Short answer
Be careful. RRSP contributions made in the 89-day period before an HBP withdrawal may not be deductible when the post-withdrawal RRSP value is insufficient to support the contribution.
The concern behind the question
A buyer moves the down payment into an RRSP shortly before closing to create a tax deduction, then plans to withdraw it immediately. The expected refund may not be available, while the closing still needs verified funds.
What the official rule says
CRA’s HBP guidance includes an 89-day test affecting deductibility of recent RRSP contributions. The buyer must also satisfy the HBP eligibility, withdrawal and home-acquisition timing rules.
What the headline does not tell you
The issue is not simply whether the financial institution releases the money. Tax deductibility, contribution room and HBP qualification are separate. A mortgage broker should not replace tax advice or promise a refund amount.
A practical Ontario example
Illustration only: A buyer contributes $20,000 to an RRSP 30 days before the planned HBP withdrawal and empties the account at closing. Part of the recent contribution may not produce the deduction the buyer expected. That can disrupt the tax-refund and cash-flow plan.
Practical options to review
Coordinate the closing date with the financial adviser or tax professional before moving funds. Preserve a clear 90-day bank trail for the lender. If timing is too short, use verified existing savings rather than creating a rushed registered-plan transaction.
Before relying on the rule
- Confirm the announcement and effective dates against the official source.
- Identify whether the transaction is insured, conventional, a straight switch, a refinance or a tax claim.
- Separate verified facts from assumptions about income, property value, occupancy and available funds.
- Check the lender’s and insurer’s current policy; a government program does not guarantee mortgage approval.
- Compare the cash-flow benefit with premiums, interest, taxes, fees and the exit plan.
Rajiv’s broker perspective
A rule should answer only the question it was designed to answer. It may expand eligibility without solving appraisal, income, credit or closing-fund problems. I would first identify the client’s real concern, verify the dates and documents, and then compare the practical A, alternative/B, MIC or private routes only where they genuinely apply.
Unsure how this rule fits your purchase or renewal? Request a mortgage strategy second opinion with Rajiv.