Need a Downpayment? - RRSP's Can Help You!

Use your RRSP's to help finance your home purchase. The HOME BUYERS PROGRAM is a federal government program designed to assist "qualified" buyers in the purchase of a home. As a qualified buyer, the RRSP HOME BUYERS PROGRAM will generally allow you to withdraw up to $20,000, from your RRSP. If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000.

You can participate in the HOME BUYERS PROGRAM more than once in your lifetime. To re-participate in the program, your balance from your previous withdrawal must be fully repaid by the beginning of the year you want to re-apply. Regardless of no penalties for withdrawing funds, there are certain guidelines that must be followed in order to use the HOME BUYERS PROGRAM.

Some of these conditions are as follows:

• You must be a resident of Canada
• You must not have owned a home within the past 5 years immediately prior to participating in the HOME BUYERS PROGRAM
• he RRSP must be repaid within 15 years with minimum annual payments of 1/15 th of the amount withdrawn
• Funds must be in the RRSP for a minimum 90 days

The HOME BUYERS PROGRAM also permits an individual to establish an RRSP with borrowed funds then the resulting tax refund for a downpayment. In this scenario the individual borrows funds that are contributed to an RRSP. After the 90 day waiting period has expired the RRSP is collapsed and the loan is repaid. When the individual receives their tax refund, it can be applied to the purchase of their home. The lender must verify the liquid assets of the individual and they must equal a minimum 5% of the purchase price.