February marks the annual rush when clients suddenly remember their RRSP contribution deadline—and when first-time buyers discover they can tap those funds for a down payment. The Home Buyers' Plan lets buyers withdraw up to $60,000 per person from an RRSP without immediate tax consequences, provided they meet the eligibility criteria and follow the repayment schedule. For agents working with first-timers in markets where a $120,000 combined withdrawal can mean the difference between 15% and 20% down—or between qualifying and not—this program remains a tactical piece of the financing puzzle.

Most agents know the HBP exists. Fewer understand the timing traps, the repayment mechanics that can derail clients five years later, or the interplay with recent FHSA rules. This article walks through the mechanics, common pitfall scenarios, and how to position the conversation so clients make informed choices rather than scrambling in March when lenders and accountants are slammed.

Eligibility and the 90-Day Rule

A buyer qualifies as a first-time home buyer if neither they nor their spouse/common-law partner owned a home they occupied as a principal residence in the four calendar years prior to the withdrawal and in the year of the withdrawal up to 30 days before. That's the official test. The practical wrinkle: contributions made fewer than 90 days before withdrawal are not eligible for the tax deduction in the year of contribution. A client who deposits $10,000 on February 15 and withdraws it March 1 gets no deduction for that $10,000 on their current-year return—they've simply moved after-tax money through an RRSP.

The strategy that works: contribute by the March 1 RRSP deadline for the previous tax year, wait 90 days, then withdraw. A February 2026 contribution for the 2025 tax year becomes eligible for HBP withdrawal in early May 2026. Clients closing in April or May can still benefit if they plan ahead. Clients closing in February or March of the contribution year often cannot unless they contributed the prior calendar year.

Interaction with the FHSA

The Tax-Free First Home Savings Account launched in 2023 allows $8,000 annual contributions up to a $40,000 lifetime limit, with tax-deductible contributions and tax-free withdrawals for a qualifying home purchase. A buyer can use both the FHSA and the HBP simultaneously—$40,000 from the FHSA and $60,000 from the RRSP per person—for a combined $200,000 in a couple. The FHSA has no repayment requirement; the HBP does.

Key distinction: FHSA funds must be in the account for at least one year before withdrawal unless the account holder is 71 or the account is being closed. RRSP funds have the 90-day contribution rule but no minimum hold period beyond that. A client who opened an FHSA in 2024 and contributed $16,000 by early 2025 can withdraw that full amount tax-free in 2026 for a purchase. A client who just opened an FHSA in January 2026 and contributed $8,000 cannot withdraw those funds until January 2027 unless they're closing the account at 71.

Agents should confirm whether buyers have maximized FHSA room before layering in HBP withdrawals. The FHSA offers a cleaner exit—no 15-year repayment obligation—so it's the first bucket to fill. Buyers who've exhausted FHSA room or need more than $40,000 per person then look to the RRSP.

Repayment Mechanics and the Five-Year Trap

HBP repayment begins in the second year after the year of withdrawal. A withdrawal in 2026 triggers the first repayment in 2028. The repayment period is 15 years, so the annual minimum is one-fifteenth of the total withdrawal. A $60,000 withdrawal requires $4,000 per year starting in 2028. Miss a year's repayment and that amount is added to taxable income.

The trap: clients forget, life happens, they don't make the RRSP contribution designated as an HBP repayment, and suddenly $4,000 is added to their T4 income. At a 30% marginal rate, that's a $1,200 surprise tax bill. Multiply that across three missed years and the client is facing reassessments and interest.

Practical coaching point: set a calendar reminder for clients in January of their first repayment year. Many banks and robo-advisors allow automatic monthly RRSP contributions designated as HBP repayments. A $334 monthly pre-authorized debit starting in January 2028 ensures the $4,000 obligation is met without year-end scrambling. Clients who receive bonuses or tax refunds can make lump-sum repayments, but automation removes the risk of forgetting.

Lender and Underwriting Considerations

Lenders treat HBP funds as acceptable down payment sources provided the buyer supplies the CRA T1036 form (the HBP withdrawal request) and proof the funds moved from the RRSP to the lawyer's trust account. The funds must be in the buyer's name—no third-party RRSP withdrawals on behalf of someone else.

One underwriting quirk: if a buyer contributes a large RRSP amount in February and withdraws it in May, the lender may ask for a 90-day paper trail to confirm the funds weren't borrowed. A $50,000 deposit in February followed by a $50,000 HBP withdrawal in May looks clean if the buyer can show the February deposit came from savings, a bonus, or a previous year's RRSP room. If the deposit came from a line of credit, the lender will count that LOC balance in the debt servicing ratios even if the HBP withdrawal technically "repaid" it.

Agents should flag this early in pre-approval conversations. A buyer planning to borrow to contribute, then withdraw, has not actually increased their down payment—they've created a circular debt that underwriters will catch.

Provincial Variations and Land Transfer Tax Rebates

The HBP is a federal program, but first-time buyer benefits stack at the provincial level. Ontario's land transfer tax rebate covers up to $4,000 for first-time buyers purchasing homes up to $368,333 (the rebate phases out above that). BC's first-time buyers' exemption applies to properties up to $835,000 as of 2024, with a partial exemption up to $860,000. Alberta has no provincial land transfer tax.

A Toronto buyer using $120,000 in combined HBP withdrawals to hit 20% down on a $600,000 condo saves the CMHC premium (roughly $19,200 on a $480,000 mortgage) and claims the full $4,000 Ontario rebate. A Vancouver buyer using the same HBP strategy on an $800,000 townhouse saves the CMHC premium and the BC land transfer tax (approximately $13,000). The HBP withdrawal itself doesn't trigger the rebate—first-time status does—but the extra down payment funds make higher-priced qualifying homes accessible without default insurance.

Agents in markets where first-time buyers are stretching to avoid CMHC premiums should model the combined benefit: HBP funds + provincial rebate + CMHC savings. That total often exceeds $30,000 on a $600,000 purchase, which is meaningful in tight qualification scenarios.

Action Items

Walk first-time buyers through FHSA maximization first, then layer in HBP if needed. Confirm they understand the 90-day contribution rule and the 15-year repayment obligation. Set them up with automated monthly repayments starting two years after withdrawal. Flag any borrowed-to-contribute scenarios to the lender early. Model the combined savings of HBP funds, CMHC avoidance, and provincial rebates so buyers see the full financial picture. February is when clients ask about RRSPs—make sure they're asking the right questions and you're ready with the numbers.