First-time buyers · 5 min read
FHSA vs RRSP Home Buyers' Plan: Which Comes First?
The First Home Savings Account (FHSA) is the most powerful first-home savings vehicle Canada has ever introduced — tax-deductible going in, tax-free coming out, and no repayment required. The RRSP Home Buyers' Plan (HBP) is the older, larger workhorse — up to $60,000 per person, but you have to pay it back over 15 years. The right answer for most first-time buyers is to use both, in a specific order.
What the FHSA gives you
Each Canadian aged 18 to 71 can contribute up to $8,000 per year, with a lifetime cap of $40,000. Contributions are deductible against your income (just like RRSPs), and when you eventually withdraw the money for a qualifying home purchase, both the contributions AND the investment growth come out tax-free. There is no repayment requirement — once it's out, it's gone, and you owe nothing. A couple stacking two FHSAs can put $80,000 toward a first home with zero future tax liability.
What the HBP gives you
Under the current rules (raised in 2024), each spouse can withdraw up to $60,000 from their RRSP for a first-home purchase — that's $120,000 for a couple. The money has to be repaid into the RRSP over 15 years, starting in the fifth year after withdrawal. Miss a repayment and the unpaid amount becomes taxable income for that year. The HBP is bigger, but it's a loan from your future self, not a true gift like the FHSA.
Why the order matters
Open and fund the FHSA first, ideally several years before you buy. You get the tax deduction immediately, and as long as the account is open for at least one full year before withdrawal, you can pull the full balance out tax-free. Once your FHSA is maxed (or you've hit the year you actually need the money), layer the HBP on top of it. The combined withdrawal of FHSA + HBP for a couple can easily exceed $200,000 — which, in most of Nova Scotia and New Brunswick, is more than a 20% down payment on a typical home and lets you skip CMHC insurance entirely.
Two common mistakes
First, people open an FHSA but don't actually contribute, then panic when they want to use it and realize the one-year rule. Open it now even if you can only put in $100 — the clock starts immediately. Second, people use the HBP without realizing the repayment hits their cash flow during the most expensive years of homeownership (years 5 through 20, when kids and renovations and second cars all collide). If you have the room, max the FHSA first to minimize how much HBP you actually need.
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