HBP Repayment Rules: What Canadians Need to Know

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.

But the withdrawal is not a gift. You must repay it over 15 years. Repayment starts the second calendar year after the year you made the withdrawal. Each year, you must repay at least 1/15th of the total amount withdrawn.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 missed amount is added to your taxable income for the year - taxed the same as any other RRSP withdrawal. The CRA does not send a bill. You simply lose the deduction and pay tax instead.

When Repayment Starts

The repayment clock is tied to the year of withdrawal, not the date of withdrawal.

If you withdrew from your RRSP under the HBP in any month of 2024, your first required repayment year is 2026. You make that repayment either by contributing to your RRSP between January 1 and March 1, 2027, and designating it as an HBP repayment on your 2026 tax return, or by contributing earlier in 2026 and designating it on your 2026 return.

The second year is what catches people. They see "15 years to repay" and assume they have 15 years from purchase. In practice, if you bought a home late in 2024, your first repayment is due for the 2026 tax year - which arrives faster than it sounds.

How to Actually Make a Repayment

This is where significant confusion happens, and it is worth being explicit.

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 installment, and it will be added to your income.

The deduction and the repayment are mutually exclusive. A dollar can be one or the other, not both.

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

Let that sit for a moment, because it changes how you should think about this.

When you contribute to your RRSP normally, you get a deduction that reduces your taxable income. That is the core appeal of the RRSP. But an HBP repayment contribution does not count as a new contribution for deduction purposes. You are simply returning money to the account - restoring what you borrowed from your future self.

This matters for planning. 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 does not penalise you with a fine for missing an HBP repayment. What it does is treat the missed installment as income.

If your required repayment in 2026 is $4,000 and you contribute nothing designated as an HBP repayment, $4,000 is added to your income on line 12900 of your tax return. Depending on your marginal rate, that could mean $1,500 to $2,000 in additional tax you were not planning for.

Missing repayments is not catastrophic if it happens once in a genuinely difficult year - but missing them systematically because you did not understand the rules is an avoidable and expensive mistake.

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 installment in any given year, your remaining balance decreases and your future annual minimums are recalculated accordingly.

This can be a useful strategy if you receive a bonus, an inheritance, or a period 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 have a year of parental leave, your HBP repayment obligation follows you. It is attached to your CRA account, not your employer or province. Your repayment requirement does not change.

If your income drops significantly in a given year and you cannot manage the minimum repayment, the practical consequence is that the missed installment becomes income. There is no formal hardship exemption - though you can certainly 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.

HBP vs. FHSA: The Key Difference

The First Home Savings Account (FHSA) changed the calculus for new first-time buyers starting in 2023. One of the most significant differences between the FHSA and the HBP is that FHSA withdrawals for a qualifying home purchase have no repayment requirement. The money is simply gone from the account, and there is no obligation to put it back.

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.

One Concrete Next Step

If you have already made an HBP withdrawal: find your Notice of Assessment from the year of withdrawal. Your HBP balance and required annual repayment are listed there. If you are not sure whether you have been making repayments correctly, log in to your CRA My Account - your HBP repayment balance is tracked there and updated each year after you file.

If the balance is not where you expected it to be, you have time to correct it for this tax year before the filing deadline. A one-hour conversation with an accountant is worth it if you are unsure.

Provision for your family includes provision for your future self - pay your own loan back.