The First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP) are both federal programs to help first-time buyers fund a down payment using tax-sheltered savings. FHSA contributions are tax-deductible and qualifying withdrawals are tax-free with no repayment. HBP withdrawals are tax-free up to $60,000 per person but must be repaid into an RRSP over 15 years. Most first-time buyers should use both, in order: FHSA first (tax-deductible contributions plus tax-free withdrawal, no repayment), then HBP for additional down payment if needed.
Side-by-side comparison
| Feature | FHSA | HBP |
|---|---|---|
| Maximum contribution / withdrawal | $8,000/year, $40,000 lifetime | $60,000 per person (uses existing RRSP) |
| Tax deduction on contribution | Yes (FHSA deduction) | Yes (RRSP deduction made before HBP withdrawal) |
| Withdrawal tax | Tax-free for qualifying purchase | Tax-free for qualifying purchase |
| Repayment required | No | Yes — over 15 years starting year 2 after withdrawal |
| First-time buyer rule | Required | Required |
| Account time limit | 15 years from opening or age 71 | n/a (uses RRSP) |
| Combined per couple | $80,000 ($40,000 each) | $120,000 ($60,000 each) |
The combined maximum
FHSA and HBP can be used together for the same first home purchase. A first-time buyer with both fully funded contributes $40,000 (FHSA) + $60,000 (HBP) = $100,000 toward a down payment per person. A couple where both partners have full FHSA and HBP can contribute $200,000 total — enough for 20% down on a $1,000,000 home or 10% down on a $2,000,000 home.
The order of use
For most first-time buyers:
- FHSA first. Tax-deductible contribution, tax-free withdrawal, no repayment burden. Strictly better than HBP if you have FHSA contribution room.
- HBP for additional down payment. Use HBP if FHSA capacity is exhausted ($40,000 lifetime) or the buyer hasn’t been contributing to FHSA long enough to accumulate full $40,000.
Reverse order — HBP first, then FHSA — is rarely better. The 15-year repayment obligation of HBP creates ongoing budget pressure, while FHSA contributions are gone after withdrawal with no repayment trigger.
Worked example: first-time buyer with both
Sarah opened an FHSA in 2024 and has contributed $32,000 ($8,000 × 4 years). She also has a $50,000 RRSP. Sarah is buying a $700,000 home in 2026.
| Source | Amount | Notes |
|---|---|---|
| FHSA withdrawal | $32,000 | Tax-free, no repayment, account closes by Dec 31, 2027 |
| HBP withdrawal | $50,000 | Tax-free, repay $3,333.33/year ($50,000 / 15) starting 2028 |
| Cash savings | $25,000 | From regular savings and refund |
| Down payment | $107,000 | 15.3% of purchase price (over the 5%/10% minimum threshold; not subject to CMHC if combined with another lender route, but mortgage insurance still required under 20%) |
FHSA carry-forward note
FHSA carry-forward is limited to $8,000 (one year only). A buyer who opened FHSA in 2024 and contributed nothing has only $16,000 of room in 2026 ($8,000 carry-forward + $8,000 new), not $24,000. The contribution room never compounds beyond one year.
HBP, in contrast, uses RRSP funds that can be accumulated over many years from any source of RRSP contributions. There is no equivalent restriction.
What if the home purchase falls through?
| Scenario | FHSA outcome | HBP outcome |
|---|---|---|
| Withdrawal made but home not purchased within timeline | Withdrawal becomes taxable income | Withdrawal becomes taxable income (added to income for the year) |
| FHSA closed without home purchase by 15-year limit | Transfer balance to RRSP/RRIF tax-free, or withdraw as taxable income | n/a |
| HBP repayment missed in any year | n/a | Missed amount added to taxable income that year |
Tax efficiency comparison
FHSA is the most tax-efficient first-home savings vehicle ever created in Canada. Contributions reduce taxable income, withdrawals are tax-free, and there is no repayment. The trade-off: lower lifetime cap ($40,000) and 15-year participation window.
HBP is less tax-efficient because withdrawals must be repaid (the deduction was already taken when the original RRSP contribution was made; repayments do not generate a second deduction). Skipped repayments become taxable. The flexibility of using existing RRSP funds is the main advantage.
Eligibility nuances
Both programs require the buyer to be a first-time home buyer: no occupied qualifying home owned by themselves or a spouse in the year of withdrawal or four preceding calendar years. The four-year rule is the same for both.
FHSA contributions can begin while the buyer is not yet a first-time buyer (e.g., currently owns a home but plans to sell and become a first-time buyer four years later). Withdrawals require first-time buyer status at the time of withdrawal.
Frequently asked questions
- Should I use FHSA or HBP first?
- FHSA first. It has the same tax deduction and tax-free withdrawal benefits as HBP but without any repayment requirement. Use HBP only after FHSA capacity ($40,000 lifetime) is exhausted.
- Can I use FHSA and HBP together?
- Yes. Both can be used for the same first home purchase. Combined maximum per person is $100,000 ($40,000 FHSA + $60,000 HBP). A couple with both fully funded can contribute $200,000.
- What is the FHSA annual contribution limit?
- $8,000 per year. Lifetime limit is $40,000. Carry-forward is limited to $8,000 (one year only) and does not compound.
- What is the HBP withdrawal limit?
- $60,000 per person. Withdrawn amount must be repaid into an RRSP over 15 years, starting the second year after withdrawal.
- Do I have to repay an FHSA withdrawal?
- No. FHSA qualifying withdrawals do not require repayment. The funds are gone from the account and the account is closed.
- What if I miss an HBP repayment?
- The missed amount is added to taxable income for that year. The 15-year schedule does not extend; remaining repayments stay on the original schedule.
- Can a couple combine both programs?
- Yes. Each spouse can use their own FHSA and HBP fully. Combined per couple: $80,000 FHSA + $120,000 HBP = $200,000 toward the same first home purchase.