FHSA vs. RRSP Home Buyers' Plan: How They Compare in 2026
Two Tax-Advantaged Ways to Save for a Down Payment
If you're a first-time homebuyer in Canada, you have access to not one but two tax-advantaged savings programs designed specifically to help you accumulate a down payment. The First Home Savings Account (FHSA) and the RRSP Home Buyers' Plan (HBP) both let you save money and reduce your taxes.
But they work differently. And they have different limits, rules, and strategies. The question isn't which one is "better" — it's which one (or both) makes sense for your situation.
Let's break down the details, then look at how the two programs can work together.
The FHSA: Canada's Newest Down Payment Tool
The FHSA launched in 2023 and it's designed from the ground up for down payment saving. Here's how it works:
FHSA Contribution Limits and Tax Benefits
- Annual contribution limit: $8,000/year
- Lifetime contribution room: $40,000
- Contribution period: January 1 to December 31; contributions made in the first 60 days of the next year cannot be deducted for the previous year, unlike RRSPs
- Unused contribution room: carries forward to the next year, up to a maximum of $8,000 (so you can have up to $16,000 of room in a year, subject to the $40,000 lifetime limit)
- Tax deduction: contributions are tax-deductible (just like RRSP contributions)
So if your taxable income before the deduction is $60,000, and you contribute $8,000 to your FHSA and claim the deduction, your taxable income falls to $52,000. For 2026, the federal rate is 14% on taxable income up to $58,523 and 20.5% from $58,523 to $117,045, and provincial or territorial tax applies in addition, so the tax you save depends on your income and where you live. For illustration only, at an assumed combined marginal rate of 25%, an $8,000 deduction would reduce your tax by $2,000, so the contribution would cost about $6,000 after tax.
FHSA Withdrawals
- Tax-free withdrawal: pull out money for your down payment with zero tax
- No repayment required: unlike the RRSP Home Buyers' Plan, you don't repay the FHSA money
- Timing: there is no minimum number of days that contributions must stay in your FHSA before you can use them as a qualifying withdrawal
- Deadline: your maximum participation period ends on December 31 of the earliest of the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal
- If you don't buy: you can generally transfer FHSA property directly to your RRSP or RRIF without immediate tax. Close your FHSA before your maximum participation period ends; property left in it after that loses its FHSA status and its fair market value is included in your income
The Strategic Advantage
The FHSA combines a tax deduction with tax-free qualifying withdrawals that do not need to be repaid. You're not borrowing from your retirement — you're saving specifically for a down payment. (And if the retirement side of the RRSP equation is what you're really weighing, our companion site The Retirement Beast digs into RRSP, TFSA, and CPP strategy in depth.)
The RRSP Home Buyers' Plan: The Familiar Alternative
The RRSP Home Buyers' Plan has been around longer (since 1992). It lets you withdraw from your RRSP to buy or build a qualifying home, and you repay the amount to your RRSP over a 15-year period.
RRSP HBP Contribution and Withdrawal Limits
- Maximum withdrawal: $60,000 (increased from $35,000 in 2024)
- Contribution timing: RRSP contributions made in the 89 days before you withdraw under the HBP may not be deductible
- Tax deduction: the original contribution was tax-deductible (like any RRSP contribution)
- Withdrawal: an eligible withdrawal is not taxed when you take it out, and you repay it to your RRSP
- Repayment period: 15 years (or less)
- Repayment start: for a first HBP withdrawal made between January 1, 2026 and December 31, 2028, repayment starts in the fifth year after the year of the first withdrawal
The Repayment Details
This is the key difference from FHSA. You must repay the RRSP Home Buyers' Plan money back into your RRSP over a 15-year period. For a first HBP withdrawal made between January 1, 2026 and December 31, 2028, the 15-year repayment period starts in the fifth year following the year of the first withdrawal (a 2026 withdrawal means a first repayment year of 2031).
If you withdraw $60,000, you owe that back. Divide it by 15 years, and the minimum required repayment is $4,000/year, made as RRSP contributions that you designate as HBP repayments. If you repay less than the minimum for a year, the shortfall is included in your income for that year as RRSP income.
