Spring Economic Update Extends Home Buyers' Plan Five-Year Repayment Grace Period to 2028 Withdrawals

From Two-Year Standard to Five-Year Grace, Now Through 2028

The Home Buyers' Plan lets a first-time buyer withdraw up to $60,000 from an RRSP, tax-free at the time of withdrawal, to put toward a qualifying home purchase. The withdrawal must be repaid to a registered plan over 15 years. Under the standard rule, the 15-year repayment clock starts in the second year after the withdrawal year — a 2023 first withdrawal would normally trigger the first repayment in 2025.

Budget 2024 changed that timing for a defined cohort. It pushed the first repayment year from year two to year five for participants whose first HBP withdrawal occurred between January 1, 2022 and December 31, 2025. A 2023 withdrawal under that framework now sees its first required repayment in 2028, not 2025. CRA's administrative guidance has reflected this five-year timing for the 2022–2025 cohort since Budget 2024 passed.

The Spring Economic Update extends the same five-year grace to first withdrawals made in 2026, 2027, and 2028 — three additional cohorts that previously would have reverted to the two-year default. The proposal does not change the $60,000 withdrawal limit, the 15-year repayment runway, or the underlying repayment mechanics. It only changes when the clock starts.

The table below lays out the practical effect on first-repayment timing across cohorts. A homeowner can find their withdrawal year, read across, and see exactly when their first required repayment lands under current rules.

A $60,000 Withdrawal, A 15-Year Schedule, and a 1/15th Annual Floor

The dollar mechanics of the HBP are straightforward, and they explain why the grace-period extension is more meaningful than a tax-roundup summary suggests.

According to the Canada Revenue Agency, each year's minimum HBP repayment is calculated by dividing the remaining balance by the number of years left in the schedule. A participant who withdrew the full $60,000 starts with a minimum repayment of roughly $4,000 per year — one-fifteenth of the original balance. That number is the source of the federal government's "$4,000 per individual per year" cash-flow estimate, and it sits at the centre of the household-budget impact.

Three points are worth pulling out of the CRA mechanics, because they shape the trade-off the grace-period extension creates.

First, HBP repayments are tax-neutral. Designating an RRSP contribution as an HBP repayment does not generate a tax deduction, and it does not consume RRSP contribution room. The repayment simply restores funds the participant already deducted when they originally contributed.

Second, falling short of the minimum has a direct tax cost. If a participant repays less than the required minimum in a given year, the shortfall is added to that year's income as RRSP income. If they repay nothing, the full required amount is added to income. The HBP is built so the government collects either repayments or income tax — there is no third path.

Third, the grace period defers the schedule but does not extend it. Once the five-year grace ends and repayments begin in year five, the 15-year clock starts from there. The total repayment runway is still 15 years; the only thing that moves is when those years begin.

This is what makes the Spring Economic Update extension economically interesting rather than cosmetic. For a borrower with a $60,000 HBP balance, three additional grace-period years free up roughly $12,000 of cash flow that would otherwise need to land back inside an RRSP — without changing the eventual repayment burden in nominal terms, and without using up RRSP contribution room.

Three Years of Cash Flow Showing Up When Borrowers Need It Most

The 2026 timing of this measure is not incidental. It lands in the middle of what the Bank of Canada and CMHC have been calling the mortgage renewal wave — a multi-year period in which the bulk of fixed-rate mortgages signed in the low-rate window of 2020 and 2021 hit renewal at meaningfully higher payments.

A July 2025 Bank of Canada staff analytical note estimated that roughly 60 percent of all outstanding Canadian mortgages would renew in 2025 or 2026, and that five-year fixed-rate borrowers renewing in those years would see average payment increases between 15 and 20 percent compared with their December 2024 payments. CMHC, in a February 2026 review of the renewal cycle, reported that more than 1.5 million households had already renewed at higher rates and another million were expected over the following year — with many extending amortization periods at renewal to keep monthly payments manageable.

The picture has softened slightly since those forecasts. TD Economics' more recent reading shows the average 2026 payment shock easing to 6 percent from 10 percent in 2025 — better than the Bank of Canada's worst-case estimates, but not zero, and not evenly distributed across borrowers. Some households are still seeing double-digit jumps. Others are softening the impact by extending amortization, which trades long-term interest for short-term breathing room.

The HBP grace-period extension does not fix any of this. It is a small lever, not a market intervention. But it interacts with renewal cash flow in a way the broader policy conversation has missed. A homeowner who used the HBP for a 2023 purchase and is renewing into a higher payment in 2028 was — under Budget 2024's rules — already going to have HBP repayments restart in that same year. The Spring Economic Update doesn't reset that 2023 cohort. For the 2026, 2027, and 2028 cohorts, though, the proposal pushes the first required repayment well past the renewal window — exactly the period when payment-shock pressure is most acute.

