FHSA & RRSP Home Buyers' Plan
Everything you need to know about the First Home Savings Account and RRSP Home Buyers' Plan in 2026 — the definitive Canadian guide.
FHSA vs. RRSP Home Buyers' Plan — At a Glance
Two powerful programs. Here's how they stack up.
Welcome! Canada gives first-time home buyers two incredible tax-advantaged tools to save for a down payment. Used together, they're the most powerful combo on the planet for building your down payment. Let Morty walk you through everything.
| Feature | FHSA | RRSP HBP | Both Together |
|---|---|---|---|
| Max withdrawal | $40,000 + growth | $60,000 per person | $100,000+ per person |
| Tax deduction? | Yes — on contributions | Yes (when originally contributed to RRSP) | Both deductible |
| Tax-free growth? | Yes | Yes (inside RRSP) | Yes |
| Tax-free withdrawal? | Yes — permanently | Temporarily — must repay over 15 years | FHSA free; HBP must repay |
| Must repay? | No | Yes — 1/15 per year | Only the HBP portion |
| Annual limit | $8,000/year | Limited by RRSP room | $8K FHSA + RRSP room |
| Lifetime cap | $40,000 | $60,000 withdrawal cap | $100,000 |
| For couples | $80,000 combined | $120,000 combined | $200,000 combined |
Morty says: A couple maxing out both programs can pull together up to $200,000 in tax-advantaged funds for a down payment. That's 20% down on a million-dollar home. Not bad for a couple of savings accounts!
What Is the FHSA?
The new kid on the block — and it's a game-changer
The First Home Savings Account (FHSA) launched in April 2023 and is the single best tool for first-time buyers to save for a down payment. It combines the best features of an RRSP and a TFSA: contributions are tax-deductible, growth is tax-free, and withdrawals for a home purchase are completely tax-free. No repayment required. Ever.
Tax-Deductible
Every dollar you contribute reduces your taxable income — just like an RRSP. At a 33% marginal rate, contributing $8,000 saves you $2,640 in taxes.
Tax-Free Growth
Investments inside your FHSA grow completely tax-free — interest, dividends, capital gains. Nothing is taxed as long as the account is open.
Tax-Free Withdrawal
When you withdraw to buy your first home, you pay zero tax on the full amount — contributions AND growth. No repayment schedule. The money is yours.
You must meet all of these criteria:
- Canadian resident — you must be a resident of Canada.
- Age 18+ — you must be 18 years of age or older when you open the account. Where 19 is the legal age to enter into a contract in your province or territory, you must be 19 or older. You must also be 71 years of age or younger as of December 31 of the year you open it.
- First-time home buyer — to open an FHSA, you must not have lived in a qualifying home as your principal place of residence that you owned or jointly owned, or that your spouse or common-law partner (at the time you open the account) owned or jointly owned, at any time in the current calendar year before you open the account or in the preceding four calendar years. A home that only your spouse or common-law partner owns counts only if you lived in it as your principal place of residence.
Note: this test looks back over the current calendar year (before you open the account) and the four preceding calendar years. If you last lived in a home you owned, or that your spouse or common-law partner owned, before that period, you may meet the opening test.
The test for a qualifying withdrawal is different. You must not have lived in a qualifying home as your principal place of residence that you owned or jointly owned at any time in the current calendar year before the withdrawal (not counting the 30 days immediately before the withdrawal) or in the preceding four calendar years. For a qualifying withdrawal, a home owned only by your spouse or common-law partner does not count.
Morty says: FHSA contributions can be deductible, growth inside the account is not taxed, and a qualifying withdrawal is not taxed. If you don't buy, CRA allows a direct transfer to your RRSP or RRIF without immediate tax. Check your own eligibility and room before you open one.
What Is the RRSP Home Buyers' Plan?
The classic — borrow from your future self, interest-free
The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP tax-free to buy or build a qualifying home. The catch? You have to pay it back over 15 years — for a first withdrawal made from 2026 through 2028, CRA defers the start of repayment to the fifth year after the year of the first withdrawal. If you miss a repayment, that amount gets added to your taxable income for the year.
