FHSA vs RRSP Home Buyers’ Plan: Which Should You Use?
If you’re saving for your first home in Canada, you have access to two powerful registered savings programs: the First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP). Both offer tax advantages, but they work very differently. Understanding which to prioritize — or how to use them together — can help you maximize your down payment savings.
The First Home Savings Account (FHSA)
Introduced in 2023, the FHSA is specifically designed for first-time home buyers. It combines the best features of both RRSPs and TFSAs:
- Tax-deductible contributions: Like an RRSP, your contributions reduce your taxable income
- Tax-free withdrawals: Like a TFSA, qualified withdrawals for your home purchase are completely tax-free
- No repayment required: Unlike the RRSP HBP, you don’t have to pay the money back
FHSA Contribution Limits
- Annual limit: $8,000 per year
- Lifetime maximum: $40,000
- Carry-forward: Unused contribution room can be carried forward to the next year (up to $8,000)
- Maximum lifetime: 15 years from opening, or until age 71
The RRSP Home Buyer’s Plan (HBP)
The HBP has been available for decades and allows first-time buyers to withdraw from their existing RRSPs:
- Maximum withdrawal: $60,000 per person ($120,000 for couples buying together)
- Tax-deductible contributions: Original RRSP contributions were tax-deductible
- Repayment required: You must repay the withdrawal over 15 years, starting two years after purchase
💡 Important Note
HBP repayments are not tax-deductible. You’re essentially paying back with after-tax dollars — you got the deduction when you contributed, and you don’t get to deduct the same money twice.
Head-to-Head Comparison
Which Is Better?
For most first-time buyers, the FHSA is the better deal if you have time to use it. Here’s why:
- No repayment obligation: The $40,000 you withdraw stays withdrawn. With the HBP, miss a repayment and it becomes taxable income.
- True tax-free growth: FHSA investment gains are never taxed. HBP withdrawals may include taxable gains when you eventually withdraw in retirement.
- Simpler administration: No 15-year repayment schedule to track and manage.
That said, if you already have significant RRSP savings and are planning to buy soon, the HBP gives you immediate access to more funds.
💡 Power Strategy
You can use both programs together. A couple could access up to $200,000 in tax-advantaged down payment funds: $80,000 from two FHSAs plus $120,000 from two RRSPs via the HBP. Even if you don’t max these out, combining the programs significantly increases your buying power.
Our Recommendation for Calgary & Alberta Buyers
If you’re planning to buy within the next 1-5 years:
- Open an FHSA immediately and contribute at least $1 to start the clock on your 15-year participation window
- Prioritize FHSA contributions up to $8,000 per year
- Use the HBP to supplement if you need more than your FHSA balance at purchase time
- Talk to your accountant about optimal contribution timing based on your tax situation
If you’re planning to buy within the next 6-12 months and don’t have an FHSA yet, the HBP may be your primary tool — but open that FHSA anyway for potential future use.
Elevation Mortgage
INDEPENDENT MORTGAGE BROKERS · LICENSED AB & BC
Julie & Andy Jeffery — independent mortgage brokers serving Calgary, Nelson BC,
and clients across Alberta and British Columbia.
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