RRSP Home Buyers' Plan with XEQT: The Smart Way to Buy Your First Home

I bought my first home in late 2024. And the single smartest financial move I made during the entire process had nothing to do with negotiating the price, finding the right neighbourhood, or picking a mortgage rate. It was something I did three years earlier: I started buying XEQT inside my RRSP with the explicit goal of using the Home Buyers’ Plan.

By the time I was ready to make an offer, I had $60,000 sitting in my RRSP that I could withdraw tax-free to put toward my down payment. No penalties. No tax hit. Just years of disciplined contributions that had grown inside a low-cost, globally diversified ETF, ready to be deployed exactly when I needed them.

If you are a Canadian who dreams of buying a first home, the RRSP Home Buyers’ Plan combined with XEQT is one of the most powerful tools available to you. It gives you a tax deduction on the way in, tax-free growth while you wait, and a tax-free withdrawal when you are ready to buy.

This post covers everything: how the HBP works, why XEQT is a strong choice (with an important caveat about timeline), how to combine it with the FHSA for maximum firepower, and how to avoid the repayment trap that catches first-time buyers off guard.

1. What Is the Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan is a Government of Canada program that lets you withdraw money from your RRSP to buy or build a qualifying first home – without paying income tax on the withdrawal. It has been around since 1992 and remains one of the most underused tools in the first-time buyer’s toolkit.

Here is the basic idea:

1. You contribute money to your RRSP and claim a tax deduction.
2. Your investments grow tax-free inside the RRSP.
3. When you are ready to buy your first home, you withdraw up to the HBP limit tax-free.
4. You repay the amount back into your RRSP over 15 years.

The CRA treats this as a loan from your own RRSP rather than a taxable withdrawal. Think of it this way: the government lets you borrow from your future retirement savings to buy a home, as long as you put the money back.

2. 2026 HBP Rules: Everything You Need to Know

The HBP rules were updated in April 2024 with some meaningful improvements. Here is the current state of the program:

Withdrawal Limit: $60,000

The maximum HBP withdrawal was increased from $35,000 to $60,000 per person as of April 16, 2024. For a couple buying together, that means up to $120,000 in combined tax-free RRSP withdrawals.

Eligibility Requirements

• First-time home buyer: You must not have owned a home you lived in as your principal residence during the four calendar years before the withdrawal year. If you sold a home more than four years ago, you can qualify again.
• Written agreement to buy or build a qualifying home.
• Canadian resident at the time of withdrawal and purchase.
• Intent to occupy the home as your principal residence within one year.
• 90-day holding rule: RRSP contributions must have been in the account for at least 90 days before withdrawal. You cannot dump $60,000 in and withdraw it the next week.

Repayment: 15 Years

You must repay the full amount back into your RRSP over 15 years, starting the second calendar year after withdrawal. If you withdraw in 2026, your first repayment is due in 2028.

The minimum annual repayment is roughly 1/15th of your total withdrawal. On $60,000, that is $4,000 per year. If you miss a repayment, the shortfall gets added to your taxable income – essentially converting the tax-free withdrawal into a taxable one.

3. Why XEQT Is Great for HBP Savings (With a Timeline Caveat)

If you have decided to use the HBP, the next question is: what should you invest in while you save up? The answer depends almost entirely on your timeline.

5+ Year Timeline: XEQT Is Excellent

• Growth potential: XEQT holds over 9,000 stocks across 49 countries, historically returning 7-10% annually over long periods.
• Low cost: At 0.20% MER, XEQT costs a fraction of what your bank’s mutual funds charge. On $60,000 over five years, that fee difference could save you $3,000-$5,000.
• Simplicity: One fund, no rebalancing needed, automatic diversification.

The Math on Growth

Contributing $1,000/month to XEQT in your RRSP at an average 7% annual return:

That is roughly $12,000 in extra growth you would not earn in a savings account – and it is all tax-sheltered inside your RRSP.

The Honest Caveat: Sequence Risk

XEQT is a 100% equity fund. It can drop 20%+ in a bad stretch. If the market crashes in year four of your five-year plan, your $55,000 could suddenly be $44,000. This is not a reason to avoid XEQT – it is a reason to be honest about your timeline and your flexibility to delay if needed.