The policy framing in the Update calls this "cash flow support." The phrase is deliberate. The measure is not a buyer subsidy and not a wealth transfer. It is a timing adjustment built around the household-budget reality of recent buyers.

Short-Term Relief, Long-Term RRSP Trajectory

The honest framing of any HBP grace-period extension has to acknowledge what it does to retirement savings runway. Deferring repayments is not free in opportunity-cost terms.

When a participant defers repayment, the withdrawn funds stay outside the RRSP for an additional period. That is three more years in which the original $60,000 isn't earning compounded growth inside a registered shelter. It is also three more years before the participant's RRSP balance recovers to its pre-withdrawal level. For households who treat the HBP as a near-zero-cost loan from their future selves, the grace-period extension changes the cost calculation slightly — interest-free in nominal terms, but with a longer drag on retirement compounding.

The trade-off is not symmetrical for every household. A homeowner whose RRSP would otherwise sit largely uncontributed during their renewal-payment-shock years loses very little, because the dollars freed by the grace period weren't going into the RRSP anyway. A homeowner who has been making aggressive RRSP contributions throughout — and treating HBP repayments as a separate line item — sees more of a real opportunity cost.

For the audience this measure targets — Canadians who used the HBP recently and are managing higher mortgage payments — the trade-off generally favours the grace period. Resources are tight in the renewal years. They are likely less tight by year five, when the deferred repayment schedule starts.

That doesn't make the trade-off disappear. It makes it negotiable.

A $42-Million Line Inside a $2.7-Billion Housing Envelope

It is worth situating the grace-period extension inside the rest of Section 2.3 of the Spring Economic Update — "Making it Easier to Afford a Home" — both for proportion and for reader context.

The Update's fiscal table allocates $42 million in total to extending the HBP across the 2025–26 to 2030–31 horizon, with most of the cost falling in 2028–29 through 2030–31 as the deferred repayments would otherwise have flowed back into government revenue. The full Section 2.3 envelope is approximately $2.7 billion over the same horizon. The HBP measure is a small line inside a substantially larger affordability package.

The bigger items in that section are familiar from earlier coverage. The Update reaffirms the elimination of GST for first-time buyers on new homes priced up to $1 million and a reduced GST on new builds between $1 million and $1.5 million — measures Homeowner.ca walked through in detail when the GST rebate cleared the Senate. The Update also funds Bill C-26, the Improving Housing Supply Act, with $1.7 billion for provinces and territories — including a federal–Ontario agreement that delivers up to 50 percent reductions in development charges for three years in major Ontario cities and full HST relief on eligible new homes up to $1 million for agreements signed between April 2026 and March 2027.

These are larger numbers. They affect different audiences. The GST and HST measures move the needle for first-time buyers shopping new construction in 2026 and 2027. The supply funding takes years to translate into completed units. The HBP grace-period extension is the only piece in the package that directly puts cash back into the budgets of homeowners who already bought.

That is the editorial lens worth holding throughout. Most coverage will focus on the bigger numbers because the bigger numbers are easier to write about. The HBP change is smaller, more technical, and more useful to a specific group of readers who already made a purchase decision and are now managing through the renewal cycle.

Implementation, Eligibility Confirmation, and Renewal Timing

The HBP grace-period extension is currently a proposal. Several things still need to happen before it takes effect for the 2026, 2027, and 2028 withdrawal cohorts.

The proposal needs to pass through legislation in a form consistent with the Update language. The CRA needs to update its administrative guidance and examples to cover the new cohorts the same way it already does for the Budget 2024 cohort. Tax software providers need to incorporate the change for the relevant filing years. None of this is unusual for a fiscal-update measure — it is the standard sequence — but the proposal's status matters for any homeowner planning around it.

For homeowners already in the HBP and considering a withdrawal in 2026, 2027, or 2028, the practical impact is straightforward. If the proposal is enacted, the first required repayment moves from year two to year five. If the proposal is not enacted, the standard two-year rule applies. CRA's "My Account" portal and the annual Notice of Assessment will reflect the actual schedule once the legislation passes and the participant's withdrawal year is captured.

For homeowners already mid-repayment, this measure does not change anything. The Spring Economic Update applies to first withdrawals made between 2026 and 2028. Existing repayment schedules — including those already adjusted under Budget 2024 — continue under their current terms.

The broader watchpoint is renewal timing. For households thinking through cash-flow planning across the 2025–2028 renewal window, the HBP grace period is one of several timing levers — alongside amortization adjustments, prepayment scheduling, and TFSA versus RRSP contribution sequencing. Homeowner.ca has documented the renewal anxiety running through Canadian households for the past year. The grace-period extension doesn't resolve that anxiety. It does give a defined subset of homeowners three additional years of breathing room — which, for the budgets they're managing, is the difference between a tight stretch and a manageable one.