Home-Buyer’s Plan

The federal Home-Buyers Plan is an effective instrument of housing finance, originally promoted by REALTORS through CREA (Canadian Real Estate Association) as a way for the government to support home ownership. Since the federal Home-Buyers Plan was created in 1992, more than a half-million homes have been purchased by first-time home-buyers using their RRSP investments.

The temporary, or “test”, plan introduced in the federal budget in 1992 allowed the use of RRSP funds for any home-buyer in Canada. A change in 1994 restricted the RRSP withdrawal option only to first-time home-buyers.

Under terms of the plan, participants in a home-buying agreement can borrow up to $20,000 from their RRSP to use in the purchase. Because there are usually two participants involved in the purchase of each home, there is a maximum of $40,000 available from individual RRSPs that can be used in the down payment. Individuals have 15 years to repay the RRSP withdrawal without penalty. To date, some $2.8 billion has been repaid to RRSP accounts.

In 2002, more than 113,000 Canadians borrowed more than $1.2 billion from their personal RRSPs to use in the purchase of their first home. Since the Home-Buyer Program was introduced in 1992, more than 1.3 million Canadians have bought a combined total of 662,832 homes by borrowing $13.4 billion from their RRSPs.

According to a study done for The Canadian Real Estate Board economists, the economic spin-off benefits of those 662,832 first-time home purchases was estimated almost $12.1 million.

Source: Canadian Real Estate Association