Key takeaways
- An FHSA allows eligible buyers to contribute up to $8,000 per year, to a $40,000 lifetime limit.
- Qualifying FHSA withdrawals, including investment growth, are tax-free and do not have to be repaid.
- The HBP allows eligible RRSP withdrawals of up to $60,000 for a qualifying home, but the amount must be repaid over 15 years.
- FHSA and HBP funds can be used for the same home if each program’s conditions are met.
Start with the strategy, not just the savings target
When Canadians plan for a first home, the conversation often starts with one question: “How much do I need for a down payment?” That matters, but an equally important question is where that money should come from. Two common tools are the First Home Savings Account, or FHSA, and the RRSP Home Buyers’ Plan, or HBP. They can work together, but they are not the same.
Why the FHSA is often worth looking at first
The FHSA allows eligible buyers to contribute up to $8,000 per year, up to a $40,000 lifetime limit. Contributions are generally tax-deductible, and qualifying withdrawals — including investment growth — are tax-free and do not have to be repaid. That combination is what makes the FHSA such a useful first place to investigate when building a down payment plan.
Timing matters. FHSA participation room starts in the year the first FHSA is opened, not before. Unused participation room can carry forward, but only up to $8,000. Before contributing, it is important to check your CRA account because the limit applies across all your FHSAs, and contributing too much can create an excess amount.
How the RRSP Home Buyers’ Plan differs
The HBP lets an eligible buyer withdraw up to $60,000 from their RRSP for a qualifying home. The key difference is that HBP funds are not simply free down payment money: they must be repaid to the RRSP over 15 years. That future repayment obligation should be part of your affordability plan, especially if you are trying to keep monthly cash flow manageable after moving in.
There is also a timing change for new HBP participants. If your first HBP withdrawal is made from January 1, 2026, through December 31, 2028, repayment begins in the fifth year after the withdrawal year, rather than the second year under the previous rule. The FHSA and a qualifying FHSA withdrawal may be used for the same home as the HBP, as long as each program’s conditions are met.
A practical order for first-home savings
- Check whether you are eligible for an FHSA and confirm your contribution room through the CRA.
- Prioritize FHSA contributions you can afford without draining your emergency savings.
- Consider the HBP only after weighing the 15-year repayment obligation and the value of leaving RRSP savings invested.
- Keep your purchase timing in mind, because HBP withdrawals generally require a qualifying purchase.
One more detail is easy to miss: RRSP contributions made within 89 days before an HBP withdrawal may not be deductible. Before making contributions or withdrawals, confirm the latest FHSA and HBP eligibility, withdrawal and repayment details with the CRA so you are working from current rules.
A Finevo advisor can help you turn your down payment savings into a broader homebuying plan — including how much you may be able to afford, how different lenders view your file, and how to compare options across 40+ Canadian lenders before you make an offer.
This article is general information about Canadian mortgages and is not financial advice. Rates, programs, and eligibility are subject to change and to lender and insurer qualification. Figures cited reflect market conditions at the time of writing. Speak with a licensed Finevo advisor for guidance specific to your situation.
