HBP Repayment Rules for Canadians

The Home Buyers' Plan (HBP) lets first-time home buyers withdraw up to $60,000 from their RRSP to purchase a qualifying home, with no withholding tax at the time of withdrawal. As of April 2024, the limit increased from $35,000 to $60,000, and couples can each withdraw $60,000, giving them up to $120,000 combined. If you are still deciding whether to make the withdrawal at all, start with the FHSA versus HBP breakdown; this article is about what happens after.

The withdrawal comes with a bill attached. You must repay it over 15 years, and each year you must repay at least 1/15th of the total amount withdrawn. If your total withdrawal was $60,000, your annual minimum repayment is $4,000.

Miss a repayment and that amount lands on your tax return as income, taxed the same as any other RRSP withdrawal. Nothing warns you in advance.

When the 15-Year Clock Actually Starts

The repayment clock is tied to the calendar year of withdrawal. The exact date you took the money out does not move it.

The ordinary rule is that repayment begins the second calendar year after the year you withdrew. If your first HBP withdrawal fell between January 1, 2022 and December 31, 2025, that start is pushed back three further years. Budget 2024 added a temporary deferral covering that window, so the 15-year period begins the fifth year after the withdrawal year.

That deferral covers almost everyone who will read this. If you withdrew under the HBP in any month of 2024, your first required repayment year is 2029. You would make that repayment by contributing to your RRSP during 2029 or in the first 60 days of 2030, and designating it as an HBP repayment on your 2029 tax return.

If your first withdrawal was in 2026 or later, the deferral has expired and the ordinary rule applies to you: a 2026 withdrawal begins repaying in 2028.

The starting year is the part people get wrong. They see "15 years to repay" and assume the clock runs from the day they bought the house. Your Notice of Assessment states your first repayment year outright, which is the fastest way to settle the question.

How to Actually Make a Repayment

This is where the confusion lives. The mechanics are two steps.

Making an HBP repayment is a two-step process:

1. Make a contribution to your RRSP (any RRSP in your name).
2. On your tax return, complete Schedule 7 and designate that contribution as an HBP repayment.

If you make an RRSP contribution but do not designate it on Schedule 7, the CRA treats it as a regular contribution, which means you get a tax deduction for it, but your HBP balance does not decrease. You will still owe the missed repayment instalment, and it will be added to your income.

Each dollar you contribute does one job. It either buys you a deduction or retires HBP debt, and Schedule 7 is where you choose.

This is the most commonly misunderstood rule in the HBP. Many Canadians contribute to their RRSP thinking they are repaying the HBP, then discover at tax time that they have a surprise income inclusion because they did not complete Schedule 7 correctly.

HBP Repayments Do Not Give You a Tax Deduction

That one sentence changes the planning math.

When you contribute to your RRSP normally, you get a deduction that reduces your taxable income. That is the core appeal of the RRSP. A contribution you designate as an HBP repayment earns you nothing on line 20800, because you already deducted this money years ago, when you first put it in. Repaying restores the account without paying you twice.

That has a planning consequence. If you are trying to both repay the HBP and get an RRSP deduction in the same year, you need to make two separate contributions: one designated as an HBP repayment on Schedule 7, and one as a regular RRSP contribution. Your total contributions cannot exceed your available RRSP room, so factor both amounts together.

What Happens If You Miss a Repayment

The CRA handles a missed HBP repayment by taxing it. Your required instalment for that year is added to your income on line 12900, the same line any other RRSP withdrawal lands on. No fine is charged and no interest accrues.

If your required instalment is $4,000 and you designate nothing, the whole $4,000 becomes income. At a 30% combined marginal rate that is about $1,200 in extra tax. At 43% it is closer to $1,720. Either way it is money you had not planned to send anyone.

One missed year in a genuinely hard season is survivable. Missing them year after year because nobody explained the rules is the expensive version, and it is the one this article exists to prevent.

You Can Repay Faster Than the Minimum

There is no penalty for repaying your HBP withdrawal ahead of schedule. If you designate more than the minimum 1/15th instalment in any given year, your remaining balance decreases and your future annual minimums are recalculated accordingly.

This can be a useful strategy if you come into a bonus or a stretch of higher income. Clearing the HBP balance early restores your RRSP's full function as a retirement vehicle: you stop splitting contributions between "repayment" and "new saving" and can put everything toward long-term growth.

The HBP Follows You Across Provinces and Employers

If you move from Ontario to British Columbia, or leave a job, or take a year of parental leave, your HBP repayment obligation follows you. The balance is attached to your CRA account, so it travels with your social insurance number wherever you work and whatever province you file in.

If your income drops sharply in a given year and you cannot manage the minimum repayment, the missed instalment becomes income. The CRA offers no formal hardship exemption here, though you can choose to pay less than the minimum in a difficult year and accept the income inclusion, knowing it may be taxed at a lower rate in that lower-income year.

Why the FHSA Does Not Come With This Bill

The First Home Savings Account (FHSA) changed the calculus for new first-time buyers starting in 2023. A qualifying FHSA withdrawal is yours to keep. The money comes out tax free and your retirement savings never carry a balance owing.

The HBP, by contrast, is a loan from your future retirement self. You are using it today and paying it back over 15 years.

If you are still in the home-buying planning phase and have not yet withdrawn from an RRSP, it is worth understanding how the FHSA fits into your strategy before reaching for the HBP. The two can be used together, but the planning is meaningfully different. See the comparison in the FHSA vs HBP guide.

Start With Your Notice of Assessment

If you have already made an HBP withdrawal, log in to CRA My Account and open your most recent Notice of Assessment. The CRA issues an HBP statement of account alongside it every year, and it names three things outright: your outstanding balance, how much you have repaid so far, and the instalment required for next year. That last figure settles the deferral question without you having to count calendar years.

If the balance is not where you expected, you have time to correct it for this tax year before the filing deadline, and an hour with an accountant is worth it if the numbers do not reconcile. For how your RRSP and TFSA fit back together once the balance is cleared, the TFSA vs RRSP guide covers the order to contribute in.

The HBP is one of the few arrangements where you borrow from yourself and nobody chases you for the money. Putting it back on time is a small, unglamorous act of keeping your word, which turns out to be most of what stewardship is.