Registered Retirement Savings For Use as Down Payment on Mortgage

Darcy DoyleBlog, Mortgage Tips

The Mortgage Professionals-common-retirement-mistakes

Two out of three people living in Canada are homeowners. However, getting into a home can be expensive from the down payment to the closing costs.

The Canadian government knows how hard it is to come up with the funds for a down payment for a home and they have come up with some creative ways of financing the down payment so as to make it more affordable for more Canadians to be able to achieve the ultimate dream of homeownership.


They have implemented a home buyer’s plan which actually allows Canadians to use a portion of their Registered Retirement Savings as a down payment to be able to qualify for a mortgage.

The way that it works is this: Canadians can withdraw up to $25,000 from a Registered Retirement Savings plan to be used for the down payment of a house without incurring a penalty. However, they must first qualify to be able to take advantage of this program.

The person making the withdraw must also be the owner of the savings plan. If they own more than one Registered Retirement Savings plan they can make multiple withdraws, not to exceed the $25,000.

If there are two or more people purchasing the home jointly, they can each take out the $25,000 assuming that they are each owners on a qualified Registered Retirement Savings plan.

The funds must have been in the savings plan for more than 90 days to be eligible for withdraw.

The borrower must provide the signed purchase agreement to serve as proof that the funds will be used for the purchase of the home.

The funds can only be used for the purchase of the mortgage holder’s primary residence unless they are purchasing the home for a relative who is disabled and the home being purchased is better fit for their needs than where they currently reside.


The program cannot be used for the down payment on rental or investment properties.

If the borrower is disabled and owns a home already the funds can be used to purchase or build a home that better suits their needs.

Repayment must begin within two years of the initial withdraw and the full repayment must occur within fifteen years following the withdraw. If the borrower fails to pay 1/15 of the portion that was borrowed each year, the amount will be considered to be taxable income.

Homeowners who have used the registered retirement savings plan for the purchase of a home previously can still use the program again as long as the balance that was owed from the initial withdraw has been fully satisfied.

Additionally, the money from the withdraw must be used prior to October 1 of the year following the withdraw.

The Registered Retirement Savings plan proves to be an excellent alternative option for those looking to pay as little out of pocket expenses as possible towards the purchase of their new home. It also opens up the door for more Canadians to achieve homeownership who wouldn’t otherwise be able to come up with the large amounts of money that are needed for down payment and the closing costs.