FIRST-TIME BUYERS · EXPLAINED

FHSA and the RRSP Home Buyers' Plan: how first-time buyers stack two tax-sheltered accounts into one down payment

Most first-time buyers treat these as two options to pick between. They aren't. They're two separate pools of tax-advantaged money that can both be pointed at the same purchase — and for a couple, that's up to $200,000 before you touch ordinary savings.

Educational only — not tax or financial advice. Program rules and CRA limits change; confirm the current figures with your accountant or financial institution before you act.

FHSA

First Home Savings Account

The newest of the two, and the most generous — it behaves like an RRSP going in and a TFSA coming out.

How much: $8,000 of contribution room per year, $40,000 lifetime maximum. Unused annual room carries forward.
Tax on the way in: Contributions are tax-deductible, exactly like an RRSP contribution.
Tax on the way out: Withdrawals for a qualifying first home purchase are completely tax-free, exactly like a TFSA.
Repayment: None. Nothing to pay back, ever.
Who qualifies: Any Canadian resident aged 18 or older who hasn't owned a home they lived in during the current year or the four preceding calendar years.

A good fit if…

Anyone more than a year away from buying — the earlier you open it, the more room accumulates
Buyers who want the deduction now and the tax-free withdrawal later
People who may not buy at all, since the balance rolls into an RRSP tax-free if plans change

Watch out: Room only starts accumulating once the account is actually opened. Opening one with a small deposit is worth doing even if you can't fund it yet — otherwise you're leaving $8,000 of room on the table each year you wait.

HBP

RRSP Home Buyers' Plan

A loan to yourself out of your own RRSP — bigger than the FHSA, but it comes with strings.

How much: Up to $60,000 per person, increased from $35,000 for withdrawals made after April 16, 2024.
Tax on the way in: You already got the deduction when the money went into your RRSP in the first place.
Tax on the way out: The withdrawal itself is tax-free, provided it meets the HBP rules.
Repayment: Must be repaid to your RRSP over 15 years, starting the second year after withdrawal (there is a grace period first). Any annual amount you don't repay is added to your taxable income for that year.
Who qualifies: Generally the same first-time test as the FHSA — no home you lived in during the current year or the four preceding calendar years.

A good fit if…

Buyers who already have a meaningful RRSP balance built up
Anyone who needs more than the FHSA lifetime maximum can hold
Households comfortable committing to the annual repayment for the next 15 years

Watch out: The repayment is real and it's easy to forget. Miss a scheduled repayment year and that portion becomes taxable income — an unwelcome surprise from the CRA at exactly the point where your budget is already stretched by a new mortgage.

A 30-second mental model

The FHSA is a gift. The HBP is a loan from your future self.

FHSA money goes in deductible, comes out tax-free, and is never repaid. HBP money comes out of an RRSP tax-free but has to go back over 15 years or it becomes taxable income. Both are useful. Only one of them is genuinely free.

Both partners have their own room

For a couple, the ceiling is $200,000

Both of these are per-person programs. Two qualifying first-time buyers each get their own FHSA lifetime maximum and their own HBP limit — the amounts don't get shared or halved.

FHSA · two people

$80,000

$40,000 lifetime maximum each, withdrawn tax-free and never repaid.

HBP · two people

$120,000

$60,000 each, repayable to your own RRSPs over 15 years.

Combined ceiling

$200,000

Tax-advantaged funds available toward one purchase, before any regular savings.

That's the theoretical ceiling, not a target. Very few buyers max both. The point is that the room is bigger than most people assume — and it's the reason opening an FHSA early matters even when you can't fund it fully.

A stacked example: one couple, one new build

Two first-time buyers who each opened an FHSA 4 years ago and contributed the full $8,000 annually, each with a modest RRSP balance, buying a $620,000 new-build home.

FHSA withdrawals — $32,000 each: $64,000
HBP withdrawals — $30,000 each: $60,000
Down payment from the stack: $124,000

And there's a third piece on a new build

Because this is a newly built home, the same couple may also be eligible for the GST/HST New Housing Rebate — a separate recovery of tax paid on the purchase, on top of everything above. See how the first-time buyer GST rebate works.

Illustration only. Actual contribution room, RRSP balances, rebate eligibility, and purchase price will all differ — run your own numbers before relying on any of this.

If plans change

The FHSA isn't a trap if you never buy

This is the objection that stops people from opening one, and it shouldn't. If the purchase never happens, you have options:

Transfer the full FHSA balance to an RRSP or RRIF tax-free — and it does not consume any of your existing RRSP contribution room
Or take a non-qualifying withdrawal and pay tax on it as income that year
Either way, the deduction you already claimed on the way in isn't clawed back on a transfer

In practical terms: worst case, an unused FHSA turns into extra RRSP savings that didn't cost you any RRSP room. That's a good worst case.

Common questions

Can I use the FHSA and the Home Buyers' Plan on the same home purchase?

Yes. They are separate programs and they stack — you can withdraw from your FHSA tax-free and take an RRSP Home Buyers' Plan withdrawal for the same qualifying purchase. For most first-time buyers who have been saving in both, using both is exactly the point.

Do I have to repay FHSA withdrawals?

No. That's the key difference from the Home Buyers' Plan. A qualifying FHSA withdrawal for a first home is simply tax-free and gone — there is nothing to pay back. An HBP withdrawal, by contrast, must be repaid to your RRSP over 15 years.

What happens if I don't end up buying a home with my FHSA?

You have two options and neither is a disaster. You can transfer the full balance to an RRSP or RRIF tax-free, and that transfer does not use up any of your existing RRSP contribution room — so the deduction you already claimed stays claimed. Or you can withdraw the money as a non-qualifying withdrawal, in which case it's taxable as income that year.

Is the Home Buyers' Plan available if I've owned a home before?

Generally you must not have owned a home you lived in during the current year or the four preceding calendar years — the same first-time test the FHSA uses. That means many people who owned years ago become eligible again. There are also specific exceptions, including for buyers with a disability. Worth checking rather than assuming you're out.

Do I need to have both accounts emptied before my mortgage closes?

You need the funds available and documented in time for closing, which is a timing question worth planning early. HBP withdrawals are straightforward but the paperwork takes days, not hours. FHSA withdrawals need the qualifying conditions met — including a written agreement to buy or build — and some institutions apply holding requirements on recently contributed funds. Tell your broker and your bank your closing date well ahead so the money is liquid when the lawyer needs it.

New to all of this? The first-time homebuyer guide walks through the whole process from savings to keys.

What Rahul actually looks at with you

Having the money is only half of it — a lender still has to be satisfied about where it came from and when it lands. Here's what gets reviewed:

Whether your FHSA and HBP withdrawals will be liquid and documented in time for your actual closing date, not just approved in principle
How lenders want the source of a down payment traced — 90 days of history applies to these accounts too
Whether taking the full HBP is worth the 15-year repayment obligation, or whether a smaller withdrawal keeps your cash flow healthier
How both withdrawals interact with your debt-service ratios, since the HBP repayment is a real future commitment
Whether a larger down payment from the stack pushes you past 20% and out of default insurance entirely
Timing the purchase against the calendar year, so the FHSA deduction lands in the tax year that helps you most

Let's figure out what your down payment can actually be

Tell Rahul what's in your FHSA and RRSP and he'll map it against a real purchase price, a real closing date, and what a lender will want to see. No pitch, no pressure.

Book a free call with Rahul Call or text Rahul

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