Make Your Dream Home a Reality with the Home Buyers’ Plan
Every one of us has imagined what our dream house should look like. A 5-bedroom house in the suburbs of Oakville, a penthouse in a Toronto condo or even a cute cottage in the quiet country of Ontario. From the number of bedrooms to the kitchen concept and garden den, we all have our preferences of the warm home we desire to create for a long time.
But how can you make that dream a reality?
At Hombek, we understand that the housing market can be frightening, especially for a first-time buyer but you’ll be pleased to know that building a dream home could be much closer than you think when you utilize the Home Buyers Plan (HBP). In Canada, the Home Buyers Plan is an incredible program designed to help make your dream home a reality by taking funds from your retirement savings to help purchase your first property and become a homeowner.
In this blog post, we’re going to break down all the details, so you’re fully prepared to make the most of this plan and take a step closer to your dream home.
What is the Home Buyers’ Plan (HBP)?
If you’re reading this blog, you’re probably looking to make your dream home a reality and may be considering the Home Buyers Plan to help you achieve this goal. But what is the Home Buyers Plan?
The Home Buyers Plan is a program that was introduced by the Canadian government to allow Canadians like yourself to retrieve money from your Retirement Savings Plan (RRSPs) and put it toward buying or building a dream home. What sets this plan apart is that it gives you time to pay back the withdrawn amount over a 15-year period. Think of it as a helping hand from your future self to get you the home you’ve always dreamed of, but with the extra support of the government.
Am I Eligible for the HBP?
To benefit from the Home Buyers Plan, there are certain conditions you will need meet. This includes:
Be A First-Time Home Buyer
The HBP was launched for the benefit of first-time buyers to offer them the opportunity to step into the world of homeownership; however, there are special cases where exceptions apply. For example, if you previously owned a home but didn’t live in it for a continuous period of four years, the Home Buyers Plan offers you another chance to use this program. And if you’re worried whether having previously owned a home may impact your eligibility for the HBP, rest assured that this plan is adapted to your unique circumstances.
Have A Written Agreement
To participate in the Home Buyers Plan, it’s important to have a written agreement to buy or build a suitable home for yourself. This agreement is like a formal contract between you and the seller, outlining all the terms and conditions related to the purchase.
The document should state your plan to buy a house, the property details, agreed price, and any other important terms that should be outlined. These terms should meet the HBP’s requirements for a clear and binding transaction.
Remain A Canadian Resident
To withdraw money from your RRSPs for the HBP, you must be a Canadian resident. This is because the program was created by the Canadian government, for Canadians, to enhance the country’s economy and encourage homeownership.
When making your purchase or constructing your property, it is crucial that you remain a Canadian citizen to guarantee access to the HBP.
Must have the Intention to Occupy
The purpose of a Home Buyers Plan is for the intention of living rather than buying a house to turn profits by selling it. This rule exists to ensure the plan is used effectively and properly. Essentially, the program allows you to make your dream home a reality by providing you with the necessary funds used to help finance your own home.
If you intend to use the home buyers plan (HBP) when buying or building a dream home, it is important to note that after acquiring the funds and getting the home, you must live in that house for at least a year after it has been purchased.
Repayable HBP Balance
If you’ve enrolled in the Home Buyers Plan (HBP) before, you may be able to do so again if you have repaid all previous withdrawals by January 1st of the year you wish to withdraw again, if you meet all other requirements. Let’s break it down. You want to buy a house in 2026 using the HBP but you are still repaying the previous loan withdrawals. If you have repaid the loan by January 1st, 2026, you will be eligible to apply for HBP.
Building or Buying a Qualifying Home
One of the features that makes the HBP stand out is its flexibility on welcoming different paths to homeownership. Whether you’re buying a house or building a dream home, the HBP helps you achieve to your goals. The key is to complete the purchase or have the home ready to live in before October 1st of the year after your withdrawal. For instance, if you receive funds from the HBP on June 5th 2026, you will need to purchase your home on or before the 1st of October 2027. This timeline ensures that you use the HBP funds efficiently within a reasonable period following the withdrawal.
How to Participate in the HBP for a Related Person with a Disability
The HBP also offers its advantages to people living with disabilities. This provision recognizes the unique needs and circumstances of these individuals and offers a pathway to a more suitable living situation. You may withdraw funds from your RRSP to procure a residence that is more suitable than their present dwelling.
Is Your HBP Balance Up to Date?
If you have previously participated in the HBP, you can participate again. However, your HBP balance must be zero on January 1st of the desired withdrawal year. You will also need to meet all the other HBP conditions that apply to your unique situation.
You can make your dream home a reality by managing your HBP effectively. Doing so allows you to be part of the program.
How to Withdraw Funds from Your RRSP
To withdraw funds from your RRSP under the HBP, you must complete the T1036 form and request to Withdraw Funds from the RRSP. Your RRSP contributions must stay in the RRSP for a minimum of 90 days before they can be retrieved and used toward your property.
Extensions for Buying or Building a Home
If, for some reason, you cannot buy or build the qualifying home before October 1st of the year after your withdrawal, you may still meet the deadline under certain conditions. These include having a written agreement in effect or having paid an amount to contractors or suppliers towards the construction of your property.
Key Points
If you have or meet the criteria listed above, Congratulations! You’re qualified for the home buyer’s plan. It doesn’t matter if you’re looking to settle down in a cozy cottage in the serene countryside or a stylish condo in the bustling city of Toronto, the Home Buyers’ Plan (HBP) is a powerful tool designed to bridge the gap between your aspirations and homeownership, helping you to make your dream home a reality. By tapping into your retirement savings, you can purchase or build your first home with a 15-year timeframe to repay the withdrawn amount loaned from yourself.
To qualify for the Home Buyers Plan (HBP), you’ll need to be a first-time homebuyer, have a written agreement stating all the terms and conditions relating to the purchase, and be a Canadian resident. Fortunately, this plan accommodates special cases where you can still use the HBP to own a home even if you’ve owned one before.
Before considering the HBP’s, your intentions must be to live in the property once acquired to emphasize the genuine need of homeownership for oneself rather than to gain profits through selling. The HBP accommodates both buying and building a dream home, with a focus on completing the process within a set timeline.
Our agents are experts and would be happy to show you the way. Get in touch today for a quick chat!
