Did you know there's a program that allows you to utilize your RRSP to assist with your down payment to purchase a home? It's called the House Buyer's Plan (or HBP for short), and it's made possible by the government of Canada. While the program is rather uncomplicated, there are a few things that are involved in this process.

Your First Home With Some Exceptions

To qualify, you must be purchasing your first home. However, when you check out the fine print, you will find that technically, you must not have owned a home in the last 4 years or have lived in a home that your partner or spouse had owned in the previous four years. An additional exception is for those with a disability or those who are helping someone with a disability. In this instance, you can withdraw from an RRSP for a home purchase at any time.

You Must Pay Back The RRSP

You have 15 years to repay the RRSP, and you begin repayment the second year after the withdrawal. While you will not pay any type of tax on the withdrawal, it does include some specific conditions. You'll have to pay back the complete amount you took out over the 15-year period.CRA will send you an HBP Statement of Account annually to suggest how much you owe the RRSP that year. Your settlements will certainly not count as a contribution as you've already obtained the tax break from those funds.

Accessibility To Funds

The funds you take out from the RRSP needs to have been there for at the very least 90 days. You can still technically withdraw the cash from your RRSP as well as utilize it for your down-payment, yet it will not be tax-deductible and will not be part of the HBP.

You can access up to $35,000 individually or $70,000 per pair through the HBP.

Please feel free to contact Canadian Mortgage Experts anytime if you would like to know more concerning the HBP and exactly how it could work for you as you prepare your down payment. It would certainly be our privilege to speak with you.