Head-to-Head Comparison
Here's how the two programs stack up on the key dimensions:
Contribution Limits
- FHSA: $8,000/year, $40,000 lifetime
- RRSP HBP: No new contribution limit to the RRSP itself, but only $60,000 can be withdrawn for a home
Note: The FHSA lifetime contribution limit is $40,000, and a qualifying withdrawal does not need to be repaid. The current HBP withdrawal limit is $60,000 per person, which you repay over a 15-year period.
Tax Benefit at Entry
- FHSA: Tax deduction on contributions (the tax saved depends on your income and province)
- RRSP HBP: Tax deduction on contributions (the tax saved depends on your income and province)
Withdrawal: Tax-Free or Taxable?
- FHSA: Tax-free withdrawal
- RRSP HBP: An eligible withdrawal is not taxed when you take it out; you repay it to your RRSP
Repayment Requirement
- FHSA: None. The money is yours to keep.
- RRSP HBP: Mandatory repayment over a 15-year period, which for a first withdrawal in 2026 to 2028 starts in the fifth year after the withdrawal year
Time to Access
- FHSA: no minimum number of days that contributions must stay in the account before a qualifying withdrawal
- RRSP HBP: RRSP contributions made in the 89 days before the withdrawal may not be deductible
Flexibility After Withdrawal
- FHSA: Once withdrawn, it's your down payment. You own it.
- RRSP HBP: You have a minimum annual repayment to your RRSP. If you repay less than the minimum, the shortfall is included in your income for that year.
If You Don't Use the Money
- FHSA: you can generally transfer it directly to your RRSP or RRIF without immediate tax. If property is still in your FHSA after your maximum participation period ends, it loses its FHSA status and its fair market value is included in your income.
- RRSP HBP: if you do not buy or build a qualifying home before October 1 of the year after your first withdrawal (and an extension condition does not apply), you must cancel your participation in the HBP.
Note: an FHSA transfer to an RRSP or RRIF is a direct transfer that you arrange, not an automatic rollover.
Using Both Programs Together
Here's where it gets interesting. You don't have to choose between FHSA and RRSP HBP. You can use both.
If you max out both programs:
- FHSA: $40,000 (tax-free withdrawal, no repayment)
- RRSP HBP: $60,000 (an eligible withdrawal is not taxed when you take it out; you repay it over a 15-year period)
- Combined down payment power: $100,000
Together, the two limits add up to $100,000: the $40,000 FHSA lifetime contribution limit plus the $60,000 HBP withdrawal limit, if you have the room to fill both.
The Sequence
If you plan to buy soon, here is one example order:
- FHSA contributions. Contribute $8,000/year (or whatever you can) until you reach the $40,000 lifetime limit. Contributions are generally tax-deductible, and a qualifying withdrawal is not taxed and does not need to be repaid.
- RRSP HBP withdrawal. Contribute to your RRSP, then withdraw up to $60,000 for your down payment (RRSP contributions made in the 89 days before the withdrawal may not be deductible). You repay it to your RRSP over a 15-year period; it adds to what you can put toward the down payment on top of your FHSA.
Scenario: When to Use Each
Scenario A: "I'm Buying in 2 Years"
You have stable income and plan to buy in 2026. Here is one example of how the two programs could be used.
Example approach: FHSA contributions plus an RRSP HBP withdrawal
- Contribute to FHSA: $8,000 now, $8,000 next year = $16,000 with tax savings
- Build RRSP: contribute an additional $30,000 over the next 18 months
- In 2026: withdraw $16,000 from FHSA (no repayment) + $60,000 from RRSP HBP (repay over 15 years; for a first withdrawal in 2026 the first repayment year is 2031)
- Down payment available: $76,000 (assuming you have some savings outside these accounts too)
- Annual repayment: $60,000 ÷ 15 = $4,000/year. Spread across 12 months, ~$333/month once repayment starts
The 15-year HBP repayment period runs alongside your mortgage, and the repayments go back into your own RRSP.