4. When NOT to Use XEQT for Your HBP

If your timeline to buy is under three years, do not use XEQT. Use a HISA or HISA ETF instead.

This is your down payment. If XEQT drops 25% six months before your closing date, you cannot just wait for the market to recover. You have a seller who does not care about your portfolio allocation.

The “glide path” approach is what I personally used: fully in XEQT for the first three years, then gradually shifting to a HISA ETF in the final year before my purchase.

5. The HBP + FHSA Combo Strategy: Up to $100,000 Tax-Advantaged

This is the part that gets me genuinely excited. Since 2023, Canadians have had access to two programs for first-home savings: the HBP and the FHSA. And you can use both at the same time.

The Combined Firepower

• HBP: Up to $60,000 from your RRSP, tax-free
• FHSA: Up to $40,000 ($8,000/year, $40,000 lifetime), tax-free growth and withdrawal, no repayment required

That is $100,000 per person in tax-advantaged home savings. For a couple, $200,000.

The FHSA is arguably even better than the HBP because it combines RRSP-style tax deductions with TFSA-style tax-free growth and withdrawals – and you never have to pay it back. The catch is it takes five years to max out at $8,000/year.

The Optimal Strategy

1. Open an FHSA immediately and contribute $8,000/year. Invest in XEQT.
2. Simultaneously contribute to your RRSP toward $60,000 for the HBP. Invest in XEQT.
3. Claim both deductions and reinvest the tax refund.
4. When ready to buy: Withdraw $40,000 from FHSA (no repayment) and up to $60,000 from RRSP via HBP (15-year repayment).

For a deeper look at account priorities, see our TFSA vs FHSA vs RRSP guide.

6. Comparison Table: HBP vs FHSA vs Regular Savings

This is the table I wish someone had shown me when I was starting out.

The takeaway: if you qualify as a first-time buyer, use both the HBP and FHSA before putting money into a regular savings account. The tax advantages are too good to leave on the table.

7. Step-by-Step: How to Use HBP with XEQT on Wealthsimple

Building Your HBP Savings

1. Open an RRSP on Wealthsimple – takes about five minutes with your SIN.
2. Set up recurring contributions from your bank account. Even $500/month gets you to $30,000 in five years.
3. Buy XEQT with each deposit. Wealthsimple charges zero commissions on Canadian ETF trades. Use the recurring buy feature to automate purchases.
4. Claim the RRSP deduction on your tax return each year. Reinvest the tax refund – this “refund recycling” strategy can add thousands to your down payment over five years.

Making the Withdrawal

1. Stop contributing at least 90 days before your planned withdrawal date.
2. Sell your XEQT inside the RRSP (settles in 1-2 business days).
3. Request an HBP withdrawal through Wealthsimple. You will fill out CRA Form T1036.
4. Use the funds for your down payment, closing costs, or any home-purchase expense.

After the Purchase

1. Set up automatic HBP repayments into your RRSP – $334/month covers the $4,000/year minimum on a $60,000 withdrawal.
2. Buy XEQT with each repayment to rebuild your retirement portfolio.
3. Designate repayments on Schedule 7 of your tax return each year.

8. The Repayment Trap: Why This Matters More Than You Think

This is where a lot of first-time buyers get caught. The HBP repayment is not optional.

If your required repayment is $4,000 and you repay $0, the CRA adds $4,000 to your taxable income. In a 30% tax bracket, that is $1,200 in unnecessary tax. Miss every repayment for 15 years and you pay tax on the entire $60,000 – roughly $18,000 in total. Your “tax-free” withdrawal becomes an expensive tax-deferred one.

The Smart Repayment Strategy

• Automate it: $334/month into your RRSP, designated as HBP repayment.
• Invest in XEQT: Your repayments should be rebuilding your retirement portfolio, not sitting in cash.
• Overpay when possible: Extra repayments reduce the remaining balance and free up deductible RRSP room sooner.

One important detail: HBP repayments do not use up your regular RRSP contribution room. If you have $15,000 in RRSP room and owe $4,000 in HBP repayment, you can contribute $19,000 total – $4,000 as repayment (no deduction) and $15,000 as new deductible contributions.

