5.2.4 Home Buyers Plan
- 5.2.1 What is a mortgage?
- 5.2.2 Down payment
- 5.2.3 Pre-approval
- 5.2.4 Home Buyers Plan
- 5.2.5 Amortization and term
- 5.2.6 Types of mortgages
- 5.2.7 Interest rates
- 5.2.8 Payment types
- 5.2.9 Fixed or variable interest rates
- 5.2.10 Video: Mortgage basics
- 5.2.11 Quiz: Mortgage terminology
- 5.2.12 Case study: Mortgage costs
- 5.2.13 Your mortgage payment
- 5.2.14 Payment options
- 5.2.15 Case study: Financing a mortgage
- 5.2.16 Summary of key messages
The federal Home Buyers Plan allows first-time buyers to use up to $60,000 from their Registered Retirement Savings Plans (RRSP) to make a down payment. However, you have to pay it back into your RRSP within 15 years, starting from the second year after your withdrawal. If you don't pay it back, you'll have to include it in your taxable income and pay income tax on the amount due. So before using money in your RRSP, be sure you can afford the repayment, plus the payments on your mortgage.
Example
In 2017, Martin withdraws $16,500 from his RRSP to add to his home down payment. Starting in 2019, he'll have to make payments of $1,100 a year back to his RRSP ($16,500 ÷ 15 years). If he decides not to make the repayment in 2019, he'll have to include $1,100 in his income when he files his 2019 income tax return. He'll still have to repay $1,100 to his RRSP in each of the following years.
To learn more, see the Canada Revenue Agency's information on the Home Buyers Plan.
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