How It Works
Withdraw: Up to $60,000 per person ($120,000 for a couple) from your RRSP, tax-free.
Use it: You need a written agreement to buy or build a qualifying home when you withdraw, and the home must be acquired or built before October 1 of the year after the year of your first withdrawal. CRA allows a limited extension in some cases, such as a second written agreement made before that date.
Repay it: At least 1/15th of the total each year over up to 15 years. For a first HBP withdrawal made from January 1, 2026 to December 31, 2028, CRA defers the start of repayment to the fifth year after the year of the first withdrawal (a 2026 withdrawal means the first repayment year is 2031). Repayments go back into your RRSP.
The Gotchas
Must repay: Unlike the FHSA, this is a loan from yourself. Miss a payment and the CRA adds it to your income.
89-day rule: RRSP contributions you make during the 89 days before an HBP withdrawal may not be deductible, per CRA.
Opportunity cost: Money withdrawn isn't growing tax-free in your RRSP while you repay it over 15 years.
Morty says: The HBP is a great way to boost your down payment — but don't forget about the repayment. $4,000 a year for 15 years adds up. Budget for it, or it becomes a surprise tax bill every April. Morty has seen too many buyers forget!
Which Should You Choose?
FHSA vs. HBP vs. using both — depends on your situation
Scenario 1: Young professional, 3–5 years out
Best move: FHSA first, HBP later.
Open an FHSA immediately and max it out at $8,000/year. You get the tax deduction now, tax-free growth for years, and no repayment obligation. Meanwhile, keep building your RRSP normally. When you're ready to buy, withdraw from both.
Scenario 2: Ready to buy this year
Best move: HBP is your heavy hitter.
If you already have a healthy RRSP, the HBP lets you withdraw up to $60,000 from your RRSP once you have a written agreement to buy or build a qualifying home. Open an FHSA too and contribute what you can (even $8,000 counts) — but the HBP will be your main source for the down payment. Mind the timing of RRSP contributions: CRA says a contribution made in the 89 days before an HBP withdrawal may not be deductible.
Scenario 3: High income, want maximum tax savings
Best move: Max both programs.
At a 50%+ marginal rate, every dollar contributed to the FHSA saves you 50+ cents in tax. Contribute $8,000/year to the FHSA plus your normal RRSP contributions. At purchase time, withdraw from both. The FHSA is free money; the HBP is a 15-year interest-free loan. Use both.
Scenario 4: Couple buying together
Best move: Each partner opens their own FHSA + uses their own HBP.
Each person can withdraw $40,000+ from FHSA and $60,000 from HBP = $100,000+ each, $200,000+ combined. That's a 20% down payment on a million-dollar home from tax-advantaged accounts alone. Coordinate your strategies.
Morty's golden rule: Open the FHSA immediately, even if you contribute $0 this year. The carry-forward clock starts ticking the moment you open it. Future you will thank present you. Then layer in the HBP when you're ready to buy. That's the max-power combo.
Step-by-Step: Using the FHSA
From opening your account to getting the keys
Open an FHSA (Today!)
Go to your bank, credit union, or online brokerage and open an FHSA. You'll need your SIN and ID. Most major institutions offer them: Wealthsimple, Questrade, TD, RBC, BMO, Scotiabank, CIBC, National Bank. The sooner you open it, the sooner carry-forward room starts accumulating.
Contribute Each Year (Up to $8,000)
Set up automatic contributions — even $500/month gets you to $6,000/year. You can carry forward up to $8,000 of unused room to the next year, but only after the account is open. Max annual contribution (with carry-forward) is $16,000.
Invest Your Contributions
Don't just let the money sit in cash! Choose investments based on your timeline. Buying in 1–2 years? GICs or high-interest savings. 3–5 years? Balanced ETFs. 5+ years? A growth-oriented portfolio. Everything grows tax-free.
