Both the FHSA and the RRSP Home Buyers Plan let you save for your first home with tax advantages, but they work very differently. Here’s how to think about using both — and why FHSA almost always goes first.
The 30-second comparison
| FHSA | RRSP Home Buyers Plan | |
|---|---|---|
| Annual contribution | $8,000 | 18% of income (max $32,490 in 2026) |
| Lifetime limit | $40,000 | $60,000 (withdrawal cap for HBP) |
| Tax-deductible? | Yes | Yes |
| Tax-free withdrawal? | Yes (for first home) | No tax, but must repay over 15 years |
| Repayment required? | No | Yes — 1/15 per year |
| If you don’t buy? | Roll to RRSP tax-free | Money stays in RRSP |
Why FHSA almost always wins on its own merits
The FHSA gives you the tax deduction and tax-free withdrawal and no repayment. The HBP only gives you two of the three — you have to pay yourself back over 15 years, and if you miss a payment, that year’s repayment is added to your taxable income.
If your only goal is buying a home and you can fit your down payment in $40K of FHSA contributions, there’s almost no reason to touch the RRSP HBP.
When to use both together
You can combine FHSA + HBP for the same home purchase — there’s no rule against it. Combined, you could pull $100K ($40K FHSA + $60K HBP) tax-free at closing. For a $700K home in a high-cost city, that gets you to roughly 14% down without saving outside registered accounts.
The order: max your FHSA first ($8K/year for 5 years), then start using RRSP contribution room for the HBP. If you’re a couple, both partners can do this — $80K FHSA + $120K HBP between you.
What if you’re not sure you’ll buy?
FHSA wins here too. If you decide not to buy within 15 years of opening it, the entire FHSA rolls tax-free into your RRSP — no tax bill, no penalty. You essentially get to “borrow” RRSP room for a hypothetical home purchase. The HBP doesn’t work that way: if you withdraw and then don’t buy, you have to put the money back within a year or face full taxation.
Can newcomers to Canada open an FHSA?
Yes — you need to be a Canadian resident, 18+, and a “first-time home buyer” (meaning you haven’t lived in a home you owned in the current year or any of the previous 4 years). If you owned a home in your former country, that doesn’t disqualify you.
Frequently asked questions
Can I open an FHSA at one bank and an RRSP at another?
Yes, and a lot of people do. I have my FHSA at Questrade because I wanted to hold ETFs, and my RRSP sits at a different institution from years ago. The CRA tracks your contribution room across all FHSAs you own, so just make sure your combined contributions don’t exceed $8,000 in a calendar year or $40,000 lifetime.
What happens to my FHSA contribution room if I don’t max it out one year?
Unused FHSA room carries forward, but only after you’ve opened an account — and only up to $8,000 of carry-forward at a time. So if you open an FHSA in 2024 and contribute nothing, you’d have $16,000 of room in 2025 ($8K current + $8K carried). But if you contribute nothing for three years, you still only have $16,000 available the next year, not $24,000. This is different from RRSP room, which accumulates indefinitely from the year you started filing taxes.
If I use both FHSA and HBP, do I have to withdraw them at the same time?
No. The FHSA “qualifying withdrawal” and the HBP withdrawal are separate transactions with their own paperwork (Form RC725 for FHSA, Form T1036 for HBP). Most people coordinate them around the closing date because you need the cash then, but you can withdraw from your FHSA earlier in the year and the HBP closer to closing as long as both meet the rules — you have a signed purchase agreement and intend to occupy the home within one year.
Does the FHSA make sense if my parents are helping with the down payment?
It can still be worth opening one just to start the 15-year clock, even with a small contribution. When my mom asked me about this for a cousin who was getting gift money from family, the answer was: open an FHSA with $1,000, claim the deduction, and you’ve locked in the option for later. If the gift covers the whole down payment and you never need the FHSA, the balance rolls to your RRSP tax-free — no harm done.
Can I use the FHSA for a home I’ll rent out?
No. The FHSA requires you to intend to occupy the home as your principal residence within one year of buying. Same rule for the HBP. If you’re buying a duplex and living in one unit while renting the other, that generally qualifies — but a pure investment property does not, and using FHSA funds that way would make the withdrawal fully taxable.
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