FHSA vs RRSP for First-Home Buyers
By MyMoneyMap Founder · Last updated
The simple answer
Use the FHSA first. The RRSP Home Buyers’ Plan (HBP) is a useful supplement after you’ve maxed the FHSA, but it’s strictly worse as a primary first-home account because you have to repay the HBP withdrawal over 15 years. Miss a repayment and the unpaid amount gets added to your taxable income - the opposite of what you wanted.
FHSA vs RRSP HBP at a glance
| Feature | FHSA | RRSP HBP |
|---|---|---|
| Maximum amount | $40,000 lifetime contribution | $60,000 withdrawal (since April 16, 2024) |
| Annual cap | $8,000 | n/a (depends on RRSP balance) |
| Tax deduction on contribution | Yes | Yes |
| Tax-free growth | Yes | Tax-deferred |
| Tax on first-home withdrawal | $0 (qualifying) | $0 IF repaid; otherwise added to income |
| Repayment required | No | Yes - over 15 years, starting year 2 after withdrawal |
| Missed repayment penalty | n/a | Unpaid amount added to taxable income that year |
| Reduces retirement savings? | No (separate room) | Yes - RRSP balance shrinks until repaid |
| Carry-forward of deduction | Yes - claim in any future year | Yes (RRSP general) |
| Available to non-first-time-buyers | No | No (with exceptions for marital breakdown) |
| Account closes after? | 15 yrs / age 71 / 1 yr after first qualifying withdrawal | Account stays open - you just owe the repayment |
| What if you don't buy a home? | Roll to RRSP without using room | n/a - never withdraw via HBP |
Sources: CRA First Home Savings Account program, Government of Canada Budget 2024 (HBP increase to $60,000).
The dollar math
Suppose you have $50,000 saved for a down payment, want to buy in 4 years, and are at a 30% combined marginal tax rate.
- FHSA route: Contribute $8,000/year for 4 years = $32,000 contributed, $9,600 in tax refunds, balance grows tax-free, withdraws tax-free. Net cost of $32k savings: about $22.4k after refunds.
- RRSP HBP route: Contribute $32,000 to RRSP over 4 years, get $9,600 in refunds, withdraw via HBP at home purchase. Then repay $32,000 / 15 = ~$2,133/year for 15 years (or face that amount being taxed if you miss).
- Combined (optimal): Max the FHSA ($32k over 4 years), put any additional first-home savings into RRSP for HBP, keeping the HBP repayment manageable.
$60,000 → $100,000
What changed in 2024: the HBP limit went from $60,000 (combined with FHSA) to $100,000 of registered first-home funds per buyer once the HBP cap rose from $35,000 to $60,000.
Source: Government of Canada Budget 2024 · 2024
When does the RRSP HBP actually win on its own?
Only in narrow situations:
- You have a large existing RRSP balance and no FHSA. The HBP lets you tap up to $60,000 today; opening an FHSA now caps you at $8,000 of new room this year. If you’re buying soon, the HBP is faster.
- You’re in your peak earning years (high marginal rate) and the RRSP deduction itself is more valuable to you than the FHSA’s identical-rate deduction. (Both deductions are technically the same, but RRSP room is much larger if you have high earned income.)
- You expect to need the money for retirement instead of a home. An FHSA forces you to either buy or transfer to RRSP within 15 years; an RRSP keeps the funds in your retirement plan regardless.
Frequently asked questions
- Should I use an FHSA or RRSP for my first home?
- Use the FHSA first if you're a first-time home buyer - it's the strictly better choice because qualifying withdrawals are tax-free with no repayment required. Use the RRSP Home Buyers' Plan AS WELL (not instead of) to access additional registered first-home funds. The FHSA caps at $40,000 lifetime; HBP allows up to $60,000 - combined: up to $100,000 per buyer.
- Do FHSA and RRSP have the same tax deduction?
- Yes, both contributions are deductible against your taxable income at the same rate (your marginal federal + provincial rate). At a 30% marginal rate, $10,000 of either contribution generates roughly $3,000 of tax refund. The difference is on the way out.
- Why is the FHSA better than the RRSP Home Buyers' Plan?
- Three reasons. First, FHSA qualifying withdrawals are 100% tax-free; HBP withdrawals must be repaid to the RRSP over 15 years (otherwise added to your taxable income). Second, FHSA growth is permanently tax-sheltered; HBP withdrawals reduce your RRSP retirement balance. Third, FHSA carry-forward of the deduction itself is more flexible than RRSP carry-forward.
- Can I use FHSA and RRSP HBP on the same home purchase?
- Yes - and you should. Since April 16, 2024, the HBP withdrawal limit increased to $60,000. Combined with a fully-funded FHSA ($40,000), a single first-time buyer can access up to $100,000 of registered first-home funds. A couple buying together can stack to $200,000.
- Does the RRSP HBP still make sense in 2026?
- Yes, but as a stack-on with the FHSA, not as a replacement. Use the FHSA first because it's tax-free out with no repayment. Then use HBP for the next $60,000 of registered first-home funds. The HBP repayment over 15 years is essentially a 0% interest loan from yourself - useful when you need more than $40,000.
- What happens to my unused FHSA if I don't buy a home?
- You can transfer the entire FHSA balance into your RRSP without using RRSP contribution room - a unique feature that effectively eliminates the downside risk of opening an FHSA. The funds keep their tax-deferred status; you just lose the tax-free withdrawal benefit since they'll now be taxed when withdrawn from the RRSP.
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Educational content only - not personalised financial advice. Editorial Policy.