How to Use Your RRSP to Maximize Your Down Payment
by Nutan Brown
on Tuesday, April 26th, 2022 at 8:05am.
Saving for a down payment can be difficult. Sometimes it can take years to save up enough money to secure your perfect home.
To help ease the burden of this expense the Canadian government has created a Home Buyers’ Plan program, which essentially allows you to borrow your own funds from an RRSP to purchase a home.
First-time homebuyers can withdraw up to $35,000 from their RRSP to increase their down payment. If you are buying with someone who also qualifies for the program, then you can double that amount to $70,000.
In order to qualify for the Home Buyers' Plan you must:
Be a first-time homebuyer
Have a written agreement to purchase or build a qualifying home
Be a resident of Canada when your RRSP funds are withdrawn and until the house has been purchased or constructed
Must intend to live in the home as a principal residence within one year of the purchase or building completion
Before you withdraw the funds from your RRSP, make sure you have the budget to pay it back. Each year you will need to repay a specified minimum amount over a period of 15 years. If you do not put the funds back into your RRSP, your taxable income for that year will be increased by a corresponding amount.
If you have any questions about using your RRSP for the down payment of your home, feel free to contact me for some advice.