Saving up for a down payment on a home can take a considerable amount of time. For first time home buyers in Canada however, there are ways making a down payment can be done more easily. With the ability to withdraw up to $25,000 from your RRSP tax-free, through the Canada Revenue Agency’s Registered Retirement Savings Plan, the RRSP Home Buyer’s Plan (HBP), helps Canadians get that first down payment made much faster than originally thought.
- The HBP can also be combined up to $50,000 if the home is being purchased in conjunction with another eligible first time homebuyer.
- The loan is completely tax-free, as long as it is repaid within a 15 year period.
- Existing homeowners can also use an HBP to purchase an accessible home or a home for a disabled dependent relative. Said individual must qualify for the Disability Tax Credit (DTC) and this home must be suited to fit all of their needs.
To qualify as a first-time homebuyer, the following criteria must be met:
- The RRSP funds you borrow must be present in your account for at least 90 days after the withdrawal.
- You cannot have owned a home within the previous four years.
- If you’re buying with a spouse (or common law partner) who is not a first time homebuyer, you cannot have lived in a house they owned for 4 years.
- You have entered into a written agreement to buy or build a qualifying home.
- You intend to live in the home within one year of purchase as your primary residence.
- If you have used the HBP before, you must pay the previous balance.
- The withdrawal from your RRSP within 30 days of acquiring the home.
- You must be a resident of Canada.