If you feel it's time for you or you and your partner to buy a North York condo, town house, or detached home but you just can't seem to come up with the requisite 25% down payment, there may yet be options available to you, so don't give up. The federal government has a plan known as the RRSP Home Buyers' Plan, which may help you make up the difference. We'll give you an overview of the program so you can see if you qualify, but for in depth information you should consult the Government of Canada or your mortgage advisor.

The Plan

The RRSP Home Buyers' Plan is designed and run by the federal government. The point of the program is to allow people to have more flexibility over the investment of their retirement income. After all, whether your RRSP (Registered Retirement Savings Plan) funds are being invested by the government in various ventures or by you into homes in North York, they're still providing you with funds to secure your future.

The Perimeters

The plan allows up to $20,000 to be removed from an RRSP and up to two people to be involved in the purchase of the home, so together you and your spouse can take up to $40,000 from your RRSPs to contribute toward a down payment, but only up to the maximum of 25% of the purchase price of the home. For example, North York condominiums that cost $125,000 would only require a down payment of $31,250, so you would not be able to withdraw the RRSP maximum. There are no penalties for withdrawing the funds, and they are not taxable.

The Participants

Until 1999 the only people who could use this program were first time homebuyers, because the program could only be used once in a person's lifetime. However, recent changes allow anyone to participate, even if they've already done so, so long as they have repaid the sum they removed from their RRSPs the first time. Most of the people who use the plan are those who intend to live in the home themselves (i.e not use it as an investment property) however participants are also allowed to purchase a home for or donate their RRSP funds to a disabled person looking to buy or renovate North York properties for sale to meet their needs.

How to Qualify

To apply for the program you must fill out a T1036 form and demonstrate that you are either buying or building the home for yourself as a habitation or to assist a disabled person. You also need to either have the RRSP funds available to withdraw or have enough eligible contributions left in the tax year to borrow the funds to top it up (this seemingly unnecessary step makes the borrowed funds tax fee). Be aware, however that you will need to repay this loan on top of your mortgage repayments and that removing funds from your RRSP leaves you with less saved for retirement.