Scenario B: "I'm Buying in 5+ Years"
You're young, early in your career, and not in a rush. You want to maximize tax-advantaged savings and have time to contribute.
Example approach: Five years of FHSA contributions, then an FHSA withdrawal alongside an RRSP HBP withdrawal
- Contribute $8,000/year to FHSA for 5 years = $40,000 lifetime (maxed out)
- Contribute to RRSP independently of the Home Buyers' Plan: let it grow
- In year 5, withdraw $40,000 FHSA (no repayment) + $60,000 RRSP HBP = $100,000 down payment
- Annual repayment: $60,000 ÷ 15 = $4,000/year. Spread across 12 months, ~$333/month, starting in the second year after the withdrawal year (year 7) if the 2026-2028 relief does not apply
In this example, five years of FHSA contributions reach the $40,000 lifetime limit. If your RRSP also holds at least $60,000, the two withdrawals add up to $100,000 toward the down payment, before any savings outside these accounts.
Scenario C: "I'm Not Sure When I'm Buying"
Maybe your career is in flux, or you're not certain about your partner's situation. Here is one example for when the timing is uncertain.
Example approach: FHSA contributions now, with the RRSP HBP as a later option
- Contribute to FHSA: it has no repayment obligation, and you can generally transfer it directly to your RRSP or RRIF if you don't buy
- RRSP: an HBP withdrawal is for buying or building a qualifying home; if you do not buy or build one before October 1 of the year after your first withdrawal (and an extension condition does not apply), you must cancel your participation in the HBP
- If you need extra down payment funds later, an RRSP HBP withdrawal (up to $60,000, repaid over a 15-year period) is another option
If you don't buy, you can generally transfer FHSA funds directly to your RRSP or RRIF without immediate tax; close the account before your maximum participation period ends.
Practical Points
Opening an FHSA Early
The sooner you open it, the sooner you can start contributing. Your FHSA participation room only starts when you open your first account.
If you open your first FHSA in 2026, your participation room for 2026 is $8,000, and contributions of any size count toward it.
How the FHSA and RRSP HBP Differ
FHSA contributions are generally tax-deductible, investment income earned in the account is not taxed when it comes out as part of a qualifying withdrawal, and a qualifying withdrawal does not need to be repaid. An RRSP HBP withdrawal is not taxed when you take it out, but you repay it to your RRSP over a 15-year period.
The Repayment Obligation
If you withdraw $60,000 and repay less than the minimum annual amount, the shortfall is included in your income for that year. Repayments go back into your own RRSP over the 15-year period.
Account for the Stress Test
Remember, even if you accumulate $100,000 down payment between FHSA and RRSP HBP, your lender will still apply the mortgage stress test. More down payment doesn't mean you can afford a proportionally more expensive home — it just means a lower mortgage amount (and thus lower monthly payments that pass the stress test).
Using Our Tools
To see how FHSA and RRSP contributions reduce your taxable income, use our affordability calculator. Input your savings plan and see how much home you can afford once you've maxed both programs.
Our mortgage calculator lets you run different down payment scenarios and see the monthly payment impact of putting down $40k vs. $100k.
The Bottom Line
The FHSA is the newer program: a qualifying withdrawal does not need to be repaid, and it has its own limits, participation period and qualifying-withdrawal conditions. The RRSP Home Buyers' Plan has a higher withdrawal limit (up to $60,000), but you repay it to your RRSP over a 15-year period.
One option is to use both. $40,000 from the FHSA (its lifetime contribution limit) plus up to $60,000 from the RRSP HBP adds up to $100,000 in tax-advantaged down payment savings, with only the RRSP portion requiring repayment.
Opening an FHSA early matters because your FHSA participation room only starts when you open your first account, and even small contributions count. The RRSP Home Buyers' Plan is another source of funds if you need additional capital.
Both programs have their own rules to track: the FHSA's limits and participation period, and the HBP's withdrawal limit and 15-year repayment.
Ready to see how much you can save? Use our affordability calculator to explore down payment scenarios and see what price range you can buy into with different savings plans.