What is the Home Buyers’ Plan (HBP)?
Want to pull $35,000 from your RRSP tax-free for a Milton home? Here’s exactly how the Home Buyers’ Plan (HBP) makes it possible — and what Milton buyers must know.
Quick Truth: HBP is the fastest way to turn retirement savings into a down payment without immediate tax pain
If you’re a first-time buyer in Milton, Ontario, the Home Buyers’ Plan (HBP) is a real tool — not a rumor. It lets eligible Canadians withdraw money from their RRSPs to buy or build a qualifying home. You avoid withholding tax and you don’t pay income tax on the withdrawal if you repay it on schedule.
This post lays out the rules, the exact dollar limits, how HBP fits Milton’s market, and the moves successful buyers make right now. Read this and you’ll know whether to use HBP, how to combine it with other first-time buyer programs, and the local tactics that win bidding wars.
What the Home Buyers’ Plan (HBP) actually is
- HBP lets an eligible individual withdraw up to $35,000 from their RRSP tax-free to buy or build a qualifying home.
- If two people qualify (spouses or common-law partners), each can withdraw up to $35,000 — up to $70,000 combined.
- You must repay the amount to your RRSP over 15 years. Repayment starts the second year after the withdrawal; you repay 1/15th each year.
- If you don’t make your annual repayment, the missed amount is added to your taxable income for that year.
These are the mechanics. The strategy is how you use it in Milton — a fast-moving, commuter-friendly market with rising prices and high demand.
Who qualifies as a “first-time buyer” for HBP
Simple, practical checklist:
- You haven’t owned and lived in a principal residence that you or your spouse owned in the last four years (there are specific date rules — we’ll cover them in the FAQ).
- You’re buying or building a qualifying home that you plan to occupy.
- You have an eligible written agreement to buy or build.
If you qualify, HBP becomes a tactical move to increase your down payment quickly.
Exact dollar math and repayment — no fluff
- Maximum withdrawal: $35,000 per person.
- Couple max: $70,000.
- Repayment term: 15 years.
- Minimum annual repayment: 1/15th of amount withdrawn.
- If you miss the annual repayment, that year’s required repayment amount gets added to your taxable income.
Example: You withdraw $30,000. Your annual repayment requirement is $2,000. If you skip it in year 3, that $2,000 gets included in your income and you owe tax on it.
Why HBP matters in Milton, Ontario market right now
Milton is not Toronto — it’s a high-demand suburban market. Key local factors:
- Commuter access: GO Transit improvements and highway links keep demand strong.
- New home development: Many new subdivisions and builders attract first-time buyers and investors.
- Price pressure: Milton home prices have risen steadily; competition for affordable starter homes is intense.
- Inventory: Limited resale inventory means buyers need stronger offers — larger down payments and faster closing power win.
HBP gives you legal, predictable access to money that’s already yours. That improves your mortgage profile and lets you offer a cleaner, stronger buy — fewer conditions, higher certainty for sellers.
How to use HBP to win in Milton
Use this simple playbook:
- Verify eligibility early. Don’t wait until you’re under offer.
- Confirm RRSP funds are available and meet CRA timing rules (contribution timing can matter).
- Talk to your lender about how the withdrawal will be treated. Some lenders want to see funds back in an RRSP or a letter from CRA.
- Use HBP to cover a meaningful slice of your down payment — even 5–10% extra can change lender ratios and mortgage insurance requirements.
- Combine HBP with provincial first-time buyer incentives and the land transfer tax rebate to minimize out-of-pocket closing costs.
These moves convert HBP from theory into a practical advantage at offer time.
Combine HBP with other first-time buyer programs
Make programs stack for maximum effect:
- Ontario Land Transfer Tax Rebate: First-time buyers in Ontario can claim a rebate up to $4,000. That’s cash back at closing — real money.
- First-Time Home Buyer Incentive (federal): Shared equity mortgage — lowers monthly payments. HBP can cover down payment while the incentive reduces mortgage size.
- CMHC mortgage insurance rules: Larger down payment reduces CMHC premium tiers. HBP can help cross those thresholds.
- Closing-cost savings: HBP + LTT rebate + careful negotiation often covers financing, inspection, and lawyer fees.
Talk to a mortgage broker and a local realtor to stack these correctly.
Local pitfalls to avoid in Milton
- Don’t assume all RRSP withdrawals clear instantly. Plan for timing and lender documentation.
- Don’t use HBP funds and then skip repayment planning. The 15-year schedule matters.
- Don’t ignore future tax consequences if you can’t meet repayments.