Claim Your Tax Deduction
On your tax return, claim your FHSA contributions as a deduction (like RRSP contributions). Your institution will issue a tax slip. You can also defer the deduction to a future year when your income is higher — the contribution room is used, but the deduction carries forward.
Request a Qualifying Withdrawal
When you're ready to buy, fill out Form RC725 (Request to Make a Qualifying Withdrawal from your FHSA) and give it to your FHSA issuer. CRA's conditions for a qualifying withdrawal are: you are a first-time home buyer for withdrawal purposes; you have a written agreement to buy or build a qualifying home, with an acquisition or construction completion date before October 1 of the year following the year of the withdrawal; you did not acquire the home more than 30 days before the withdrawal; you are a resident of Canada from your first qualifying withdrawal until you acquire the home; and you occupy or intend to occupy it as your principal place of residence within one year after buying or building it. If a condition is not met when you withdraw, the amount is treated as a taxable withdrawal.
Use the Funds for Your Home Purchase
A qualifying withdrawal is not included in your income, and CRA says you do not need to repay it. CRA says to close all of your FHSAs on or before December 31 of the year following the year of your first qualifying withdrawal, which is when your maximum participation period ends. Contributions you make after your first qualifying withdrawal are not deductible.
Morty says: Pro move — if your employer offers RRSP matching, contribute to get the match, then put extra savings into the FHSA. Don't leave free employer money on the table, but the FHSA's no-repayment perk makes it the better home-buying vehicle.
Step-by-Step: Using the HBP
Borrow from your RRSP and repay over 15 years
Check Your RRSP Balance & Contribution Room
Log in to your CRA My Account to see your RRSP balance and remaining room. Remember: you can withdraw up to $60,000, but only what's actually in your RRSP. RRSP contributions made during the 89 days before an HBP withdrawal may not be deductible.
Top Up If Needed (Mind the 89-Day Deduction Rule)
If you want to raise your HBP withdrawal, you can contribute to your RRSP before you withdraw. CRA says an RRSP contribution made during the 89 days before an HBP withdrawal may not be deductible, so the timing can affect the deduction.
Fill Out Form T1036
Complete CRA Form T1036 (Home Buyers' Plan Request to Withdraw Funds from an RRSP). Submit it to your RRSP issuer (bank/brokerage). They'll release the funds without withholding tax.
Buy or Build Your Home
You must buy or build a qualifying home before October 1 of the year after the year of your first HBP withdrawal, unless a CRA extension applies. You must intend to occupy it as your principal place of residence within one year after buying or building it.
Start Repaying (Fifth Year After the Withdrawal Year)
For a first HBP withdrawal made from 2026 through 2028, CRA defers the start of repayment to the fifth year after the year of the first withdrawal. If you withdrew in 2026, your first repayment year is 2031. Each year, you repay at least 1/15th of the total withdrawn back into your RRSP.
Designate Repayments on Your Tax Return
When you contribute to your RRSP during a repayment year, you choose whether to designate the contribution as an HBP repayment (not tax-deductible) or a regular RRSP contribution (tax-deductible). You can't double-dip. If you don't designate enough as repayment, the shortfall is added to your taxable income.
Morty says: The repayment is the part people trip on. Set up an automatic monthly transfer into your RRSP for 1/12th of your annual repayment. If you owe $4,000/year, that's $333/month. Automate it and forget it — don't let a missed repayment become a tax surprise.
Money Math: How Much Can You Actually Save?
Interactive calculators to model your strategy
FHSA Growth Calculator
See how your FHSA grows over time with tax-free compounding. Adjust the sliders to match your situation.
$8,000/yr
5 years
5%/yr
FHSA Balance
$46,415
Tax-free withdrawal
Tax Saved
$13,200
On contributions (est. 33%)
Total Benefit
$19,615
Growth + tax savings
HBP Repayment Impact
Understand what your HBP repayment looks like — and what happens if you miss a year.
