How does hbp repayment work

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Last updated: April 8, 2026

Quick Answer: HBP repayment requires you to repay the withdrawn amount over 15 years, starting the second year after withdrawal. You must make minimum annual repayments equal to 1/15 of the total withdrawal, which are added to your RRSP contribution room for the year. If you miss a repayment, the amount is added to your taxable income for that year. The repayment period can be extended if you become a non-resident of Canada or under certain other conditions.

Key Facts

Repayment period is 15 years starting the second year after withdrawal
Minimum annual repayment is 1/15 of total HBP withdrawal
Missed repayments are added to taxable income for that year
Repayments do not count against RRSP contribution limits
Program established in 1992 under Canadian Income Tax Act

Overview

The Home Buyers' Plan (HBP) is a Canadian government program established in 1992 under the Income Tax Act that allows first-time home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plans (RRSPs) tax-free to purchase or build a qualifying home. Originally introduced with a $20,000 limit, the program was designed to help Canadians enter the housing market by accessing retirement savings without immediate tax consequences. The limit was increased to $25,000 in 2009 and further to $35,000 in 2019 to reflect rising housing costs. To qualify, participants must be first-time home buyers (or haven't owned a home in the previous four years), have a written agreement to buy or build a qualifying home, and intend to occupy the home as their principal residence within one year of purchase. The program has helped over 3 million Canadians purchase homes since its inception.

How It Works

HBP repayment operates on a 15-year schedule beginning the second calendar year after the withdrawal. For example, if you withdraw funds in 2023, your first repayment is due by December 31, 2025. Each year, you must repay at least 1/15 of the total amount withdrawn to your RRSP. These repayments are not considered contributions for tax deduction purposes but do restore your RRSP contribution room. You can make larger repayments at any time to shorten the repayment period. If you fail to make the minimum annual repayment, the shortfall is added to your taxable income for that year. Special rules apply if you become a non-resident of Canada, in which case the entire outstanding balance becomes taxable immediately unless you continue making repayments. The Canada Revenue Agency (CRA) tracks repayments through your annual tax return using Schedule 7.

Why It Matters

The HBP repayment system matters because it enables Canadians to access significant funds for home purchases while maintaining retirement savings discipline. By requiring systematic repayment over 15 years, the program ensures that retirement savings are eventually restored, addressing concerns about depleting retirement funds for housing. The program has substantial economic impact, with approximately $40 billion withdrawn through HBP since 1992, stimulating the housing market and supporting construction industries. For individuals, successful HBP participation can mean the difference between renting and homeownership, with the average HBP withdrawal being approximately $25,000. The repayment flexibility allows homeowners to manage cash flow during mortgage payments while rebuilding retirement savings, creating a balanced approach to major financial milestones.