A buyer I worked with in Meadowvale, Mississauga in early 2026 had been saving diligently for three years. She had a decent RRSP balance and had just heard about the First Home Savings Account from a colleague at work. When she came to me, her question was simple: should she use her RRSP through the Home Buyers’ Plan, open an FHSA, or somehow do both? She was worried about picking the wrong one and losing money she had worked hard to save. That worry is completely understandable, and it is one I hear from buyers all across the GTA almost every week.
The good news is that this is not an either-or decision. Most first-time buyers in Ontario benefit from using both programs, and for many buyers, the combined power of the FHSA and the RRSP-HBP is what makes the difference between a 5% down payment and a 10% or higher one. What matters is understanding how each program works, what is different between them, and which one to prioritize when you are building your savings.
Before We Compare: Four Things Worth Clearing Up
| What You May Have Heard | What Is Actually True |
|---|---|
| You have to choose between the FHSA and the RRSP-HBP. | You can use both for the same qualifying home purchase, as confirmed by CRA. |
| The FHSA is always better because you never repay it. | The RRSP-HBP gives access to a higher amount ($60,000 vs $40,000). Using both is often the strongest strategy. |
| You need to open the FHSA years before you buy. | There is no minimum waiting period. You can contribute and withdraw in the same year for a qualifying purchase. |
| Missing an RRSP-HBP repayment just means a small penalty. | A missed repayment is added to your taxable income for that year, which can result in a significant tax bill. |
The First Home Savings Account (FHSA) is a registered account created by the federal government in 2023 that allows eligible first-time buyers to save for a home purchase with tax-deductible contributions and tax-free qualifying withdrawals. The RRSP Home Buyers’ Plan (RRSP-HBP) is a separate long-standing federal program that allows first-time buyers to borrow from their existing RRSP savings for a qualifying home purchase, with a requirement to repay the amount over 15 years. Both programs are governed by CRA and both can be used by the same buyer for the same home purchase. For guidance on how either program affects your individual tax situation, speak with a qualified accountant or tax professional before making any decisions. If you arrived in Canada recently as a permanent resident, both programs are available to you, provided you meet the eligibility conditions for each.
What Is the FHSA and Why Should You Open One Now?
The FHSA is the most tax-efficient savings vehicle a first-time buyer in Canada has ever had access to. Contributions are tax-deductible, meaning they reduce your taxable income in the year you contribute, just like an RRSP. But unlike an RRSP, qualifying withdrawals are completely tax-free. You get the deduction on the way in and pay nothing on the way out.
The contribution limits, as confirmed by CRA, are $8,000 per year and $40,000 over the lifetime of the account. Unused annual room carries forward, but only up to $8,000, meaning the maximum you can contribute in any single year is $16,000. There is no minimum waiting period between contributing and withdrawing for a qualifying purchase. You can contribute and use the funds in the same year.
The single most important thing to understand about the FHSA is this: open it as early as possible, even if you cannot contribute much yet. Contribution room only starts accumulating once the account is open. Every year you wait is a year of room you can never recover.
What Is the RRSP Home Buyers’ Plan and When Does It Add Value?
The RRSP-HBP allows first-time buyers to withdraw up to $60,000 from their RRSP for a qualifying home purchase, as confirmed by CRA. The limit increased from $35,000 to $60,000 on April 16, 2024. Couples where both partners qualify can access a combined total of up to $120,000 from their RRSPs through the RRSP-HBP.
The critical difference from the FHSA is repayment. The amount you withdraw must be repaid to your RRSP over a 15-year period, beginning in the second calendar year after the year of withdrawal. If you made a withdrawal between January 1, 2022 and December 31, 2025, a five-year repayment grace period applied. If you are withdrawing in 2026 or later, the standard repayment schedule applies and begins in the second calendar year after your withdrawal year. If you miss a repayment in any given year, the shortfall is added to your taxable income for that year. For guidance specific to your repayment obligations, speak with a qualified accountant or tax professional.
There is also a 90-day rule with the RRSP-HBP that does not apply to the FHSA. RRSP contributions must remain in the account for at least 90 days before they can be withdrawn under the RRSP-HBP.
