FHSA vs RRSP Home Buyers' Plan: Which to Use First? (2026)
The FHSA wins for new savings: deductible going in, tax-free coming out, never repaid. The HBP suits money already in an RRSP. Both: $100,000 per person.
Put new savings in the FHSA first. Contributions are tax-deductible like an RRSP, withdrawals for a first home are tax-free like a TFSA, and nothing is ever repaid. It's the only account in Canada that works both ways. Use the RRSP Home Buyers' Plan for money already sitting in an RRSP, or once the FHSA's $8,000-a-year room is used up. They combine: up to $40,000 plus growth from the FHSA and $60,000 from the HBP, per person, on the same purchase.
Figures come from the CostToClose FHSA and HBP calculator.
Side by side
| Metric | FHSA | RRSP Home Buyers' Plan |
|---|---|---|
| Contribution deductible | Yes | Yes (RRSP) |
| Withdrawal for a first home | Tax-free | Tax-free |
| Must be repaid | No | Yes, 1/15 per year over 15 years |
| Annual limit | $8,000 (unused room carries forward one year, max $16,000 in a year) | RRSP room (18% of earned income, max ≈ $32,500 for 2026) |
| Lifetime limit | $40,000 contributions; growth unlimited | $60,000 withdrawal |
| Holding period before withdrawal | None | Funds must be in the RRSP 90 days |
| First-time test | No home owned this or previous 4 years | Same |
| If you never buy | Transfer to RRSP tax-free, no room used | Stays in RRSP |
| Account life | 15 years from opening, or age 71 | — |
Sources: CRA, First Home Savings Account; CRA, Home Buyers' Plan. Checked 14 September 2026.
Why the FHSA wins for new money
A dollar saved through the FHSA gets a deduction at your marginal rate on the way in and pays no tax on the way out. The same dollar through an RRSP gets the deduction, but the HBP withdrawal is a loan from yourself: you repay $1 for every $15 you took, every year, or that year's share is added to your income and taxed.
At a 30% marginal rate, $8,000 into an FHSA costs $5,600 after the refund and yields $8,000 plus growth for the down payment with no strings. The same $8,000 into an RRSP costs the same and yields the same, but with a $533-a-year repayment obligation for 15 years.
Why you still use the HBP
- Money already in your RRSP cannot move to the FHSA (no direct transfers in that direction), so the HBP is the only way to use it for a down payment.
- FHSA room is capped at $8,000 a year. A buyer two years from purchase can shelter at most $16,000 there; the HBP can access up to $60,000 of existing RRSP savings.
- Couples double everything: two FHSAs and two HBP withdrawals.
Worked example from the calculator
Couple, both 30, buying in three years, $150,000 combined income, $45,000 already in RRSPs, able to save $22,000 a year:
| Year | FHSA contributions (both) | Tax refund at 30% | RRSP additions |
|---|---|---|---|
| 1 | $16,000 | $4,800 | $6,000 |
| 2 | $16,000 | $4,800 | $6,000 |
| 3 | $16,000 | $4,800 | $6,000 |
| Available at purchase | $48,000 + growth (≈ $49,900) | $63,000 in RRSPs → $63,000 via HBP |
Down payment: about $112,900, all tax-sheltered, with $14,400 of refunds along the way. That's enough for 15% down on a $700,000 home, which drops the CMHC premium from 3.10% to 2.80%. HBP repayment: $4,200 a year combined from year two. Reproduce this.
The order of operations
- Open an FHSA the year you decide to buy. Room only starts accruing once the account exists.
- Fill it ($8,000 each) before adding to RRSPs.
- Put the balance of new savings in RRSPs at least 90 days before closing so it qualifies for the HBP.
- Withdraw from both in the same year; both require a written agreement to buy and occupancy within a year.
- If the purchase falls through, the FHSA can be rolled to an RRSP untaxed within 15 years; an HBP withdrawal must be returned to the RRSP by the deadline or it becomes income.
Frequently asked questions
Should I use my FHSA or RRSP first for a down payment?
FHSA. It gives the same deduction as an RRSP but the withdrawal is tax-free and never repaid. Use the HBP for money already in an RRSP or beyond FHSA room.
Can I use both the FHSA and the HBP for the same home?
Yes. Up to $40,000 plus growth from the FHSA and $60,000 from the HBP, per person.
What is the FHSA contribution limit in 2026?
$8,000 a year, with one year of unused room carrying forward (maximum $16,000 in a year), to a $40,000 lifetime cap.
Do I have to repay the FHSA?
No. A qualifying withdrawal is tax-free and permanent. Only the RRSP Home Buyers' Plan requires repayment.
What happens to my FHSA if I don't buy a home?
Transfer it to your RRSP or RRIF tax-free (without using RRSP room) before the account's 15-year limit, or withdraw it as taxable income.
Sources
- Canada Revenue Agency, First Home Savings Account (FHSA) — checked 14 Sept 2026
- Canada Revenue Agency, Home Buyers' Plan (HBP) — $60,000 limit — checked 14 Sept 2026
- Canada Revenue Agency, RRSP contribution limits 2026 — checked 14 Sept 2026
This guide gives general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown. It is not legal, tax, or mortgage advice. Because rules and rates change, confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before relying on them.