The Home Buyers’ Plan (HBP) enables first-time home buyers to withdraw up to $35,000 from their RRSPs ($70,000 for a couple) to use as a down payment. Here are the key details:

Eligibility for First-Time Buyers
To qualify as a first-time home buyer, you (and your spouse or partner) must not have owned a home that you occupied as your principal residence in the last four years.
The four-year period ends on December 31 of the year before the withdrawal.

Steps to Use Your RRSP for a Down Payment
Contribute to Your RRSP: Make contributions to your RRSP before the withdrawal to maximize your savings. Contributions must stay in the RRSP for at least 90 days before they can be withdrawn under the HBP.

Withdraw Funds: Fill out Form T1036 to request a withdrawal under the HBP. The withdrawal is tax-free as long as you meet the program’s conditions.
Repayment Timeline: You must repay the amount withdrawn over a 15-year period, starting the second year after you withdraw the funds.

Benefits of Using RRSPs for a Down Payment
Tax Savings: Contributions to your RRSP reduce your taxable income, so you could benefit from a refund at tax time.

Boost Your Down Payment: Using RRSPs can help you reach the minimum down payment requirement faster, which can lower your mortgage amount.

Can Second-Time Home Buyers Use the Home Buyers’ Plan?

Second-time home buyers can also use the HBP if they meet the four-year rule for first-time buyer eligibility. This means:

You haven’t owned a home you lived in during the four years leading up to the withdrawal.

If you’re buying with a spouse or partner, they must also meet the four-year rule unless you’re separated or divorced.

If you qualify again, you can withdraw up to the maximum limit under the HBP.

Considerations Before Using Your RRSP

Repayment Obligations: If you don’t repay the required amount each year, the unpaid portion will be added to your taxable income for that year.

Opportunity Cost: Withdrawing from your RRSP means losing out on potential investment growth within the account.

Timing of Contributions: Contributions to your RRSP must remain in the account for 90 days before withdrawal to count as part of the HBP.

Alternative for Second-Time Buyers: The Home Accessibility Tax Credit (HATC)

If you’re not eligible for the HBP but are purchasing a home that requires renovations to make it accessible for a disabled person, you may qualify for the Home Accessibility Tax Credit (HATC). This program provides a non-refundable tax credit for eligible renovation expenses.

Final Thoughts
Your RRSP can be a powerful financial resource for buying your first or even your second home under the right circumstances. If you’re unsure about your eligibility or how much to withdraw, it’s wise to consult a mortgage professional or financial advisor. They can help you navigate the process and ensure you’re making the most of your resources while planning for long-term financial health.

If you’re ready to explore your home buying options or want expert guidance on mortgages and down payment strategies, don’t hesitate to contact us. Let’s turn your dream of homeownership into a reality!