By Pankaj Babbar, licensed advisor at SAI Insurances · 3 min read
1-minute read
The short answer
- First-time buyers can often use both the FHSA and the RRSP Home Buyers' Plan (HBP) for the same home.
- The FHSA lets you contribute up to $8,000 a year and $40,000 in total, with a deduction going in and a tax-free withdrawal for a qualifying first home.
- The HBP lets you withdraw from your RRSP to buy or build a first home — but that money has to be paid back to your RRSP over time.
- FHSA money doesn't need to be repaid, which is why many buyers fill it first.
- Rules and limits change, so check the current CRA details before you plan around them.
Detailed guide · 2 min read
Saving for a first home in Canada
A down payment is often the biggest hurdle to buying a first home. Canada offers two registered ways to build one with tax help: the First Home Savings Account (FHSA) and the Home Buyers' Plan (HBP), which uses money already in your RRSP. In many cases, a qualifying first-time buyer can use both.
The FHSA in short
- Contribute up to $8,000 per year, to a lifetime total of $40,000.
- Contributions are tax-deductible, like an RRSP.
- Qualifying withdrawals for a first home are tax-free, like a TFSA.
- Nothing has to be paid back.
The Home Buyers' Plan in short
- Lets you withdraw from your RRSP to buy or build a qualifying first home.
- The withdrawal isn't taxed when you take it out under the plan.
- It's essentially a loan to yourself: you repay it to your RRSP over a set schedule, or the unpaid amount is added to your taxable income.
The key difference: repayment
This is the part that shapes most plans. FHSA money is yours to use with no repayment. HBP money has to go back into your RRSP over the following years — which is a new monthly commitment right when you've taken on a mortgage. That's why many buyers lean on the FHSA first and use the HBP to top up.
How they can fit together
- Open an FHSA early — contribution room only starts building once the account is open.
- Contribute to it each year you can, up to the annual limit.
- If you already have RRSP savings, look at the HBP as a second source.
- Plan the HBP repayments into your budget alongside the mortgage.
Where the TFSA fits
Some buyers also keep savings in a TFSA for flexibility. We compare the two in TFSA vs FHSA for your first home.
This article is general information, not financial or tax advice. FHSA and Home Buyers' Plan rules, limits, qualifying conditions and repayment terms are set by the CRA and can change — check the CRA website for current details, and your advisor confirms what applies to you.