Are you looking of owning your first home in Canada but worried about financing? Look no further than the Canadian government’s Home Buyers’ Plan (HBP), a program tailored to assist first-time homebuyers in making their dreams a reality.

The HBP allows eligible individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to put towards the purchase or construction of a home. What’s even more advantageous for couples is that if you’re buying with your spouse, you can jointly access a total of $70,000 from your RRSPs, doubling your potential financial support.

However, this isn’t just a free withdrawal. The HBP operates as a self-loan scheme, necessitating repayment into your RRSP over a 15-year period. Failure to adhere to the repayment schedule results in taxation, with the withdrawn amount being treated as income each year until fully repaid. The repayment period begins the second year following the initial withdrawal, ensuring buyers have time to settle into their new homes before repayment obligations kick in.

To qualify for the HBP, you must meet specific criteria:

First and foremost, you must be a first-time homebuyer. In this context, a first-time homebuyer is defined as someone who, in the past four years, has not occupied a home that they or their current spouse/common-law partner owned. Notably, recent divorces or separations can reset your status as a first-time buyer, provided you’ve been living separately from your partner for at least 90 days and aren’t residing in a property owned by a new partner.

Furthermore, you must have a written agreement to purchase or build a qualifying home. This could include a variety of residential properties, as long as they meet the criteria set out by the HBP.

Additionally, you must be a resident of Canada at the time of withdrawing funds from your RRSPs and up to the point of purchasing or constructing the qualifying home. Moreover, you must intend to use the home as your primary residence within one year of its acquisition or completion.

Moreover, if you’ve previously participated in the HBP, you may be eligible to do so again under certain conditions. Specifically, if your repayable HBP balance is zero on January 1st of the year of withdrawal and you meet all other eligibility criteria, you could access the plan once more.

If you are interested in learning more about The Home Buyer’s Plan or other first-time homebuyer support, please don’t hesitate to reach out Neena Parmar a Dominion Lending Centres mortgage expert today!