RRSPs for First Time Homebuyers

First time home buyer? Here is a quick summary of how a first time home buyer can take advantage of their RRSP’s to buy their first home!

The Basics:

First time home buyers that are buying a home that they intent to occupy as their primary residence for one year after buying/building are eligible.
Up to $35,000 per person can be used in the program.
The funds need to be paid back within 15 years of use.
The funds must be in your RRSP for at least 90 days prior to being used.

Don’t take the funds out of your RRSP until after you have removed conditions on your purchase. Banks will want to see a 3 month history of funds for downpayment. Moving funds around prior to you financing being approved can make for more paperwork requirements for your approval.
If you have funds available for downpayment and are a first time home buyer it can be a good idea to put them into you RRSP now before you are too serious about searching for a home. That way you can get the tax benefits and still be sure they will be in your RRSP account for at least 90 days before you close on your first home.
If you have existing RRSP’s through your employer, it’s a good idea to confirm with the employer that these funds are able to be withdrawn and not “locked in”.
If you are saving for a down payment and already have $35K in your RRSP’s, put the extra savings into your TFSA or other account. If you take out more than the $35K from your RRSP’s you will have to pay tax on the amounts over and above $35K.
Don’t forget that you will have to pay the funds back over 15 years. Best to make monthly deposits from the get-go so you don’t have a large surprise amount to pay back at the end of 15 years.

Here is a quick link to the government of Canada website for a detailed look at how it works and to double check you qualify.

Here is a link to the form that you have to fill out and send to your financial institution when withdrawing the RRSP’s for a home purchase.