[Buyer Tips] How does the RRSP Home Buyers' Plan work?
By Warren McNeil
Buying a home can be a bit of a challenge if you don't have a downpayment. Even though banks are offering no-money down or 5% downpayments, you still might want to put a larger downpayment. Keep in mind that the bigger your downpayment, the less money your home will cost you over the long-haul. It makes a lot of sense to put a bigger downpayment if you can afford it.
One option that can help individuals with their downpayment is a Canadian government program called the Home Buyers' Plan or HBP.
If you are a first time homebuyer or someone who is buying on behalf of someone who is disabled, you are eligible to withdraw an amount of up to $20,000 to put towards the downpayment when purchasing or building a new home. Spouses are also eligible to withdraw up to $20,000 as well for a total maximum of $40,000.
No tax is deducted from these funds so long as you repay the fund to an RRSP.
For more information about this type of assistance along with forms, conditions, prepayment options
see http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html
This is just one more thing to make you homebuying experience a little bit easier. Be sure to talk to your local lendor or realtor to get more information about this plan or any other plan.
Reference: Orea Guide: How to Buy Your Home pg 88
Thanks for reading!