$35,000
30%
Annual Repayment
$2,334
Back into RRSP each year
Repayment Period
15 years
Starting year 2 after purchase
Miss a Year?
$700
Added to taxable income
Combined Strategy vs. Doing Nothing
Compare using FHSA + HBP together versus saving in a regular TFSA with no tax perks.
$80,000
5 years
FHSA + HBP Combined
The max-power strategy
$105,000
+$13,200 tax savings
FHSA Only
No RRSP involvement
$45,000
+$13,200 tax savings
TFSA Only (No Programs)
Same savings, no tax perks
$45,000
$0 tax savings
Combined strategy advantage over TFSA-only
$73,200
At your 33% marginal rate
Morty says: The numbers don't lie — the combined strategy beats plain savings by tens of thousands of dollars. The tax deduction alone is worth more than most people's annual vacation budget. Open that FHSA today!
Deadlines, Tax Rules & 2026 Updates
Don't miss these dates — they matter
| Deadline | FHSA | RRSP / HBP |
|---|---|---|
| Contribution deadline | December 31 of the tax year | 60 days after year-end (usually March 1) |
| Contribution timing before withdrawal | No minimum number of days before a qualifying withdrawal | RRSP contributions made in the 89 days before the withdrawal may not be deductible |
| Purchase deadline | Acquire or finish building before October 1 of the year after the withdrawal | Acquire or build before October 1 of the year after the year of the first withdrawal (limited extension) |
| Repayment start | No repayment required | 5th year after the year of the first withdrawal (for first withdrawals from 2026 to 2028) |
| Account closure | December 31 of the year of the earliest of: 15 years after opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal | N/A (RRSP stays open) |
| Carry-forward | Up to $8,000 unused room carries forward | Full RRSP room carries forward indefinitely |
Morty says: The number-one deadline mistake? Forgetting that FHSA contributions are due December 31 (not March 1 like RRSPs). If you want the 2026 deduction, get your FHSA contribution in before New Year's Eve. Don't wait for tax season.
Common Mistakes & How to Avoid Them
Morty has seen it all — don't be that person
Not opening an FHSA early enough
Carry-forward room only starts accumulating AFTER you open the account. If you wait 3 years to open one, you've lost 3 years of carry-forward. Open it today, even with $0.
Morty: "The best time to open an FHSA was yesterday. The second best time is today."
Leaving FHSA contributions in cash
An FHSA sitting in a savings account earning 2% when you could be earning 5–8% in a diversified ETF is leaving thousands on the table. If you're 3+ years from buying, invest it.
Morty: "Cash is for emergencies. Your FHSA is for building wealth. Put it to work!"
Contributing to your RRSP just before an HBP withdrawal
CRA says an RRSP contribution made during the 89 days before an HBP withdrawal may not be deductible. Check the timing before you contribute.
Morty: "Count the 89 days before you contribute."
Missing HBP repayments
If you don't repay at least 1/15th of your HBP withdrawal each year, the CRA adds the shortfall to your taxable income. On a $60K withdrawal at 33%, that's a $1,320 tax hit per missed year.
Morty: "Set up auto-transfers. Your RRSP repayment shouldn't depend on your memory."
Opening an FHSA when you don't meet the opening test
To open an FHSA, you must not have lived in a home that you owned (or that your spouse or common-law partner owned when you open the account) in the current calendar year before opening or in the preceding four calendar years. Contributing or transferring more than your FHSA participation room also creates an excess FHSA amount, which CRA taxes at 1% of the highest excess amount for each month it remains.
Morty: "Check the opening test before you open the account."
Not claiming the FHSA deduction strategically
You can defer your FHSA deduction to a higher-income year for a bigger tax break. Contributing $8K at a 20% rate saves $1,600, but at 33% it saves $2,640. Same money, different timing.
Morty: "Patience pays — literally. Defer the deduction if your income is climbing."