- Don’t forget local fees: development levies, builder adjustments, and condo fees (if buying a condo).
A local agent who knows Milton saves you avoidable mistakes and keeps timelines tight.
Practical example — how a Milton buyer used HBP to win
Client profile: First-time buyer couple. Price target: $700,000 townhome. Down payment needed: 5% min = $35,000.
- One partner had $30,000 in RRSPs. The other had $15,000.
- They used HBP to withdraw $35,000 (one $20k + other $15k distribution to hit $35k combined from RRSPs), covering the full minimum down payment and reducing mortgage insurance costs.
- With the land transfer tax rebate and a small builder incentive, they closed with minimal out-of-pocket cash.
- They won in multiple-offer situation by presenting a cleaner financing condition and faster closing.
This is realistic in Milton where clean, flexible buyers win.
Step-by-step action plan for Milton first-time buyers
- Check HBP eligibility today. If unsure, book a quick eligibility review.
- Get pre-approved and tell your mortgage broker you plan to use HBP.
- Confirm RRSP timing rules with your accountant; make sure contributions clear in time.
- Factor the HBP repayment schedule into your budget — treat it like a hidden mortgage payment.
- Claim Ontario’s land transfer tax rebate at closing.
- Work with a local realtor who knows Milton neighborhoods and builder timelines.
Follow these steps and HBP becomes a tool that closes deals instead of a hopeful gamble.
Why local expertise matters: Milton-specific advice
Milton’s market moves fast. A local agent who knows which builders are flexible on closing, which neighborhoods have quick inventory turnover, and which sellers prefer conditional offers improves your odds. A seasoned Milton realtor will:
- Advise on neighborhoods that give the best growth-to-affordability balance.
- Coordinate RRSP timing with closing dates.
- Negotiate seller conditions that work with HBP paperwork.
This is tactical, non-negotiable advantage in today’s market.
Contact and next step
If you’re buying in Milton and want a direct, no-nonsense plan to use HBP and other programs to win your home, get local help. Contact Tony Sousa for a fast eligibility check, pre-approval coordination, and Milton market strategy.
Email: tony@sousasells.ca
Phone: 416-477-2620
Website: https://www.sousasells.ca
FAQ — Common questions about the Home Buyers’ Plan, First-Time Buyer Programs, and Milton, Ontario
Q: How much can I withdraw from my RRSP under HBP?
A: Up to $35,000 per eligible person. Couples can combine for up to $70,000.
Q: Do withdrawals count as taxable income?
A: Not if you repay them according to HBP rules. If you fail to make the required annual repayment, that year’s missed amount is added to your taxable income.
Q: When do repayments start?
A: Repayments start the second year after the withdrawal and continue for 15 years at a minimum of 1/15th per year.
Q: Can I use HBP for any home in Milton?
A: Yes, if the home is a qualifying home and you meet first-time buyer rules. Qualifying homes include resale homes, new builds, and homes under construction that you will occupy.
Q: Can I use HBP with the Ontario land transfer tax rebate?
A: Yes. HBP is a withdrawal from RRSPs; the LTT rebate is a separate provincial rebate available to first-time buyers in Ontario. They stack.
Q: Are there lender issues when using HBP?
A: Some lenders want documentation that funds are for HBP and may have specific timing requirements. Always tell your lender and mortgage broker you plan to use HBP when getting pre-approval.
Q: Does HBP help my mortgage approval?
A: It can. HBP increases available down payment and improves loan-to-value ratios. This may lower mortgage insurance and monthly payments.
Q: Is HBP good for condos and townhomes in Milton?
A: Yes. HBP can be used for any qualifying home you intend to occupy, including condos and townhomes. Consider condo fees in your affordability calculations.
Q: What are Milton’s first-time buyer advantages?
A: Proximity to transit, new developments, and provincial LTT rebate. However, demand and price growth mean buyers must be prepared and move fast.
Q: What if I move before I finish repaying HBP?
A: Moving doesn’t cancel HBP repayment rules. You still must follow the 15-year repayment schedule.
Q: Can investors use HBP?
A: HBP is intended for qualifying homebuyers who will occupy the property. It’s not for buying properties solely as investments.
Q: Where to get help in Milton?
A: Work with a local realtor and a mortgage broker. For quick help and a direct plan for HBP and Milton market strategy, contact Tony Sousa at tony@sousasells.ca or 416-477-2620.
If you want a clear plan tailored to a Milton neighbourhood, price range, and your RRSP numbers, reach out. This is how local buyers win.
