RRSP-Using it for your downpayment

In the early 1990's the Federal Government of Canada introduced a plan whereby first time homebuyers could use their RRSP's as their downpayment towards the purchase of a property.

The plan allows two people in a home purchase to withdraw up to $20,000 each from their RRSP to be used as a downpayment towards the purchase. The RRSP must have been set up 90 days prior to its withdrawal. The withdrawal would not be subject to personal income taxes. However, the amount withdrawn must be repaid over a 15-year period through equal annual payments. Of course, no deductions from personal income taxes would be allowed on these re-deposits. If the annual minimum repayment is not made, that amount would be added to that year's income and be subject to personal income taxes.

This program is designed for first time homebuyers only. However, some exceptions can be made for special circumstances. Please talk to one of our Mortgage Specialists to discuss your individual circumstances to determine eligibility.

What is the minimum downpayment required?

Any qualified buyer can purchase a home with a downpayment as low as 5%.

To be eligible, CMHC, a Federal Crown Corporation, or GEMI, a private insurance company, must insure the purchase. They are currently the only two mortgage insurers in the Canadian marketplace. A one time only insurance premium will be charged. This premium may be added to the total mortgage and is not required to be paid up front.

Under this program, both insurers have placed a maximum on the purchase price of the home depending on the area in which it is located. To find out what the ceiling price is for your area, please contact one of our Mortgage Specialists.

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