Key Takeaway

Canadian first-time home buyers can use both the First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP) to maximize their down payment savings. The FHSA allows you to save up to $40,000 with tax-deductible contributions and tax-free withdrawals, while the HBP lets you withdraw up to $60,000 from your RRSP interest-free (but you must repay it). Combined, these programs can provide up to $100,000 in savings toward your first home, with significant tax advantages.

What is the First Home Savings Account?

The First Home Savings Account (FHSA) is a registered savings plan that launched in Canada in 2023, designed specifically for first-time home buyers. According to the Canada Revenue Agency, the FHSA combines the best features of RRSPs and TFSAs: contributions are tax-deductible (like an RRSP), and qualifying withdrawals for your first home are completely tax-free (like a TFSA).

You can contribute up to $8,000 per year with a lifetime maximum of $40,000. The account must be used within 15 years of opening or by age 71, whichever comes first. If you do not buy a home, you can transfer the funds to your RRSP or RRIF without affecting your RRSP contribution room, though you will lose the tax-free withdrawal benefit.

What is the RRSP Home Buyers’ Plan?

The Home Buyers’ Plan allows eligible Canadians to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home, according to the Canada Revenue Agency. The withdrawal is tax-free at the time, but you must repay the full amount to your RRSP over 15 years, starting the second year after you withdraw.

If you miss a repayment in any year, that amount is added to your taxable income for that year. The HBP has been a cornerstone program for first-time buyers for decades, providing access to retirement savings without immediate tax consequences.

How the Two Programs Work Together

You can use both the FHSA and the RRSP HBP simultaneously to maximize your down payment, potentially accessing up to $100,000 in combined savings. The programs complement each other because they serve the same goal (funding your first home purchase) but operate under different rules.

Here is how you might structure your savings strategy:

  1. Open an FHSA and contribute up to $8,000 annually until you reach the $40,000 lifetime limit, claiming the tax deduction each year.
  2. Continue contributing to your RRSP beyond your FHSA contributions.
  3. When you are ready to buy, withdraw up to $40,000 from your FHSA tax-free with no repayment required.
  4. Withdraw up to $60,000 from your RRSP under the HBP, knowing you will need to repay this amount over 15 years.

This combined approach gives you $100,000 in available funds, with $40,000 coming completely tax-free and the remaining $60,000 as an interest-free loan to yourself.

Read also: RRSP Home Buyers Plan in Canada: Calculate Your Withdrawal and Repayment Schedule

Key Differences Between FHSA and HBP

Understanding the differences helps you decide how much to allocate to each account:

Repayment requirement. FHSA withdrawals for a qualifying home purchase never need to be repaid. HBP withdrawals must be repaid to your RRSP over 15 years, or the missed amounts become taxable income.

Contribution limits. The FHSA has a $40,000 lifetime limit and $8,000 annual limit. The HBP withdrawal limit is $60,000, but you must have that amount in your RRSP first (your total RRSP contribution room depends on your income and available room).

Eligibility. Both programs require you to be a first-time home buyer (generally defined as not owning a home in the current year or the previous four calendar years). FHSA eligibility also requires you to be a Canadian resident aged 18 or older.

Tax treatment. FHSA contributions are tax-deductible and qualifying withdrawals are tax-free. RRSP contributions are tax-deductible, but HBP withdrawals are only tax-deferred, you avoid tax at withdrawal but must repay the funds or face taxation.

Time limits. You have 15 years from opening an FHSA to use it (or until age 71). HBP repayment begins the second year after withdrawal and continues for 15 years.

Next Steps

If you are planning to buy your first home in Canada within the next few years, consider opening an FHSA as soon as possible to start building tax-free savings. Continue contributing to your RRSP as well if you have the financial capacity, since the HBP provides an additional pool of funds when you are ready to purchase. Consult a licensed mortgage broker or financial advisor to confirm your eligibility and develop a savings strategy that fits your timeline and budget.

Disclaimer. This article provides general educational information only and is not personalized financial, tax, legal, or lending advice. Eligibility, contribution limits, and tax treatment for the FHSA and RRSP Home Buyers’ Plan are subject to Canada Revenue Agency rules and may change. The information is current as of October 2026. Confirm current program details and your personal eligibility with a licensed financial advisor or the CRA before making contribution or withdrawal decisions.