: eligibility assessment, RRSP contribution and seasoning planning, Form T1036 preparation, T1 Schedule 7 reporting, and 15-year repayment tracking. In Mississauga’s competitive real estate market, maximizing your down payment through the HBP and FHSA is essential.
Call 437-872-7399 or email info@pathakcpa.ca. 48 Village Centre Place, Mississauga, Ontario L4Z 1V9.