Side-by-Side Comparison
| FHSA | RRSP Home Buyers’ Plan (RRSP-HBP) | |
|---|---|---|
| Annual limit | $8,000 | No annual limit (uses RRSP room) |
| Lifetime limit | $40,000 per person | $60,000 per person |
| Tax deduction on contribution | Yes | Yes (when contributed to RRSP) |
| Withdrawal tax treatment | Completely tax-free | Tax-free at withdrawal, must repay |
| Repayment required | No repayment required | Yes, over 15 years |
| 90-day rule | No waiting period | RRSP funds must sit 90 days before withdrawal |
| Can be used together | Yes | Yes |
So Which Should You Use First?
The answer for most buyers is: open the FHSA first and maximize it before drawing on the RRSP-HBP.
The FHSA gives you the best tax outcome of any registered account available to first-time buyers. You get a deduction on the way in and pay nothing on the way out. The RRSP-HBP is powerful because of the higher withdrawal limit, but it comes with a 15-year repayment obligation. Starting homeownership with a debt you owe back to yourself adds an annual obligation that some buyers underestimate.
What I consistently see with buyers across the GTA is that those who open the FHSA early and contribute steadily arrive at the purchase stage with a meaningful tax-free pool of savings, often $30,000 to $40,000, that requires no future repayment. They then layer the RRSP-HBP on top for additional purchasing power. Used together, a couple can access up to $200,000 in registered savings for a single home purchase.
The scenario where the RRSP-HBP makes more sense first is when a buyer already has a significant RRSP balance and has not yet opened an FHSA. In that case, using RRSP-HBP funds already in the RRSP while simultaneously opening and contributing to the FHSA is a reasonable approach.
What This Means for First-Time Buyers in the GTA
In a market like the GTA, where entry-level homes in Meadowvale in Mississauga or in Bramalea in Brampton typically start around $650,000 to $800,000, the gap between a 5% and a 10% down payment is real money. The combined FHSA and RRSP-HBP strategy is one of the most practical tools available to close that gap.
This is part of what I call the 3P Method, the three stages every first-time buyer needs to move through before making an offer: Prepare, Plan, and Purchase. Setting up the right registered accounts at the right time is core to Stage 1, Prepare. An FHSA that has been open and contributing for two or three years is worth significantly more to a buyer than one opened a month before the offer.
For a broader overview of the full first-time buyer journey, including everything you need to know before your first showing, see our First-Time Home Buyer Guide for Ontario.
Frequently Asked Questions
Can I use both the FHSA and the RRSP Home Buyers’ Plan for the same home?
Yes. CRA confirms you can make qualifying withdrawals from both programs for the same qualifying home purchase. Using both is often the most effective strategy for maximizing your down payment.
What happens to my FHSA if I do not end up buying a home?
You can transfer the full balance of your FHSA to your RRSP or RRIF on a tax-free basis, without affecting your RRSP contribution room. The account must close by the end of the 15th year after opening, or when you turn 71, whichever comes first.
Is there a minimum time I need to have the FHSA open before I can use it?
No. There is no minimum waiting period. You can contribute and make a qualifying withdrawal in the same year, even within weeks of opening the account.
What happens if I miss an RRSP-HBP repayment?
The missed repayment is added to your taxable income for that year and taxed at your marginal rate. For specific guidance on managing your repayment schedule, speak with a qualified accountant or tax professional.
Can newcomers to Canada use the FHSA and the RRSP-HBP?
Yes, in most circumstances. Permanent residents are eligible to open an FHSA provided they have not owned a qualifying home in the preceding four calendar years. RRSP-HBP eligibility also requires Canadian residency at the time of withdrawal. Confirm your specific eligibility with a qualified professional before proceeding.
The buyer from Meadowvale I mentioned at the start opened her FHSA within a week of our conversation and started contributing immediately. She also kept her existing RRSP intact, knowing the RRSP-HBP would give her access to it when the time came. A few months later she was pre-approved, had a clear down payment plan, and was actively searching. That is what understanding the programs early actually does for a buyer.
You came into this uncertain about which program to use. You are leaving knowing you do not have to choose, and with a clear picture of how to use both in the right order.
This is Stage 1 of the 3P Method. When you have your savings accounts set up and your down payment plan in place, the next step is understanding how lenders assess your application. Read our guide: What Is the Mortgage Stress Test in Canada.
References
Canada Revenue Agency. First Home Savings Account (FHSA). canada.ca — First Home Savings Account
Canada Revenue Agency. Home Buyers’ Plan (HBP). canada.ca — Home Buyers' Plan
Government of Canada / Department of Finance Canada. 2024 Federal Budget. canada.ca