9. Tax Implications and Smart Planning

The Tax Refund Recycling Loop

This is my favourite strategy. Contribute $12,000 to your RRSP, get a ~$3,600 tax refund at a 30% marginal rate, then invest that refund back into your RRSP or FHSA. Each year the refund gets slightly larger, and each year you reinvest it. Over five years, this can add $15,000-$20,000 to your down payment fund compared to spending the refund.

Strategic Use of Both Deductions

For someone earning $80,000:

• $8,000 to FHSA (max annual): $8,000 deduction
• $12,000 to RRSP for HBP: $12,000 deduction
• Total deduction: $20,000
• Approximate refund at 30% marginal rate: $6,000

That $6,000 alone could cover your home inspection, legal fees, and land transfer tax.

Timing Your Contributions

If you are in a lower tax bracket now but expect higher income in a few years, you can contribute now (to start the 90-day clock and invest in XEQT for growth) but defer the deduction to a future year when it saves you more. This works best if your cash flow can handle waiting for the refund.

10. Common HBP Mistakes to Avoid

Mistake #1: Forgetting the 90-day rule. Contributions withdrawn within 90 days are treated as regular RRSP withdrawals – fully taxable. Contribute at least four months before you plan to withdraw.

Mistake #2: Not confirming eligibility. You qualify if you have not owned a principal residence in the four calendar years before withdrawal. If you owned a condo in 2021 and sold in 2022, you can typically use HBP again starting in 2027.

Mistake #3: Ignoring your partner’s RRSP. Each partner can withdraw up to $60,000 independently, but both must qualify as first-time buyers.

Mistake #4: Not planning for repayment. Set up automatic contributions from day one. Treat it like a bill. Buy XEQT with each repayment so the money is growing.

Mistake #5: Using XEQT with a short timeline. Under two years? Use a HISA. The risk of a market drop right before you need the money is real and the consequences are severe.

Mistake #6: Not using the FHSA. The FHSA gives you a tax deduction, tax-free growth, and tax-free withdrawals with no repayment. Open one today, even if you can only contribute $100/month.

Mistake #7: Withdrawing more than you need. Every dollar withdrawn must be repaid, and those repayment contributions do not generate a tax deduction. If your down payment is $40,000, withdraw $40,000 – not $60,000. Leave the rest compounding in XEQT for retirement.

11. Your Action Plan

5+ Years from Buying

1. Open a Wealthsimple RRSP and FHSA. Contribute $8,000/year to FHSA and what you can to the RRSP.
2. Buy XEQT in both accounts. Claim both deductions. Reinvest the refund.
3. As you get within two years, shift XEQT to a HISA ETF to protect your gains.

3-5 Years from Buying

1. Maximize FHSA at $8,000/year. You will have $24,000-$40,000 by purchase time.
2. Contribute to RRSP toward your HBP target. Use XEQT early, then transition to safer assets.

1-2 Years from Buying

1. Open an FHSA immediately for up to $16,000 over two years.
2. Ensure RRSP contributions have been in for 90+ days. Use a HISA, not XEQT.
3. Confirm eligibility and coordinate withdrawal timing with your closing date.

After You Buy

1. Automate HBP repayments: $334/month into your RRSP.
2. Buy XEQT with every repayment. Track repayments on Schedule 7.
3. Continue additional RRSP contributions above repayment for the tax deduction.

12. Final Thoughts

The RRSP Home Buyers’ Plan is one of the most valuable programs the Canadian government offers to first-time buyers. Combined with the FHSA, it gives you access to up to $100,000 per person in tax-advantaged home savings. That is real, meaningful money in a country where housing affordability is a genuine crisis.

But the HBP is a withdrawal mechanism, not an investment strategy. The investment strategy is what you do with the money while it sits inside your RRSP. For anyone with a timeline of three years or more, I believe XEQT is the best option: low cost, globally diversified, automatically rebalanced, and available commission-free on Wealthsimple.

Start early, be honest about your timeline, and understand the repayment obligation before you withdraw. If you do those three things, the HBP + XEQT combination can be a genuine game-changer on your path to homeownership.

I know it was for me.

The information in this post is for educational purposes only and does not constitute financial advice. Tax rules and government programs can change. Consult a qualified financial advisor or tax professional for advice specific to your situation. For more on how these accounts work together, check out our account priority guide, RRSP guide, and FHSA guide.