Short answer
The ordinary HBP framework has a shorter grace period. A five-year grace period already applies to first withdrawals made from 2022–2025; extending it to first withdrawals made from 2026–2028 was proposed on April 28, 2026 and should not be treated as effective until enacted and confirmed by CRA.
The client’s real concern
A 2026 buyer assumes no HBP repayment will be due for five years because a government announcement was reported as though it were already law.
What the official rule says
Canada’s 2026 Spring Economic Update proposed extending the five-year grace period to participants making a first withdrawal from January 1, 2026 through December 31, 2028. CRA confirms the earlier extension for 2022–2025 withdrawals.
What this does not guarantee
A proposal is not the same as enacted law or updated CRA administration. The exact first repayment year should be confirmed from current CRA records and the participant’s HBP statement.
A practical Ontario example
Illustration only: A buyer makes the first HBP withdrawal in July 2026. Their budget should not rely on the proposed extended grace period until implementation is officially confirmed.
What I would check before relying on the money
Track the legislation and CRA page before filing the relevant return. Keep a conservative repayment amount in the household budget; if the extension becomes effective, the extra cash flow can remain a reserve rather than being pre-spent.
- Which program are you using: FHSA, HBP, both, or another source?
- Who owns the account and independently meets that program’s definition?
- When were funds contributed, and when must they be withdrawn?
- Will the full bank, RRSP or FHSA trail satisfy the lender and lawyer?
- What cash remains for the deposit, adjustments, tax, legal costs and emergencies?
Rajiv’s broker perspective
Tax eligibility and mortgage approval are two separate tests. CRA determines whether the withdrawal or credit qualifies under tax law. The lender, mortgage insurer where applicable, and lawyer separately examine ownership, source of funds, borrowed down payment, timing and affordability. I would build one funds-to-close schedule first, then compare suitable A-lender, alternative/B, MIC or private options only if the complete mortgage facts require them. A tax benefit should support the plan—not hide a cash shortfall.
Related: First-Time Buyer Rule Hub · Mortgage Knowledge Centre · Updates & Rules Centre
Will your down payment be ready when the offer becomes firm?
Send Rajiv the purchase timeline, account types, contribution dates, expected withdrawals and available closing cash. He can prepare a practical funds-to-close review and identify questions that need your accountant or lawyer before you commit.