RRSP Mortgage: Using Your RRSP to Buy a Home

An RRSP mortgage is possible in Canada. The Home Buyers’ Plan is a program established by the federal government that allows individuals, who are qualified first-time home buyer (as defined by Canada Customs and Revenue Agency – see CCRA link below) to withdraw of up to $20,000 tax-free from your RRSPs to buy or build a qualified home, located in Canada that must be the buyer’s principal residence.

This amounts to $20,000 per applicant or $40,000 per couple. The borrower must be a resident of Canada and must pass the eligibility test at the link above. To participate, you must complete “Form T1036” and provide this form to the institution that holds your RRSPs that you would like to withdraw. These forms can be easily downloaded from the CCRA website.

If you participate in the Home Buyers’ Plan you must repay the amount you withdrew within a 15-year period in an amount no less than 1/15th per year. If you repay less than the amount you should repay, that difference is then added to your taxable income on your income tax return and you are taxed at your marginal tax rate.

For more information on RRSP Mortgages in Canada including applications visit the Canada Revenue Agency’s Home Buyer’s Plan.