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Stop Using Your Own Money! How First-Time Buyers Can Use RRSPs for a Down Payment in Canada

  • erin0582
  • Sep 26
  • 3 min read

Updated: Nov 6



Buying your first home in Canada can feel overwhelming—especially when you’re trying to save up for that big down payment. The good news? You don’t have to rely on your personal savings alone. Thanks to the RRSP Home Buyers’ Plan (HBP), you can leverage your Registered Retirement Savings Plan to purchase property—while saving thousands of dollars in taxes.


In this blog, I’ll break down exactly how it works, the new 2025 updates, and why this strategy is a game-changer for first-time home buyers.


What Is an RRSP?

An RRSP (Registered Retirement Savings Plan) is a government-registered account that allows you to save for retirement while reducing your taxable income. Every dollar you contribute is tax deductible, meaning you pay less income tax today while building your financial future.


But here’s the exciting part: first-time home buyers can withdraw from their RRSPs under the Home Buyers’ Plan to use those funds toward a down payment—without paying taxes on the withdrawal.


Using an RRSP Loan for Your Down Payment

Here’s where many buyers are surprised: you don’t necessarily need to have tens of thousands already saved in your RRSP. Instead, you can apply for an RRSP loan through your bank.

  • The maximum loan you can receive is $50,000.

  • You’ll contribute this loan into your RRSP account and receive a tax receipt for the contribution.

  • Those contributions reduce your taxable income—often saving you thousands of dollars.

  • After a 90-day waiting period, you can withdraw the funds under the Home Buyers’ Plan and use them toward your down payment.


For example: If you borrow $50,000 as an RRSP loan and already have $1,000 saved, you now have $51,000 in your RRSP account. After 90 days, you can withdraw that amount tax-free toward your first home.


The New $60,000 Withdrawal Limit (2025 Update)

One of the biggest updates for 2025 is the increase of the withdrawal limit under the Home Buyers’ Plan from $35,000 to $60,000 per individual.

That means:

  • If you’re buying with a partner, you could potentially use up to $120,000 combined from your RRSPs for your down payment.

  • Any remaining balance in your RRSP stays invested and continues growing for retirement.


Repayment Rules You Need to Know

Another update makes the program even more flexible:

  • You now have 15 years to repay the funds back into your RRSP.

  • Repayment doesn’t start right away. Instead, you get a 5-year grace period before annual repayments begin.

This makes it much easier for new homeowners to manage their finances without being burdened immediately.


How Much Can You Really Save?

Let’s look at a quick example:

  • Annual income: $100,000

  • Normal taxes owed: about $25,000

  • Contribute $60,000 into an RRSP → your taxable income drops to $40,000

  • New taxes owed: about $9,000

That’s a $14,000 tax savings! Money that can be used to help repay your RRSP loan or cover moving and closing costs.

This is why so many first-time buyers consider it “free money.”


Why This Strategy Works for First-Time Buyers

  • ✅ Boosts your down payment without draining your savings

  • ✅ Saves you thousands in taxes

  • ✅ Lets you enter the market faster

  • ✅ Offers flexible repayment terms

  • ✅ Works even if you don’t already have a large RRSP balance


Final Thoughts

If you’re a first-time home buyer in Canada, the RRSP Home Buyers’ Plan could be your ticket to owning a home sooner than you thought possible. By leveraging your RRSP (and even using an RRSP loan), you can increase your down payment, lower your taxes, and give yourself a financial advantage.


💡 Every situation is unique, so it’s important to review your options with both your mortgage broker and your realtor before making a move.


Let’s Chat About Your Home Buying Goals

Have questions about how to set this up or whether it’s right for you? I’d love to help guide you through the process.


Erin Price Emery

Vancouver REALTOR® | The Collective Real Estate Team | Oakwyn Realty

📞Contact me: erin@priceemery.com 

Call or text: 604-767-7725

Explore homes for sale in Vancouver and other areas at listitvancouver.com






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