The Home Buyers’ Plan (HBP) is a federal program that makes getting a first home easier. Under the HBP, anyone can withdraw money from their RRSP to help purchase or build a qualifying first home, either for themselves or a disabled relative.
Each year, the home buyer must pay back to their RRSP a portion of the withdrawn amount. Generally, the full amount must be repaid within 15 years.
The HBP makes home ownership more affordable. Money withdrawn through the HBP essentially serves as a repayable, zero-interest self-loan. This can reduce or eliminate the need for costly mortgage insurance and reduce the amount of interest paid to lenders. The HBP’s withdrawal limit is currently set at $25,000, but the Canadian Real Estate Association is working to get that number higher to keep up with inflation. For more information on how to participate in the Home Buyers Plan, visit the Government of Canada’s website at: http://www.cra-arc.gc.ca/hbp/