Down payments and the Home Buyers' Plan: the moving parts

Down payment · 6 min read

The down payment is the part of the home price you pay yourself; the rest comes from a mortgage. Two separate systems govern how much you need and where it can come from: minimum down payment rules, and the Home Buyers' Plan (HBP), which lets you borrow from your own RRSP. Here is how they fit together.

Minimum down payments in Canada

If your down payment is under 20%, your mortgage is "insured" — you pay a mortgage default insurance premium (added to your mortgage, not paid in cash at closing). Reaching 20% avoids that premium entirely, which is why so many buyers target it.

The Home Buyers' Plan, in plain language

The HBP lets a qualifying first-time buyer withdraw money from their RRSP tax-free to buy or build a home. The moving parts:

• The limit is $60,000 per person — raised from $35,000 for withdrawals made after April 16, 2024. A qualifying couple can each withdraw, for up to $120,000 toward the same home.
• It is a loan to yourself, not a gift. You repay the full amount into your RRSP over 15 years, starting the second year after the withdrawal. Miss a year's minimum repayment and the shortfall is added to your taxable income.
• The 90-day rule: RRSP contributions must sit in the account at least 90 days before they can be withdrawn under the HBP. If you are contributing specifically to fund a withdrawal, do it at least 90 days early.
• You need a written agreement to buy or build a qualifying home in Canada, and you must occupy it as your principal residence within one year.
• First-time test: you did not live in a home you owned as your principal residence in the current year or the previous four calendar years — so past owners can requalify.

Stacking the HBP with the FHSA

You can use both programs on the same purchase. The FHSA contribution never has to be repaid, so most buyers' best order is: fill the FHSA first, then direct remaining savings toward RRSP contributions you will borrow under the HBP. The trade-off to understand: every dollar you withdraw from your RRSP under the HBP stops compounding for your retirement, and the repayments are not deductible — you are repaying with after-tax money. An FHSA withdrawal has no such cost.

The down payment checklist

1. Figure out your target price range, then compute the minimum down payment from the table above.
2. Add your closing costs on top — they are a separate expense, not part of the down payment.
3. Open and fund your FHSA early; contribution room only starts when the account exists.
4. If using the HBP, make RRSP contributions at least 90 days before you will need the withdrawal.
5. Get a mortgage pre-approval so you know your real budget — including the stress test — before you start shopping.

General information only, not financial or tax advice. HBP rules come from the Canada Revenue Agency and can change — confirm limits, repayment timing, and eligibility before withdrawing.