Using Your RRSP to Buy Your First Home in Ottawa

Jan 17

For many first-time homebuyers in Ottawa, saving enough for a down payment can feel like a daunting task. But did you know your Registered Retirement Savings Plan (RRSP) could provide the financial boost you need? The Home Buyers’ Plan (HBP) allows eligible first-time buyers to withdraw up to $60,000 tax-free from their RRSPs—or $120,000 if purchasing with a partner—to put toward their first home.

Here’s a detailed guide to understanding the Home Buyers’ Plan, how it works, and how Ottawa residents can leverage it to achieve homeownership.

What is the Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan is a federal program that helps first-time buyers access their RRSP savings for a home purchase. Instead of taking out a taxable withdrawal, you can borrow from your RRSP tax-free, provided the funds are repaid over time.

This program is especially beneficial for Ottawa residents looking to enter a competitive housing market while reducing the financial strain of a large down payment.

Eligibility Requirements for the Home Buyers’ Plan

To participate in the HBP, you must meet the following criteria:

First-Time Buyer: You or your spouse/common-law partner must not have owned a home in the last four years.
Canadian Residency: You must be a Canadian resident at the time of withdrawal and purchase.
RRSP Funds: The money you withdraw must have been in your RRSP for at least 90 days.
Written Agreement: You must have a written agreement to buy or build a qualifying home.
You’re considered a First Time Home Buyer again is you rent for 5 years.

How the Home Buyers’ Plan Works

Here’s a step-by-step breakdown of how to use the HBP:

Withdraw Funds Tax-Free
- Withdraw up to $60,000 per individual (or $120,000 per couple). These funds can be used for your down payment or other qualifying home-buying expenses.
Repayment Terms
- Repay the borrowed amount over 15 years, beginning two years after withdrawal. Payments are interest-free, but any missed payments are added to your taxable income for the year.
RRSP Contribution Deadlines
- Contributions made by March 3, 2025, can be applied to your 2024 tax return, helping reduce your taxable income while you save for your home.

Pro Tips for Ottawa Homebuyers

Understand Your RRSP Contribution Limits
- Check your 2023 Notice of Assessment to determine your current contribution room. Contributions exceeding your limit may result in penalties, so plan carefully.
Budget for Repayments
- For example, withdrawing $60,000 under the HBP requires repayments of approximately $330 per month over 15 years. Ensure this fits into your post-homeownership budget.
Plan Contributions Early
- If you’re relying on a new RRSP contribution to fund your HBP withdrawal, remember that funds must remain in the account for at least 90 days before they’re eligible for the program.
Strategize Around Tax Benefits
- Contributing to your RRSP before withdrawal can lower your taxable income. For maximum benefit, consult a financial advisor or tax professional.
Consider Additional Costs
- Beyond the down payment, remember to account for other expenses like land transfer taxes, legal fees, and home inspections.

Ottawa-Specific Considerations for First-Time Buyers

Ottawa’s real estate market is diverse, offering everything from modern condos downtown to family-friendly homes in Kanata and Orleans. With the average home price in Ottawa hovering around $700,000, accessing your RRSP through the HBP can make a significant difference in your purchasing power.

Additionally, Ontario offers a Land Transfer Tax Rebate of up to $4,000 for first-time homebuyers, which can further reduce your upfront costs.

Is the Home Buyers’ Plan Right for You?

While the HBP offers valuable benefits, it’s essential to evaluate whether it aligns with your financial goals. Here are a few factors to consider:

Long-Term Savings Impact: Withdrawing from your RRSP reduces your retirement savings. Ensure you have a plan to rebuild your RRSP balance.
Repayment Discipline: Missing HBP repayments will increase your taxable income, so it’s critical to budget for these amounts.
Alternative Savings Options: Consider whether the new Tax-Free First Home Savings Account (FHSA) could better meet your needs.

Next Steps for Ottawa Buyers

If you’re ready to take advantage of the Home Buyers’ Plan or want more information, reach out to a trusted financial advisor. They can help you navigate the program, assess your contribution room, and ensure your plan aligns with your long-term financial health.

If you’re searching for your first home in Ottawa, working with a knowledgeable real estate agent can make all the difference. From understanding the local market to navigating the buying process, a professional can help you secure your dream home.

For personalized advice or connections to financial planners, feel free to contact me directly at liane.moskal@keyrate.com.

Start Your Homeownership Journey Today

Using your RRSP through the Home Buyers’ Plan is a smart, practical way to boost your buying power in Ottawa’s competitive real estate market. By planning carefully and seeking expert guidance, you can turn your dream of owning a home into a reality while staying on track financially.

Have questions? Let’s talk.