Withdrawing from FHSA for non-qualifying purposes
If you withdraw FHSA funds and DON'T buy a qualifying home, the withdrawal is added to your taxable income. This defeats the entire purpose. Only withdraw when you have a signed agreement.
Morty: "The FHSA isn't a piggy bank. Break it open only when you've found your home."
Not using both programs together
Many buyers use the FHSA OR the HBP, not realizing they can use both simultaneously. A single person can access $100,000+ in tax-advantaged funds. Don't leave money on the table.
Morty: "Using just one program is like eating only half a sandwich. Why would you do that?"
Your Action Plan + Beast Toolkit
Your 30-day checklist and all the tools you need
30-Day Action Plan
Week 1
- Open an FHSA at your bank or brokerage
- Check your RRSP balance on CRA My Account
- Note your RRSP contribution room
Week 2
- Set up automatic FHSA contributions ($667/month = $8,000/year)
- Choose investments inside your FHSA based on your timeline
- Review your budget — how much can you save monthly?
Week 3
- Run the Affordability Calculator to find your max purchase price
- Take the Mortgage Matcher quiz to find your ideal mortgage type
- Check the Rate Radar for current market conditions
Week 4
- Read the First-Time Buyer Guide for the full buying process
- Review how pre-approval works before you start shopping
- Bookmark this guide and review it before tax season
Your Beast Toolkit
Mortgage Calculator
Calculate payments, amortization, and total interest
Affordability Calculator
Find your max purchase price based on income
Mortgage Matcher
Compare fixed or variable, term length, and open or closed mortgages
Rate Radar
Live rate data and how rates work
First-Time Buyer Guide
The complete guide to buying your first home
Mortgage Dictionary
Look up FHSA, HBP, GDS, TDS, and more
Mortgage Checklists
Shopping and document checklists with progress
Closing Cost Calculator
Land transfer tax and closing costs by province
You're armed and dangerous! You now know more about FHSA and HBP than 99% of Canadians. Open that FHSA, build your strategy, and come back to Morty's tools whenever you need to crunch numbers. You've got this — Morty believes in you!
Ready to Start Saving Smarter?
Open your FHSA today, run the numbers with Morty's calculator, and take the Mortgage Matcher quiz to find the right mortgage for when you're ready.
Disclaimer: This guide is for educational purposes only and does not constitute financial, tax, or legal advice. FHSA and HBP rules may change — always verify current details with the CRA, your financial institution, or a qualified tax professional. Calculators provide estimates only. Morty is a mascot, not a licensed financial advisor.
Related Tools & Resources
First-Time Buyer Guide
Everything you need to know about buying your first home in Canada.
Affordability Calculator
Find your maximum mortgage based on income and debts.
Mortgage Calculator
Full payment calculator with CMHC insurance and stress test.
Home Buying Checklists
Step-by-step checklists from pre-approval to moving day.
Frequently asked questions
Can I use both the FHSA and RRSP Home Buyers' Plan?
Yes, you can use both programs together. CRA says you can make an FHSA qualifying withdrawal and an RRSP Home Buyers' Plan withdrawal for the same qualifying home, as long as you meet all of the conditions at the time of each withdrawal. 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.
Can I make an FHSA qualifying withdrawal after my closing date?
CRA says you must not have acquired the qualifying home more than 30 days before you make the withdrawal. A withdrawal made within 30 days after you acquire the home can still meet that condition if every other condition is met. A withdrawal made more than 30 days after you acquire the home may be a taxable withdrawal.
What are the 30 days immediately before an FHSA withdrawal?
For the qualifying-withdrawal first-time-buyer test, CRA leaves out the 30 days immediately before the withdrawal when it checks whether you lived in a home you owned during the current calendar year. The four preceding calendar years are still checked in full.
How long must money stay in my FHSA before a qualifying withdrawal?
CRA says there is no minimum number of days that contributions or transfers must stay in your FHSA before you can use them as a qualifying withdrawal. Contributions you make after your first qualifying withdrawal are not deductible.