Why use RRSP’s for down payment? Canadian First Time Home Buyers

Buying a  first home can be a tough journey. Especially trying to come up with a 20 per cent down payment in order to avoid having to purchase mortgage loan insurance. 

Under the Home Buyers’ Plan (HBP), first time homeowners can borrow up to $25,000 tax free from their RRSPs to buy or build a home. If you are purchasing a home with a spouse, you can each withdraw $25,000 if you qualify. 
 • If you can use your RRSPs under the plan to make that 20 per cent down payment, you might not only avoid paying the mortgage loan insurance, but you could also qualify for a lower interest rate. • With a larger down payment, your monthly mortgage payments will be smaller • This is one of the only ways to make a tax-free withdrawal from your RRSPs • Your RRSP can help you buy your first home if you don't have much in terms of savings. This is a great option for young adults. • There is no penalty for repaying more each year than what your scheduled payment amount is. • It is a tax-free and interest-free loan over a 15-year span.