How the FHSA Works
The First Home Savings Account (FHSA), introduced in 2023, is a registered account that combines the best features of both the RRSP and the TFSA — but only for the purpose of buying a first home.
- Contributions are tax-deductible — just like an RRSP, every dollar you contribute reduces your taxable income
- Qualifying withdrawals are completely tax-free — just like a TFSA, you pay no tax when you take the money out to buy a home
- Annual contribution limit: $8,000 per year
- Lifetime contribution limit: $40,000
- Unused annual room carries forward by one year — if you contribute $5,000 in 2025, you can contribute up to $11,000 in 2026
To qualify, you must be a Canadian resident, at least 18 years old, and a first-time home buyer — meaning you have not owned a home you lived in at any point during the current year or the preceding four calendar years.
How the RRSP Home Buyers' Plan Works
The Home Buyers' Plan (HBP) allows first-time buyers to withdraw up to $60,000 from their RRSP tax-free to put toward a home purchase. Unlike the FHSA, however, the money must be repaid — 1/15th of the withdrawn amount per year, starting two years after the withdrawal. If you fail to repay the required amount in a given year, that portion is added to your taxable income for that year.
Key Differences at a Glance
| Feature | FHSA | RRSP (HBP) |
|---|---|---|
| Tax deduction on contribution | ✅ Yes | ✅ Yes |
| Tax on qualifying withdrawal | ✅ None | ✅ None (if repaid) |
| Repayment required | ❌ No | ✅ Yes — over 15 years |
| Annual contribution limit | $8,000 | 18% of earned income |
| Max withdrawal for home | $40,000 lifetime | $60,000 |
| Unused room carry-forward | 1 year only | Indefinite |
Can You Use Both?
Yes — and this is where the real power lies. A first-time buyer can withdraw from both their FHSA (up to $40,000 lifetime) and their RRSP under the HBP (up to $60,000) for the same home purchase. Combined, that is up to $100,000 in tax-advantaged savings that can go toward a down payment.
Which Should You Prioritize?
For most first-time buyers, the FHSA should be the first priority, for one simple reason: the withdrawal is completely tax-free with no repayment obligation. This makes it strictly better than the RRSP HBP for this specific purpose.
Once you have maximized your FHSA contributions ($8,000/year, up to $40,000 lifetime), use the RRSP HBP for additional funds if needed — especially if you already have significant RRSP savings built up.
If you are just starting to save:
- Open an FHSA immediately and contribute $8,000 per year
- Once your FHSA is maximized, redirect savings to your RRSP
- When you buy, withdraw from the FHSA first, then use the HBP if you need more
If you already have RRSP savings:
- Open an FHSA and start contributing $8,000 per year going forward
- When you buy, use both — FHSA withdrawal first (no repayment), then RRSP HBP for the remainder
See how much you can save with the FHSA
Our free FHSA Calculator shows how much you can accumulate by your target purchase date.