can you use your rrsp to finance a down payment?

Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment.  With the Federal Government’s Home Buyers’ Plan, you can use up to $25,000 in RRSP savings ($50,000 per couple) to help pay for your down payment on your first home.   You then have 15 years to repay your RRSP.

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers’ Plan.  For example, if you had already saved $25,000 for a down payment, assuming you still had enough contribution room in your RRSP for a contribution of that amount, you could move your savings into a registered investment at least 90 days before your closing date.  Then, simply withdraw the money through the Home Buyers’ Plan. 

The advantage?  Your $25,000 RRSP contribution would count as a tax deduction this year and you could use any tax refund you receive to repay the RRSP or other expenses related to buying your home.

While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth.  So be sure to ask your mortgage specialist whether this strategy makes sense for you, given your personal financial situation.

To qualify, the RRSP funds you’re using must be on deposit for at least 90 days.  You will also need a signed agreement to buy a qualifying home. 

For more information, visit the Canada Revenue Agency website or speak to a mortgage specialist.  If you don’t have a mortgage specialist, contact me and I can recommend some experts in the industry.

Angela Slager

Angela Slager

CENTURY 21 Heritage House Ltd., Brokerage*
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