Should You Use RRSP’s as a Down Payment?

Should You Use RRSP’s as a Down Payment?

For many Canadians, the first hindrance to purchasing a home is coming up with enough money for a reasonable down payment. This often causes anxiety and can easily deter a person from buying their dream home. However, thanks to programs like the Canada Revenue Agency Home Buyers Plan (HBP), home buyers may have another option for funding a down payment. If you have never heard of the Home Buyers Plan before, there are a few conditions you should be aware of, and we are going them in this article.

How the Home Buyers Plan Works

The Home Buyers Plan allows you to withdraw a maximum of $25,000 from a Registered Retirement Savings Plan (RRSP) for use as a down payment on your new home. First time home buyers are not taxed or penalized for their initial withdraw from their RRSP, but you must meet the following criteria according to the Canada Revenue Agency:

  • You must be considered a first-time home buyer.
  • You must have a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).

You are considered a first-time home buyer if, in the four year period, you did not live in a home that you or your current spouse or common-law partner owned.

Some things to Consider

  • Funds from a locked-in RRSP, generally are ineligible.
  • The Home Buyers Plan may not be used to purchase investment or rental properties.
  • You may not use funds from an RRSP that have not been in the RRSP for a minimum of 90 days before your withdrawal.
  • By October 1st of the following year (after your withdrawal) you must build or buy your home.

Is it Right for You?

Though the Home Buyers Plan has many benefits, you should examine your long-term goals and lifestyle choices before jumping into it. Ask a mortgage broker to help you assess all the options available to you when it comes to purchasing your next home. By being proactive and understanding all the pros and cons of the Home Buyers Plan, you’ll be able to make a decision that’s right for you.


We specialise in offering mortgage solutions that go ‘above and ‘beyond the bank’. This means we are able to provide flexible solutions at great rates, in fact our rates are often better than what traditional banks have to offer. The bank can be intimidating and even frustrating, while working with a mortgage broker opens up your options and allows you to find solutions for your unique situation. We work with a variety clients including first-time buyers, those looking to transition from renting to owning, self-employed business people, as well as investors in rental and/or vacation properties.

For more information and to learn more about all of the mortgage solutions we have to offer, please click here or call us direct (250) 212-8512 or toll free 1 (877) 366-3487.

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